Today's testimony by economists, purchasing executives and managers from DaimlerChrysler, Ford, General Motors, Honda, Nissan and Toyota ma" />

Issue: Oct 2006


Automotive Companies Urge End to Duties on Corrosion Resistant Steel



by Rob White

Representatives of the six largest automobile companies with manufacturing facilities in the United States testified today before the U.S. International Trade Commission (ITC), urging Commissioners to terminate anti-dumping and countervailing duties on "corrosion resistant steel," a product used extensively in the manufacturing of automobiles.

Today's testimony by economists, purchasing executives and managers from DaimlerChrysler, Ford, General Motors, Honda, Nissan and Toyota marked the first time that these six companies have united on a trade issue.

"The auto companies have come together to call for an end to special duties on corrosion resistant steel. These duties are imposing a punishing cost upon U.S.-based manufacturers and are a backdoor tax on American consumers," said Steve Biegun, Vice President, International Governmental Affairs at Ford Motor Company. "A revitalized, profitable and healthy U.S. steel industry does not need special protection. We have urged the Commissioners to not only take our word for it, but to listen to what steel industry executives are telling Wall Street about their business forecast -- long-term profitability and new pricing power."

"We need both a strong steel industry and a strong auto manufacturing industry in the U.S.," said Jim Morton, Vice Chairman, Nissan North America. "Steel companies are witnessing an impressive period of profitability compared to 13 years ago when the tariffs were introduced, and simply no longer need this protection."

"The steel industry's strength and profitability are well-known," said John Bozzella, Vice President, External Affairs and Public Policy, DaimlerChrysler Corp. "We believe their prosperity is not dependent on continued intervention by imposing a tax on steel consumption."

Highlights of the auto companies' testimony follow:

Mustafa Mohatarem, Chief Economist, General Motors Corporation: "Strong
demand growth for autos means strong demand growth for corrosion
resistant steel. And the fact that demand growth is so strong outside of
North America means that foreign steel producers are quite focused on
serving that demand ... The restructuring of steel has created a very
different industry. It is not just an industry that is ready to face
competition. It is an industry that needs more competition."

Chris Nielsen, General Manager, Purchasing, Toyota Motor Engineering and
Manufacturing North America, Inc.: " ... all evidence indicates that the
industry as a whole, not only our steel suppliers, has experienced a
dramatic and successful financial turnaround ... regardless of whether
the orders are revoked, we do not foresee any significant increase in
imports to meet growing domestic demand."

Larry Jutte, Senior Vice President and General Manager, Purchasing of
Honda of America Mfg. Inc.: "We have seen the same developments in the
marketplace that the other auto companies have described -- the market is
tighter. We are not just seeing higher prices, we are seeing other
things -- like delivery issues -- that tell us that our suppliers are
stretched. We have ambitious growth plans, and so do a lot of our
competitors here and overseas. We cannot afford artificial restrictions
on a growing steel market. These restrictions need to be lifted, and
lifted in this review."



"This is the first time that these six manufacturers have ever taken a unified position on an international trade issue. That is a sign of the importance of this review, and also is a sign that the case before you today is very different from the Commission's proceedings in 1993 and in 2000," testified Mark S. McConnell, counsel to the six auto manufacturers and a partner at Hogan & Hartson LLP. "The results are in: the steel industry today is fundamentally different from the industry you examined just 5 years ago. We believe this transformation -- combined with the performance shown by the facts of this investigation -- have positioned the corrosion resistant steel industry so that a recurrence of injury is NOT likely to result once these orders are revoked."

The U.S. auto and auto parts industry alone is responsible for employment of 2.4 million Americans. The six automotive companies together purchase $200 billion annually in materials, parts and services for their U.S. operations. Steel is a critical component of every vehicle and a significant portion of production costs. All six companies buy the overwhelming amount of the steel used in their U.S. operations from U.S. steel mills, but must maintain the ability to obtain key materials for their vehicle assembly plants dependably and at globally competitive prices.

The ITC is required to conduct a "sunset review" on antidumping and countervailing duties every five years. The duties will be lifted unless the ITC finds that the steel industry is likely to face material injury as a result. The duties on corrosion resistant steel have been in place since 1993 on imports from six countries: Australia, Canada, France, Germany, Japan and Korea.

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