Some toolmakers dodged a bullet when new U.S. steel tariffs were introduced, but many mold shops serving automakers and optical-disc manufacturers might not be so lucky.
Those companies could see a 15-30 percent rise in the price of steel, which accounts for as much as a fifth of the cost of many large automotive molds. That could eat into profit margins already thinned by customers squeezing the price of tooling.
With business conditions just beginning to bounce back after a perilous 2001, the tariffs could not have come at a worse time, said Joe Kavalauskas, vice president and general manager of Dayton, Ohio-based Minco Tool & Die Inc., a maker of automotive molds.
``The industry is so fragile right now,'' he said. ``We have to be able to compete, and we don't need anything else working against us. I honestly never dreamed this would happen.''
When news of the tariffs on steel imports was announced March 5, some toolmakers were relieved. The decision by President Bush places no duties on tool steel, the material used to make molds in most industries.
But the tariffs likely do not exempt P20 pre-hardened steel, used for such large molds as bumper fascias and car dashboards, said Tom Schade, executive vice president of Florence, Ky.-based International Mold Steel Inc., a distributor of specialty steels.
P20 steel falls under the classification of a hot-rolled alloy or steel slab, not a tool steel, Schade said. Imports of P20, a softer and less-expensive form of steel, could be subject to as much as a 30 percent duty starting March 20.
Imported stainless steel, used to make compact-disc molds and other optically scanned products, also faces tariffs as high as 15 percent for the first year.
Automotive toolmakers could be especially harmed by the tariffs, Schade said. Because of the size of those molds, more P20 is used than any other steel grade in the United States, he said. Molds using P20 in bumper fascias can weigh as much as 40,000 pounds.
The tariffs could boost U.S. mold imports from Canada, which is not affected by the decision, said Matthew Coffey, president of the Fort Washington, Md.-based National Tooling & Machining Association. Many automotive toolmakers are located across the U.S. border near Windsor, Ontario.
``That puts Canadians in a position where they can buy [steel] without duties,'' Coffey said. ``It's a killer competitively that will have a hollowing-out effect on the supply base.''
The new tariffs make international trading that much more difficult for U.S. companies, said Jim Meinert, director of international sales and marketing for Mequon, Wis.-based Snider Mold Co. Inc.
``Europe can use this as an opportunity for retaliation,'' he said. ``You've swatted a hornet's nest.''
P20 and stainless steel also are used for mold inserts and mold bases. Progressive Components Corp., a Wauconda, Ill.-based maker of mold components, will send a letter to Bush asking that the decision be revoked, said President Glenn Starkey.
``Although this announcement will not have a direct impact to tool builders using some steels, it may limit the supply options and pricing for many mold builders whose applications call for P20- type steel,'' Starkey said. ``That said, it is disturbing to see the administration tinkering with anything that can have adverse implications to an already embattled manufacturing segment.''
So the letter is not lost, Starkey will send it laser-etched onto an 8-by-10-inch piece of plate steel.
