International Door & Operator Industry

MAY-JUN 2018

Garage door industry magazine for garage door dealers, garage door manufacturers, garage door distributors, garage door installers, loading docks, garage door operators and openers, gates, and tools for the door industry.

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Page 34 of 110

MANAGEMENT by John Zoller & David Bowen, Zoller Consulting, Inc. GARAGE DOOR ACTIVITY INDEX Publication Note: Tariffs and related Presidential policy maneuvers are political tools, arbitrarily imposed and rescinded. Moreover, reactions to such tariffs will evolve as political and economic consequences unfold. As such, this look at garage door industry implications of announced steel and aluminum tariffs, written in mid-March 2018, may be obsolete and subject to modification by the date of publication. 32 International Door & Operator Industry™ On March 8, 2018, the President signed a tariff order establishing charges of 25% and 10% respectively on purchases of foreign steel and aluminum, with exemptions for Canadian and Mexican imports. What are the immediate and long-term implications for the construction industry generally, and the garage door industry specifically? It is important to note that much of the following is a gathering of first reactions, but because steel is pivotal to the garage door industry, rejoinders and speculation must be tracked as they transpire. Certainly one school of thought suggests that the ubiquity of steel in construction means that the net cost all projects will increase. However, that fact alone does not endanger construction activity if demand for new and renovated space is sufficiently elastic to push the cost forward to building owners and users. For steel fabricators, including garage door manufacturers, much depends on the extent to which they depend on imported steel and/or price increases imposed by domestic suppliers in light of a real or perceived reduction of foreign competition. Even then, some will argue that excess production capacity in selected industries will forestall passing along all materials cost increases. What Do Steel & Aluminum Mean for the Garage Door Industry? As of now, the tariff is not applicable to fabricated steel products. Thus, raw steel imported to Mexico, for example, and subsequently used to manufacture a construction component and resold in the U.S., would escape the tariff. Such a situation could have an effect the reverse of the tariff intention, and is but one of many potential unintended consequences that could auger badly for construction based industries, but such speculation is probably premature. Statements from Industry Leaders On March 8, Stephen E. Sandherr, chief executive officer of the Associated General Contractors of America, released the following statement: 1 "These new tariffs will cause significant harm to the nation's construction industry, put tens of thousands of high-paying construction jobs at risk, undermine the President's proposed infrastructure initiative and potentially dampen demand for new construction projects for years to come. That is because the newly-imposed tariffs will lead to increases in what construction firms are forced to pay for the many steel and aluminum products that go into a typical construction project …" Randy Noel, chairman of the National Association of Home Builders stated the following when the intention to establish the tariffs was announced: 2 " … These tariffs will translate into higher costs for consumers and U.S. businesses that use these products, including home builders. Given that home builders are already grappling with 20 percent tariffs on Canadian softwood lumber and that the price of lumber and other key building materials are near record highs, this announcement by the president could not have come at a worse time. Tariffs hurt consumers and harm housing affordability … " 1, Associated General Contractors of America, News Release, March 8, 2018 2 National Association of Home Builders, News & Publications, March 1, 2018 (continued on page 34) TARIFFS TARIFFS

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