Why Elkay’s Anti-Dumping Trade Case Win Is Good For Buying Organizations

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MetalMiner recently caught up with Kathleen Deighan, VP, Chief Human Resources Officer & General Counsel, who led the efforts on behalf of Elkay in their trade case win involving “…unlawful pricing by Chinese producers of drawn stainless steel sinks which caused material injury to ELKAY Manufacturing Company and other domestic producers.”

Read the first part of the interview here.

MetalMiner: How much of the Elkay case is supported by charges of “currency manipulation,” or rather, the effects of the Chinese keeping their exchange rates artificially low vs. other factors related more to labor and material costs?

Kathleen Deighan: We did not include allegations of currency manipulation, so we don’t believe this was a factor.

MM: Do you fear some sort of Chinese retaliation or do you feel the Chinese will look for ways to restrict Elkay finished product exports to China?

KD: We haven’t experienced any retaliation.

MM: Buying organizations [often falsely] believe these trade cases to be extremely negative for them and for the ultimate consumer because prices end up increasing. What arguments do you make to explain to buying organizations that over the longer term, it’s in their better interests to have US producers bring these cases forward rather than do what Kohler did – shutting down a manufacturing facility?

KD: Our “Buying Partners” have applauded us for this action. When the pricing in the entire market increases, it is good for all of our wholesaler partners. Pricing that allows for a reasonable profit helps everyone in the industry. Dumped imports pull the entire market down and, when the import pricing is below domestic producers’ costs, the very existence of domestic producers is jeopardized. Our customers understand that there needs to be fair pricing in the market in order to benefit the entire industry. While all consumers want lower prices, we do not believe that they want low prices at the cost of supporting foreign jobs over U.S. jobs.

MM: Do you track China domestic stainless pricing vs. U.S. stainless pricing? And if so, what did your findings tell you?

KD: We do pay attention to stainless steel pricing. [See an example of current price trends below.] Information supplied with our petition suggests that the pricing of 304 cold rolled steel coils supplied by state-owned steel companies to Chinese sink producers during the period of investigation [2009-2011] was significantly lower in China than it was in the U.S., or other foreign countries for that matter.

Source: MetalMiner IndX(SM) and MEPS

Source: MetalMiner IndX(SM) and MEPS

MM: Have you seen or do you expect to see any dramatic changes in terms of sales numbers as a result of this case?

KD: We have been able to secure significant business from customers that were buying Chinese product prior to the imposition of the preliminary tariffs. The actual orders are coming in somewhat more slowly than we had expected, due to a buildup of inventory between the filing of the petitions and the imposition of tariffs, and importers willing to pay the tariffs pending the final decision. We are also well aware that there will be efforts to evade or circumvent the tariffs by transshipping product through other countries, such as Malaysia, or improperly classifying the product coming in. We plan to continue to monitor the imports and report any suspected circumvention.

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