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Upper Valley Businesses Are Feeling the Effects of Trump’s Trade Policies

  • Mark Lavoie, of Claremont, N.H., an inspector at Canam-Bridges in Claremont, measures the thickness of the zinc paint on a steel girder at the plant on July 12, 2018. (Valley News - Jennifer Hauck) Copyright Valley News. May not be reprinted or used online without permission. Send requests to permission@vnews.com.

  • Dwayne Tarajkowski has been working at Canam-Bridges in Claremont, N.H., for six years. He uses a grinder at work on July 12, 2018. (Valley News - Jennifer Hauck) Copyright Valley News. May not be reprinted or used online without permission. Send requests to permission@vnews.com.

  • Jillian Badger, of Springfield, N.H. is a welder at Canam-Bridges and has been working at the plant for two years. She was preparing to weld at the Claremont, N.H., plant on July 12, 2018. (Valley News - Jennifer Hauck) Copyright Valley News. May not be reprinted or used online without permission. Send requests to permission@vnews.com.

  • Dominique Blouin listens during an interview on July 12, 2018 in Clareomont, N.H. Blouin is the Vice-President of Canam-Bridges USA and the general manager of the Claremont, N.H., plant. (Valley News - Jennifer Hauck) Copyright Valley News. May not be reprinted or used online without permission. Send requests to permission@vnews.com.



Valley News Business Writer
Saturday, July 21, 2018

Claremont — Slabs of black steel weighing 25 tons are lifted from railroad cars by an overhead crane each week and fed into one end of the aircraft-hangar-size building.

Inside, the 85-foot steel “plates” begin a crawl that can take up to six weeks through the 264,000-square-foot building where they are cut, heated, bent, drilled and welded into girders and trusses before emerging out the other end. The pieces are then shipped to be assembled on site into such structures as the Tappan Zee Bridge in New York or the I-95/I-91 interchange in New Haven, Conn.

Dominique Blouin, the general manager of Canam-Bridges’ plant in Claremont, navigates between yellow lines on the factory floor while assessing the impact that the recently imposed tariffs on steel imported into the U.S. will have on his operation. He nods to the helmeted welders and fitters shaping girders destined for an overpass at LaGuardia Airport in New York and the Henry Hudson Bridge that connects the Bronx and Manhattan.

“The cost of our raw material has gone up more than 20 percent the last several months,” Blouin said, even though Canam buys all its steel from U.S. mills. That’s an ominous sign for building steel bridges in the Northeast, where most of the Claremont plant’s projects are located.

“We compete against concrete bridges,” Blouin explained. “If you increase the price of steel, that puts us in a bad place. If it costs less to build a bridge with concrete than steel, then we may not be building that bridge.” Canam hasn’t seen that happen yet, he said, but nonetheless “our concern is long term.”

The Trump administration’s tariffs on metals imported from its trading partners — 25 percent on steel, and 10 percent on aluminum — are having a direct impact on Upper Valley manufacturers, builders and businesses that either use the materials in the products they make or in the services they provide.

And as more categories get swept up in the escalating trade war between the U.S. and other countries, Upper Valley companies are feeling the blows from ever-widening directions.

With its pastoral setting and distance from metropolitan areas, the Upper Valley can give the impression that it is isolated from upheavals in the global economy. But when it comes to everyday materials such as steel and aluminum, which are utilized in a wide variety of products, no company or business — big or small — is immune.

In fact, small- and medium-size companies — the kind most frequently found in the Upper Valley — are most vulnerable to the extra costs incurred by tariffs because they cannot easily pivot to avoid the consequences — the way Harley-Davison did, for example, by announcing it would shift some production outside the U.S. because Europe had imposed a 25 percent tariff on imported bikes.

Erik Palmer, a salesman and estimator with metal roofing contractor Iron Horse Roofing in Newport, N.H., said he started seeing the cost of steel roofing coils increase right after the Trump started threatening the tariffs in the spring. In the past two months alone, the price has jumped 25 percent, he said.

A typical 1,500 to 2,000-square-foot house requires 1 to 1½ of steel roofing coils to cover, which depending on grade, thickness and finish can run 75 cents to $1.50 per foot from a wholesale supplier.

