Contractors to feel ripple from tariffs

BY BOB MIODONSKI Of CONTRACTORs staff WASHINGTON Mechanical contractors likely will feel the impact of the tariffs on imported steel announced March 5 by President Bush. The administration imposed tariffs that range from 8% to 30% on a wide variety of steel products that were being sold in the United States at below-market prices. We have domestic mills going on allocation, and some telling people

BY BOB MIODONSKI

Of CONTRACTOR’s staff

WASHINGTON — Mechanical contractors likely will feel the impact of the tariffs on imported steel announced March 5 by President Bush. The administration imposed tariffs that range from 8% to 30% on a wide variety of steel products that were being sold in the United States at below-market prices.

“We have domestic mills going on allocation, and some telling people that they are not going to get any more steel; others are reneging on contracts for OEMs,” said Dan Elliott, A.O. Smith’s director of purchasing. “This is going to drive up the cost of water heaters.”

U.S. Steel has raised the price $50 on hot-rolled steel and $60 on cold-rolled steel, Elliott said. Those increases and price hikes from other steel producers could raise the price of water heaters from 8% to 18%, he added.

“We’re trying to hold our prices, but hot-rolled steel prices are up about $30 per ton since the tariffswere announced; that’s quite a steep increase,” said Bob LaFata, Burnham Corp.’s purchasing manager. “The tariffs certainly have provided some relief for steel companies, but they will be highly inflationary. Eventually, they will impact Burnham and our products, but so far they have not.”

Joe Bogucki, materials manager for Weil-McLain, said that two of the boiler manufacturer’s suppliers of flat-rolled sheet steel plan to raise their prices May 1 by $20 to $25 per ton.

“It’s something we’re trying to fight right now, we’re under the gun to reduce our costs, not raise them,” he said. Whether higher costs would be passed on to contractors is uncertain.

“I can’t speak for our marketing people, but probably not,” Bogucki said. “We’re going to do whatever we can to hold our prices.”

On the industrial side of the business, Weldbend President James Coulas Sr. said Bush’s actions would raise the price of imported steel fittings and flanges by 12% to 15%. Domestic prices on the same products will be unchanged, he said. The tariffs should have been higher, he added.

“They didn’t do enough for the flange and fitting industry, and they didn’t do enough for the steel industry,” Coulas said. “No country as great as the United States can do without a steel industry.”

Roddey Dowd Jr., president of Charlotte Pipe, said he expects little impact on his company or the plumbing industry. He agreed, however , that the tariffs should have been higher.

“The government only did about half of what they should have done on these tariffs,” Dowd said. “Steel is coming in at a lower price than what it costs to produce it. That’s not a level playing field.”

On the residential plumbing side, several manufacturers told CONTRACTOR the tariffs would not affect their operations. Spokesmen for American Standard and Elkay, for example, said they foresee little impact on prices.