Recent steel tariffs affect Honda

Discussion in 'OT Driven' started by GucciGucci, Jul 16, 2002.

  1. GucciGucci

    GucciGucci Well-Known Member

    Mar 14, 2000
    Likes Received:
    Silicon Valley, CA USA
    Our government did a good job with the recent steel tariff.

    Looks like it's causing shortages that force Honda to fly steel into the US.

    And guess who will eventually have to pay for the additional costs involved ?

    Good job Washington ! :mad:

    Cliff Notes:

    -Washington passes steel tariff several months ago to help steel companies raise prices
    -Tariff causes steel shortage for US manufacturers
    -Manufacturers are forced to buy expensive steel or risk shutting down US factories
    -Consumers get shafted with higher prices
    -Steel executives rake in the cash


    Honda flies steel to U.S. auto plants

    By Yuzo Yamaguchi and Robert Sherefkin

    Automotive News / July 08, 2002

    Honda Motor Co. airlifted as much as 200 tons of specialty steel to North America from Japan at the end of June to cover a shortage at its plants here and is poised to airlift 2,000 more tons this month if needed, the company confirmed last week.

    The highly unusual and costly measure comes amid a developing shortage of high-quality steel products in the United States after President Bush's decision to curb imports with tariffs of up to 30 percent. By acting to push prices higher, the tariffs have caused spot shortages as steel supplies get diverted to the highest bidder.

    "We're still working to procure the steel we need locally, but we're prepared to have steel flown in" if there are shortages when production resumes Monday, July 8, said Ron Lietzke, a spokesman for Honda of America Manufacturing Inc.

    Honda's plants in Marysville and East Liberty, Ohio, build the Honda Accord and Civic, and the Acura CL and TL. The plants were shut last week for summer vacation.

    Honda also builds the Odyssey minivan in Lincoln, Ala., and the Civic, Odyssey, Pilot, Acura MDX and Acura EL in Alliston, Ontario. It is not clear if those plants have been receiving normal steel supplies.

    The decision to airlift steel appears to be under consideration by other Japanese automakers. In Tokyo, Kawasaki Steel Corp. disclosed last week that it had received "urgent requests" in late June from some Japanese automakers, but declined to elaborate.

    According to a Japanese press report, Honda procured its steel for the airlift from Nippon Steel Corp., Sumitomo Metal Industries Ltd., Kawasaki and Kobe Steel Ltd.

    Honda would not provide details on the unusual arrangement, such as the exact date of the shipment or the destinations. The company did not reveal the amount of steel flown in, but said it was between 100 tons and 200 tons.

    The costly move is "a temporary measure," said a Honda official, who declined to be named.

    Hefty price tag

    It's also an expensive measure. Shipping 2,000 tons of coated sheet steel would require 20 747 flights at a cost of as much as $300,000 per flight, according to Roy Stapleton, a vice president with a GeoLogistics Americas office in Carlstadt, N.J.

    Honda's airlifted steel also would be hit with the 30 percent tariff, pushing the cost even higher. In Japan, hot-rolled, zinc-coated 1.6-millimeter steel sheet is quoted at $433 to $442 per ton, but a spokesman for Nippon Steel said the price of auto-quality steel would be higher.

    That 2,000 tons of sheet steel would be enough to build about 1,800 vehicles, according to David Anderson, a director with the American Iron and Steel Institute. Honda's Ohio plants build that many cars in a single day.

    In Tokyo, Honda spokeswomanNoriko Okamoto said the airlifted steel was only for buffer stocks, and the shortages would not lead to any disruption in production schedules or changes in the production mix.

    She did not say precisely what led to the air shipment. "Maybe we didn't anticipate some effects of the tariffs," she said.

    Honda buys about 94 percent of its North American steel needs from North American suppliers. The remainder is imported specialty steel.

    Four months after the tariffs were announced March 5, the levies are sending pain through the automotive industry. Makers of auto parts, especially stamped parts, were hit almost immediately with skyrocketing prices and spot shortages.

    Tariffs causing pain

    The tariffs were seen as a way to give U.S. producers an opportunity to raise prices. They had been at a 20-year low, in part because of a torrent of lower-priced steel into the United States. More than a quarter of U.S. steel makers have sought Chapter 11 bankruptcy protection.

    But apparently unforeseen was the negative effect the higher prices would have on supply. Instead of creating additional capacity, brokers and suppliers tend to raise prices or divert shipments to the highest bidder, creating spot shortages.

    Steel supplies already were tight because the U.S. industry lost more than 8 percent of its capacity last year with the liquidation of LTV Corp. A fire last December at a Double Eagle plant also has temporarily decreased the domestic supply of some grades of auto steel, according to steel industry executives.

    The Big 3 say they have adequate supplies, but a steel industry middleman said the "automakers are butting heads with the steel mills" over prices.

    At Toyota Motor Manufacturing North America Inc., which will face significant steel-contract renewals this fall and next spring, an official said its suppliers already are warning it to expect sharply higher steel prices.

    Dennis Cuneo, senior vice president of Toyota Motor Manufacturing North America, said Toyota gets about 95 percent of its steel domestically and supply is not yet an issue.

    "But several suppliers are trying to push the issue that when their contracts expire, we can expect a 20 to 30 percent price increase," Cuneo said.

    $100 per car

    "That's $100 million additional increase in North American costs, which comes out to $100 per car. We are definitely concerned about that."

    Honda may be using the airlift as a negotiating ploy, in effect saying, "We can bypass your price demands by doing something like this," said Kenji Tanaka, an analyst at Daiwa SB Investments Ltd.

    Other analysts agreed that Honda would not cut production even if it has to choose either accepting a price increase by local steel makers or absorbing the higher cost of airlifted steel.

    "They will never stop the lines, even if they make less (money)," said Shigeharu Kimishima, an analyst at Kokusai Securities Co. For Honda, the U.S. market is a money generator even if its profit margins shrink. c

    Staff Reporters James B. Treece and Fumiko Soda in Tokyo, and Mark Rechtin in Los Angeles, contributed to this report
  2. SquirtRussel

    SquirtRussel OT Supporter

    Oct 8, 2004
    Likes Received:
    San Francisco
    good tariffffffff
  3. BigBADGSX

    BigBADGSX New Member

    Nov 17, 2003
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    that shit doesnt explain why im working 10hrs a day almost 7 days a week stamping out inner doors for honda now does it? our inventory is up so much its not even funny but yet they still insist we work our asses off. Honda is gay
  4. BigBADGSX

    BigBADGSX New Member

    Nov 17, 2003
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    oh and yes honda does ship around 1,800 cars a day sometimes i just wonder where the heck all of these cars go. Considering every night i run from 2,500-almost 5,000 parts a night.
  5. AJT

    AJT Guest

    Look at the original post date. 2002.
  6. P07r0457

    P07r0457 New Member

    Sep 20, 2004
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    Southern Oregon

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