One Voice | Government Advocacy for the Metalworking Industry

Dear Mr. Chairman, Vice Chairman, and Commissioners: On behalf of the National Tooling and Machining Association (“NTMA”), and the Precision Metalforming Association (“PMA”), and their respective roughly 2,300 member companies, we write to express our concern that the U.S. Department of Commerce and U.S. International Trade Commission are considering imposing high duties on tool steel imports from the above-named countries.

 

The National Tooling and Machining Association’s 1,400 member companies design and manufacture special tools, dies, jigs, fixtures, gages, special machines and precision-machined parts. Some firms specialize in experimental research and development work as well as rapid prototyping. Many NTMA members are privately owned small businesses, yet the industry generates sales in excess of $40 billion a year.

 

The Precision Metalforming Association is the full-service trade association representing the $137-billion metalforming industry of North America—the industry that creates precision metal products using stamping, fabricating, spinning, slide forming and roll forming technologies, and other value-added processes. Its 900 member companies also include suppliers of equipment, materials and services to the industry.

 

We respectfully urge the Commission to follow its over 35-year long practice of treating tool steel as a separate and distinct product from other steel products and the U.S. tool steel industry as a separate and distinct industry from other steel industries. As explained in great detail in numerous submissions made to the Commission in these investigations by others, there is a clear divide between tool steel and other carbon and alloy steel plate.

Specifically, tool steel has distinct high alloy chemical compositions that give it unique mechanical properties for end-use applications that are entirely different from other steel plate. In simple terms, tool steel has high wear resistance, toughness, and hot/red hardness, while other steel plate have relatively low wear resistance, toughness, and hot/red hardness. On the other hand, tool steel has relatively low ductility and weldability, while other steel plate has high ductility and weldability. For those reasons, tool steel is used for cutting, pressing, extruding and coining of metals and other materials; forming tools, such as dies, molds, and blades; and the stamping of surfaces of machinery. Carbon and other low alloy steel plate is used in load-bearing and structural applications. There is effectively no interchangeability between the end-use applications for tool steel and other steel plate.

 

Further, tool steel and other steel plate are produced by a nearly entirely different group of manufacturers. For the few companies that produce tool steel and other steel products, they are produced on separate lines using different machinery, equipment, and production processes. Tool steel requires many additional production processes that are not applied to other steel products. This is a clear demonstration that tool steel is a separate product and the tool steel industry is a separate industry from other steel products.

 

Based on the above, it is no surprise that both producers and purchasers of tool steel—including the 2,300 companies on whose behalf this letter is submitted—perceive tool steel as an entirely separate product from other steel plate. Based on the lack of any overlap of end-uses for tool steel and other steel products, it should not be surprising that tool steel is sold to a totally different group of purchasers than other steel products. Tool steel is typically sold on a per kilogram or per pound basis at much smaller order volumes than other steel products, which are sold on a per ton basis.

 

Finally, due to the much more expensive chemical composition, production processes, and resulting costs of tool steel, it is sold for roughly four times the price of other steel plate products. Nobody buys tool steel unless they require it.

 

These are two critical points – small order volumes and cost to manufacture – which often leads to many of the challenges our members face when attempting to procure steel from domestic sources. The major U.S. producers petitioning in this case will claim the capacity to manufacture the required grade, but will not do so due to the low run quantity, cost to manufacture the specific type of tool steel required, or both. According to our members, demand for more tool steel is certainly there.

How could tool steel and other steel plate products—that are so different in virtually every respect—be considered similar products manufactured by the same industry? We respectfully submit that it cannot, as the Commission has found for over 35 years, including in its most recent investigations of cold-rolled and hot-rolled steel completed only months ago.

 

We also respectfully urge the Commission to acknowledge and consider four facts critical to the Commission’s analysis of the role of tool steel imports in the U.S. market:

 

1. The three petitioners in these investigations—ArcelorMittal USA, Nucor, and SSAB Enterprises—produce minimal volumes (if any) of tool steel and in only a few grades.
2. The few real producers of tool steel there are in the United State —Carpenter Technologies Corporation, Crucible, Ellwood, Finkl Steel, Niagara Specialty Metals, and Universal Stainless—do not produce anything close to sufficient quantities or the full range of tool steel grades and types required by the U.S. tooling, machining, and metalforming industries. Our associations account for well over $177 billion in annual sales, roughly 20 times the size of the entire U.S. cut-to-length steel plate market. Each of our members responding to inquiries involving this investigation stated the preferred a U.S. source but struggle to secure the quantity they need in a timely fashion.
3. As a result, U.S. tool steel purchasers often require imported tool steel. Our members do not purchase imported tool steel because it is less expensive than domestic tool steel (it is already often more expensive, without additional import duties). Purchases are based on supply and demand and in many cases foreign tool steel producers manufacture the quantities and full range of specific types of tool steel that we require. More importantly, in order to compete globally, our members must deliver their product in a timely manner. Tool steel buyers currently report that procuring from domestic sources increases their lead-time significantly. One company stated their supplier could deliver an imported product in less than a week, while a U.S. source was a two week delivery time. For this small, family-owned downstream metalworking manufacturer, the choice was not a difficult one: if they wanted to keep the business, they needed the steel now so agreed to the imported material. Our members report this as an increasing trend over the past few years but increasingly in the previous twelve months.
4. There is a clear short supply of U.S.-produced tool steel in the domestic market as reported by industrial users leading to decreased competition among global tool steel makers as U.S. producers manufacture less of the material. We source tool steel from U.S. producers to the degree they produce the types, qualities, and quantities of tool steel we require with reasonable delivery terms. However, domestic sources are increasingly difficult to come by. Particularly for defense industry suppliers, which comprise roughly 20% of our membership, and who also face strict government requirements under Defense Federal Acquisition Regulations, a shortage of timely delivered domestically produced tool steel raises significant concern.

We are fully aware that the Commission’s focus in these investigations is not the devastating impact that imposing duties would have on the hundreds of thousands of well-paying U.S. jobs and industries such as aerospace, automotive, electronics, energy and medical device industries that rely on imported tool steel. We understand Petitionors will argue that the Commission is required by law to focus only on the specific industry requesting trade relief, and not the overall U.S. manufacturing base or economy. The above facts, however, demonstrate that imports of tool steel have no negative effects on U.S. tool steel producers who have not even requested, or in many cases support the petitioners’ request, for trade relief.

 

Over the past decade, our members have found their foreign competitors often supplying metal components, assemblies or finished products cheaper than the cost of our raw material alone. In an August 2016 NTMA Business Conditions Report, several respondents stated they needed shorter raw material lead times in order to achieve their business goals. This clearly puts smaller American manufacturers at a disadvantage, and seriously restricts our export opportunities. It is essential that our industry has access to globally competitive supplies of steel.

 

Thus, on behalf of NTMA, PMA, their 2,300 member companies, and the 215,000 Americans directly employed in high paying jobs across these industries in virtually every state, we respectfully request that the Commission treat tool steel as a separate product from other steel plate and determine that imports of tool steel do not injure or threaten to injure domestic tool steel producers.

Sincerely,

 

PMA President

 

NTMA President