“The price went up even before it went into effect (on July 1) in anticipation of the tariffs,” Palmer said. “We can’t eat that kind of cost. Obviously it gets rolled right over to the customer. People understand, but it gets harder to push. It will cause people to say, ‘Maybe I’ll go with shingles this time.’ ”

Across the river in Sharon, roofer Walter Radicioni said he’s seen four price hikes totaling $400 over the past three months for 1,000-foot rolls of metal coils. “It went from $1,800 to $2,200. Then you got sales tax, too, don’t forget that,” he said.

Radicioni, who roofs about 100 homes annually, said the price he charged to do work this summer was locked-in early this past spring before the cost of steel began to escalate. Now he’s squeezed because he can’t go back to his customers and adjust the cost to align with his higher expenses.

“I have like 30 to 40 jobs pre-booked already,” he said. “So I got to eat it.”

Even when the steel and aluminum tariffs have a minimal impact on costs, a company can still get caught in the crossfire of a trade war that will bear on its bottom line.

Lebanon’s Hypertherm, which makes plasma-cutting equipment, utilizes steel and aluminum materials in its cutting systems and power supply boxes, but the metals “account for a small percentage” of the manufacturing costs, said Chief Executive Evan Smith.

Instead, Smith said, the concern right now is collateral damage over the tariffs issue in overseas markets, which accounts for about half of Hyptherm’s sales.

“We’ve heard anecdotally in Germany that we’ve lost some system sales as a result of some customers unhappy with the (Trump) administration’s policy,” Smith said. Moreover, if China, in ramping up retaliatory tariffs against the U.S. were to include plasma cutters among its targets, that would shut out Hypertherm from an important and growing revenue source.

“China is 10 percent or more of our business; that’s a meaningful market for us,” Smith said.

Steel and aluminum also represents a small fraction of manufacturing costs for manufacturer FujiFilm Dimatix in Lebanon, but the company sources half of the materials it uses to make its industrial inkjet printheads from overseas suppliers.

The Trump administration’s recently announced plan to target tariffs on $200 billion in Chinese goods on top of two earlier rounds is boomeranging back on the Lebanon company by adding millions of dollars onto its manufacturing costs. Finding ways to lessen the financial hit has turned into a full-time job for Rick Correia, FujiFilm’s director of supply chain.

“It’s pretty much my No. 1 priority right now,” said Correia, who has had to swing his regular duties to others in his department while he spends his day poring over Excel spreadsheets to weigh the benefits and risks of switching to U.S. suppliers or finding cheaper alternative overseas sources. Without mitigating the impact, FujiFilm would be facing $5 million more a year in additional manufacturing costs, he said.

Correia said he’s even becoming familiar with the drill: His phone will ping with a text message from a supplier asking, “Do you have a short minute to talk today?” He said he just says texts back “sure” and doesn’t even need to inquire what’s up. “I’m assuming I know what it’s about,” Correia laughed.

Even though the tariffs were imposed on imported steel and aluminum, U.S. suppliers have increased their prices in response to increased demand from buyers switching to domestic sources.

Stephens Precision, a precision toolmaker and light manufacturer in Bradford, Vt., that specializes in making components for aircraft interiors and hydraulic systems, is paying 15 to 20 percent more for its steel materials than it was a few months ago.

For a small family-owned company with 15 employees, the six figures in additional annual manufacturing costs has had a big impact on operating margins, said Julian Stephens, general manager.

“It decreases my profit margins while making it harder to compete with China, Taiwan and other low-cost countries,” Stephens said. “A lot of time, we can’t raise our prices because that will just make our customers look elsewhere. We could potentially lose a job if we fluctuate our prices.”

Stephens runs through the math: A component that costs $10 to manufacturer, now costs $12. On an order of 100 components, that’s $200 added dollars in manufacturing costs, which amounts to “a couple days of somebody getting paid,” he said.

And it doesn’t stop there.

The increase in costs mean that “wage increases are on hold, improvements to our facility are on hold and buying new equipment is on hold,” Stephens said. “It’s a global issue, but it’s hitting home much harder than people think.”

John Lippman can be reached at jlippman@vnews.com.