Hartford Business Journal

14 Hartford Business Journal • August 20, 2018 • www.HartfordBusiness.com By Matt Pilon mpilon@HartfordBusiness.com I n the nearly six months since President Donald Trump an- nounced tariffs on imported steel and aluminum, Connecti- cut manufacturers have scram- bled to blunt the impact of rising materials costs, jammed-up suppliers and other effects from the Republican administration's trade policies. The impact of tariffs, and strate- gies deployed to mitigate them, vary from company to company, but three central Connecticut manufacturers interviewed by the Hartford Business Journal reported a combination of efforts that include changing ordering strategies or stockpiling key metals, asking the federal government for tariff exemptions, and diversifying or reshuffling their supplier mix. With local employee counts ranging from 42 to 144 workers, the companies are far from metal-buying behemoths like United Technologies Corp. and Stanley Black & Decker, both of which have been negatively impacted by the tariffs, but they are still key players in Connecticut's economy. Meantime, Trump hasn't shown signs of backing away from his trade policies, which he recently tweeted are "working big time" and will mean "jobs and wealth" for the U.S., despite warnings from various industry execu- tives that the tariffs are hurting their businesses. Stanley Black & Decker, for example, recently projected a $35 million tariff impact in 2018, while UTC CEO and Chairman Greg Hayes earlier this year said tariffs were a bad idea. One of UTC's subsidiaries recently raised prices by 3 percent on residential and commer- cial heating, ventilating and air-conditioning equipment, citing economic conditions. Paul Nathanson, a spokes- man for the Coalition of American Metal Manufac- turers, said the tariffs came quickly on the heels of last year's federal tax cuts. "Just about every manu- facturer who I talk to tells me that the benefits that they received from the tax cut passed by Congress at the end of 2017 have been wiped out by the tariffs," Nathanson said. However, some U.S. steelmakers have expanded production in recent months as more companies turn to domestic suppliers as a cost- saving measure. In Connecticut, the eco- nomic impact is still unclear. Earlier this month, a Ca- nadian trade official told a crowd in Hartford that steel and aluminum tariffs on her country would help the state gain 200 jobs, but shed 5,000. Canada is the Nutmeg State's larg- est import partner, followed by Mexico and China — all three countries that have been hit by metals tariffs. Meantime, unwrought aluminum was Connecticut's second-largest import in 2017, with companies here having pur- chased $656 million worth from interna- tional suppliers, according to trade data. Gibbs feels the bite William Torres, president and CEO of Southington-based Gibbs Wire & Steel Co., said since the 25 percent steel tariff took effect June 1, the metal strip and wire processor-distributor has seen an "unprecedented increase" in materials costs, and higher pricing and order lead times from domestic mills that supply it with steel for its products, which are used to make springs and other com- ponents that ultimately end up in cars, medical devices and retail shelves. In response, Gibbs has sought to buy more of its materials from U.S. sup- pliers, passed a portion of its higher costs onto customers, and filed 85 ap- plications with the U.S. Department of Commerce seeking tariff exemptions — and says it hasn't gotten an answer on any of them yet. That's not unusual, according to Hart- ford attorney Jeff White, who leads Rob- inson + Cole's manufacturing practice. "While there was an initial rush of questions from our clients about ap- plying for exemptions from the steel and aluminum tariffs, those requests have died down perhaps in light of the significant delays in getting those exemptions ruled upon," White said. Torres said he agrees with Trump that some countries' trade practices have not treated U.S. manufacturing fairly, but he thinks the tar- iffs painted too many coun- tries and suppliers with the same broad brush. Most countries, except South Korea, Argentina, Aus- tralia and Brazil, have been hit with the 25 percent tariff on imported steel and 10 percent tariff on aluminum. "A more surgical approach would've been better," Torres said. "It takes many years to build relationships overseas." "We are being naive if we don't recognize that our foreign suppliers are now looking to form other relationships with [non-U.S.] companies," he added. Torres said he raised his concerns directly to Trump in a March 5 letter, which he shared with HBJ. He wrote that he's been unable to find a domestic sup- plier for certain materials he buys inter- nationally and that many domestic steel mills are operating at or near capacity. He also predicts tariffs will lead to job losses and a drop in U.S. exports. ACMT has stable costs, for now Executives from Manchester-based ACMT, which makes components for Pratt & Whitney's geared turbofan engines, provided a less urgent view of the situation. But ACMT President Michael Polo CT's largest imports Description 2016 Value 2017 Value Silver, unwrought $1B $982M Unwrought aluminum, not alloyed $396M $656M LT oils, petro $402M $557M Refined copper cathodes and sections of cathodes $281M $437M Turbojet and turboproller parts $1.6B $411M CT's largest import partners Country 2016 Value 2017 Value Canada $2.9B $2.9B Mexico $2.5B $2.5B China $2.3B $2.2B Germany $1.4B $1.3B United Kingdom $2.5B $1B Source: U.S. Census Bureau Mike Scotto is the business development vice president at Manchester-based ACMT, which makes parts for Pratt & Whitney engines. ACMT has been placing bigger aluminum orders to deal with the increased demand for domestic raw materials caused by tariffs. Playing Defense CT manufacturers scramble to blunt metals tariffs HBJ PHOTO | STEVE LASCHEVER

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