Spike in Metal Prices-What Does it Mean for Small Manufacturers?

SPIKE IN METAL PRICES-WHAT DOES IT MEAN FOR SMALL MANUFACTURERS-HON. LINDA T. SÁNCHEZ (Extensions of Remarks - March 11, 2004)

HON. LINDA T. SÁNCHEZ
OF CALIFORNIA
IN THE HOUSE OF REPRESENTATIVES
WEDNESDAY, MARCH 10, 2004

Ms. LINDA T. SÁNCHEZ of California. Mr. Speaker, today Chairman MANZULLO and Ranking Member VELÁZQUEZ held an important hearing for the small business. The hearing focused on the increase in steel prices.

Consumers of Steel expected that the removal of the tariffs by President Bush in December would decrease the price of steel and increase steel imports. However, this did not happen. For the past 2 months the price of steel has increased approximately by 30 percent.

The continuing increase in steel prices affects many parts of the economy, but particularly small manufacturing companies who buy their steel at market price. These small companies have not only been dealing with the increase in steel prices, they are now facing shortages in steel products. With these factors combined, it is virtually impossible for small manufacturers to survive.

I would like to share a story of a constituent of mine who has been dealing with this crisis. Argo Springs Manufacturing Company, located in Norwalk, CA, is a family company that has been in business for almost 40 years. They produce numerous products from springs to compression coils. Their customers range from the commercial and aerospace industry to military agencies.

Argo Springs currently employs 70 people, but with the sudden increase in prices and shortages in steel, it has become difficult for the company to compete in the manufacturing market. Randy Fox, vice president of Argo, told me and I quote,

On February 15, I bought steel at 34 cents a pound, but by March 2 the price of steel had increased by 59 cents. I am worried that the company will have to start laying-off workers and eventually go out of business. I'm not sure the company will outlast the crisis.

This story highlights the true impact of this crisis on small business owners. I am worried that if this crisis is not resolved, many small manufacturing companies like Argo Springs will not be able to continue doing business. This is unacceptable.

After talking to my constituent, Randy Fox, one thing is apparent to me-we need to do something about this crisis in the steel industry. Small businesses are the economic backbone of our Nation. It is imperative that we create a viable and reasonable economic environment for them to maintain their businesses and grow.

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