As U.S. Steelmakers Cheer Tariffs, A Michigan Factory's Future Looks Bleak

Mar 8, 2018
Originally published on March 8, 2018 8:36 am

American steel manufacturers are excited about the Trump administration's plan to levy 25 percent tariffs on imported steel. They say the tariffs will level the playing field against big steel exporters like China.

But in one Michigan county that voted heavily for Trump, people are worried that tariffs could force a big local plant to shut down.

The town of Big Rapids straddles the Muskegon River as it winds from northern Michigan's hardwood forests to Lake Michigan. A century ago, this town played a key role in the timber industry. Some of the old riverfront lumber buildings remain, like the one that houses Simonds International.

Simonds manufactures blades and knives — really, really big ones.

"They're not your mother's kitchen cutlery," says plant Manager Dave Campbell. "They're anywhere from 8 to 80 pounds [of] hardened steel."

The steel products here, which end up in the lumber industry, are made from a type of steel that isn't produced by any U.S. mill.

"There's only four mills in the world that we're aware of that provide this," says Campbell. "Two are in Europe and two are in China."

Marina McGee buys the raw steel Simonds needs from Europe. "If we could buy it in the U.S., we would happily do that and stop paying all these freight fees and everything else we're paying to bring it in," says McGee.

McGee says a 25 percent steel tariff would be devastating and give Simonds' foreign competitors a big advantage.

"This plant could shut down," she says. "And all 80 employees here — a lot of very good people — could all lose their jobs."

Professor Linda Lim, who studies global trade at the University of Michigan, says that anytime there's a big new tariff on a global commodity like steel, there are winners and losers.

In this situation, Lim says, domestic steelworkers and investors in American steel companies will be the immediate winners. But she is skeptical the advantage will last.

"If Ford and Boeing and Caterpillar lose market share, globally and in the U.S, due to more expensive steel, they will sell less cars, tractors, and planes," she says.

While President Trump's proposed tariffs aren't in place yet, Simonds' workers are worried. Campbell says most of them voted for Trump.

"I think the individuals here that may have supported President Trump will be disappointed," says Campbell. "[They] will be somewhat concerned that some of the actions he's taking may disadvantage them, disadvantage the company they work for, and disadvantage their job prospects down the road."

Simonds is now trying to band together with its suppliers, and even its domestic competitors, to assure that any tariff regulation has an exemption for the foreign-made steel it needs.

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STEVE INSKEEP, HOST:

American steelmakers are excited about President Trump's proposal to put 25 percent tariffs on imported steel. They say the tariffs will help level the playing field against competitors in China. But in one Michigan county that voted heavily for Donald Trump, some people worry that any tariffs could force a big local plant to shut down. What's going on there? Well, here's Interlochen Public Radio's Aaron Selbig.

AARON SELBIG, BYLINE: The town of Big Rapids straddles the Muskegon River as it winds from northern Michigan's hardwood forests to Lake Michigan. A century ago, this town played a key role in the timber industry. Some of the old riverfront lumber buildings like the one that houses Simonds International remain.

(SOUNDBITE OF POWER TOOLS)

SELBIG: Simonds makes blades and knives - really big knives. Dave Campbell is the plant manager here.

DAVE CAMPBELL: And they're not your mother's kitchen cutlery. They're anywhere from 8 to 80 pounds - hardened steel.

SELBIG: The steel products here end up in the lumber industry, and they're made from a type of steel that isn't produced by any U.S. mill.

CAMPBELL: There is only four mills in the world that we're aware of that provide these. Two are in Europe, and two are in China.

SELBIG: Marina McGee buys the raw steel they need from Europe.

MARINA MCGEE: If we could buy it in the U.S., we would happily do that and stop paying all these freight fees and everything else we're paying to bring it in.

SELBIG: McGee says a 25 percent steel tariff would be devastating, and it would give her foreign competitors a big advantage.

MCGEE: This plant could shut down, and all 80 employees here - a lot of very good people - could lose their jobs.

SELBIG: Professor Linda Lim studies global trade at the University of Michigan. She says anytime there's a big new tariff on a global commodity like steel, there are winners and losers. In this situation, Lim says, steelworkers and investors in steel companies will be the immediate winners, but it may not last.

LINDA LIM: Because if Ford and Boeing and Caterpillar lose market share globally and in the U.S. due to more expensive steel, they will sell less cars, tractors and planes.

SELBIG: As foreign companies increase market share, that becomes a double whammy for American manufacturers. Not only will they have to pay a lot more for imported steel but, Lim says, their foreign competitors will pay less

LIM: For example, if this company in Michigan can no longer buy the steel from Germany, well, then the Germans will cut the price. So whoever is making a competitive will have cheaper steel, and that product will then be in market share in the United States.

SELBIG: A few of those foreign companies compete directly with Simonds, and while President Trump's proposed tariffs aren't in place yet, Simonds workers are worried. Dave Campbell says most of them voted for Trump.

CAMPBELL: I think the individuals here that may have supported President Trump will be disappointed - will be somewhat concerned that some of the actions he's taking may disadvantage them and disadvantage the company they work for and disadvantage their job prospects down the road.

SELBIG: Simonds is now trying to band together with its suppliers, and even its competitors, to try to assure that any possible tariff regulation has an exemption for the foreign-made steel it needs. For NPR News, I'm Aaron Selbig.

(SOUNDBITE OF BALMORHEA'S "BOWSPIRIT") Transcript provided by NPR, Copyright NPR.