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Missouri company may be first to fold due to Trump administration's tariffs

close up of nail heads
Flickr | Ed Ivanushkin

Mid Continent Steel and Wire, a nail manufacturer in Poplar Bluff, Missouri, has been at the center of a media blitz after its plight was publicized by Sen. Claire McCaskill, D-Mo., in front of Commerce Secretary Wilbur Ross at a Senate committee hearing last week.

Since the hearing, Mid Continent, alongside household names like Harley-Davidson, Inc., has been declared a likely casualty of the Trump administration’s protectionist trade policies — specifically steel tariffs.

The company, which manufactures 50 percent of the nails made in the United States, laid off 60 of its 500 employees and shuttered a production plant last week.

In the next two weeks, if things remain unchanged, the company anticipates it will have to lay off another 200 workers, Vice President of Sales and Marketing George Skarich said.

According to testimony by Sen. McCaskill, the company has lost almost half of its business in the month of June and “believes they’ll be out of business by Labor Day.”

The company got caught in the choppy waters of the trade skirmish because its parent company, Mexico-based Deacero, sources most of their raw materials from Mexico, including the steel wire it uses to make the nails.

In early June, the president announced he would not only levy Section 232 tariffs against countries like China, but also against America’s historic trading allies of Canada, Mexico and the European Union. As a result, Mid Continent had to absorb that cost at the same time that domestic steel prices had shot up.

James Glassman, a spokesman for the company, said before the tariffs, Mid Continent had been competitive with the Chinese even though the U.S. gets 80 percent of its nails from China. But, “after battling China for all this time, these new tariffs — these Section 232 tariffs — help China and severely hurt an American company,” lamented Glassman.

The company has a history of grievances with trade policy, mostly with China, said Missouri state Sen. Doug Libla, R-Poplar Bluff, who is one of the original co-owners of Mid Continent since it was founded in 1987. The company had filed multiple suits against China with the International Trade Commission alleging unfair trade practices prior to being sold to Mexico-based Deacero in 2012.

However, the new tariffs don’t impose tariffs on finished products (e.g. nails) from abroad, so the price of raw materials for U.S. producers has gone up. But the price of imported finished products remains the same, hurting a lot of what Mid Continent’s George Skarich calls “downstream producers.”

Doug Libla puts it simply: “The market share that we’ve always enjoyed in the U.S. has helped us weather the storm. However, you can’t weather increases in your raw materials [of] double digits and still allow cheap imports of nails [to] flood this country. And that’s what’s happening.”

Libla added the tariffs may be a short-term benefit for domestic steel producers, but it’s a real boon to fabricators and other ancillary businesses: “But, if they don’t have anyone to take their steel and to process the steel … they’ll not have customers, either.”

Mid Continent’s chance to survive is now pinned to getting an “exclusion” — or an exemption — for the wire from which its nails are made. However, at the Senate hearing last week, Secretary Ross noted the Department of Commerce had received 20,000 requests for exclusions since the tariffs were announced, and the department had reviewed only 98. It’s issued just 42 exemptions.

Glassman noted the irony in pursuing an exclusion from tariffs that were intended to save American steel jobs. He said he would like to ask President Trump and Secretary Ross, “Do you want to save 500 jobs? Give Mid Continent — this company that’s about to go out of business — an exclusion.” He continued, “That’s the quick solution that’s necessary, yes. But, is it going to happen? I mean, I hope so, but under the current process, it’s going to be very hard.”

As for what’s going to happen to Mid Continent’s 500 workers if all of the plants shut down, Mr. Skarich maintains that the company will do everything in its power to “get creative” and prevent further layoffs from happening.

Follow Abigail Censky on Twitter@AbigailCensky