A recent study showed that in the face of rising steel prices, parts suppliers will face a worrying future.
This research work was carried out on behalf of 700 U.S. companies' suppliers of engine and equipment manufacturers. The federation hopes to persuade the International Trade Commission and the U.S. Department of Commerce to return to normal levels the heavy taxes on imported steel products that were caused by the dumping of steel products.
Dumping refers to the sale of steel products at a price lower than the cost of foreign markets.
The Federation’s research report did not condemn steel producers for price deception, but it asserted that domestic steel producers have been healthy and they no longer need government protection.
The research was carried out by the economists Brian Becker and Kev in Hassett and the EM A federation publicized the findings last week.
Economist research results show that since December 2003, the Dow Jones index of steel stocks has increased by 76 percentage points, while at the same time, the stock prices of auto suppliers have dropped by an average of 5 percentage points.
The report pointed out that both U.S. Steel Corporation and Nucor Corporation achieved a net profit of US$1 billion in 2004, and the price of important steel products has increased by 4.3 to 106 percentage points.
This report does not address the common complaints of suppliers: With the increasingly fierce competition, they cannot transform the high cost of their raw materials by increasing the selling price of their products.
The chairman of the MEM A federation, Beb M c Kenna, said that suppliers are happy to use American-made steel, but they cannot get all the high-quality steel they need from domestic companies.
When suppliers turned to imports, they faced high prices for imported steel due to heavy taxes. In the past few months, five major parts suppliers have closed down, partly because of the steel crisis, the chairman said.
Del Eco's global supply management director, E r ic Sand Ford, said that his company is trying to meet the company's demand for steel, but he expressed concern about some Delphi components suppliers.
"We are entering a very difficult stage," he said.
The American Iron and Steel Association, which represents steel producers, published an opposite research report last week, pointing out that the steel consumer industry is profitable, and the cost of steel accounts for only a fraction of the total cost of their products.
The report also pointed out that steel producers in the United States are facing greater pressure from overseas currency operations, employee health care costs, and government regulations.
In China, rising steel prices have also made it difficult for parts and components companies to suffer. Industry insiders pointed out that since steel prices continued to rise in 2004, domestic steel prices have risen by 30% in just a few months. The price increase of cold-rolled hot-rolled steel sheets used by the automotive industry is also more than 10%, which puts great pressure on parts companies that use more steel.
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