stats Making the Business of Life Easier

   Finance globeinvestor   Careers globecareers.workopolis Subscribe to The Globe
The Globe and Mail /
Home | Business | National | Int'l | Sports | Columnists | The Arts | Tech | Travel | TV | Wheels


  This site         Tips

  The Web Google


  Where to Find It

Breaking News
  Home Page

  Report on Business



Subscribe to The Globe

Shop at our Globe Store

Print Edition
  Front Page

  Report on Business




  Arts & Entertainment



   Headline Index

 Other Sections

  Births & Deaths






  Facts & Arguments




  Real Estate









  Food & Dining




  Online Personals

  TV Listings/News

 Specials & Series
  All Reports...


   Where to Find It
 A quick guide to what's available on the site



  Customer Service

  Help & Contact Us



 Web Site

  E-Mail Newsletters

  Free Headlines

  Globe Store New

  Help & Contact Us

  Make Us Home

  Mobile New

  Press Room

  Privacy Policy

  Terms & Conditions


Marine industry shifts course amid choppy trade waters

Email this article Print this article
Monday, August 6, 2018 – Page B1

U.S. President Donald Trump promised to disrupt the way America trades. Two months after he imposed tariffs on steel and aluminum, sparking a trade war with Canada, the European Union and other countries, disruption is exactly what he has created.

The tariffs are driving up metal prices, redrawing supply chains and threatening jobs in some places.

The marine industry is one example of the rapid shifts created by Mr.Trump's tearing up of the global trade order.

Michael Szwez, marketing director at Canada Metal Pacific Ltd., a Delta, B.C.-based company that makes equipment for commercial ships and recreational boating, said the company's markets for raw materials and finished goods have been hit "all around" by tariffs in China, the United States and Canada.

"It's affecting our margin and affecting the bottom line. In a lot of cases, we're not able to pass on the increase so we're trying to find creative ways to absorb it whatever way we can and cut costs internally," Mr. Szwez said.

The company's products, including anchors, dock ladders and remote steering systems, are made in Canada or China of steel, aluminum and resins, and mainly sold in Canada and the United States.

Mr. Szwez said the 25-per-cent tariff on steel and 10-per-cent levy on aluminum across his supply chain have spurred the company to turn its Virginia distribution centre into a manufacturing plant, a move he conceded is "not great for Canada." The new plant employs 20 and will grow as production rises, but is vexed by a shortage of machinists and tool-and-die makers.

"It's the only solution that we can see to overcome this," he said.

Mr. Trump imposed the metal tariffs on imports from Canada, Mexico and the European Union as of June 1 in a stated bid to restore U.S. manufacturing jobs in the sector. He also levied new tariffs on a wide array of Chinese goods and has threatened more.

Canada and other countries have responded in kind, touching off an escalating battle even as negotiations continue toward a renewed North American free-trade deal.

Trade wars are a theme the President returns to again and again. On Sunday, he wrote on Twitter: "Tariffs are working big time."

"Every country on Earth wants to take wealth out of the U.S., always to our detriment," Mr.Trump added on Twitter. "I say, as they come, tax them. If they don't want to be taxed, let them make or build the product in the U.S."

But the steel and aluminum jobs Mr. Trump says he is creating or protecting through tariffs could come at a steep cost.

For every job gained in U.S.aluminum and steel industries, 16 other jobs will vanish as consumers facing higher costs of goods cut spending, according to Trade Partnership Worldwide LLC, an economic consultancy based in Washington.

The U.S. tariffs on steel and aluminum will cost a net 402,000 jobs in the United States as other countries retaliate with their own tariffs, the group said in a recent report. The total job losses include more than 6,000 agriculture jobs and 91,000 jobs at companies that manufacture goods with steel and aluminum and which now face higher costs.

"This is what the textbook says you should do," said Dan Ciuriak, a trade expert at the C.D.

Howe Institute and a former deputy chief economist at the Department of Foreign Affairs and International Trade. "You go titfor-tat [with retaliatory tariffs] ... the question whether it's going to work or not is an open one."

"What is rational from the standpoint of the Trump administration is not necessarily what is rational by conventional economic thinking and this of course is puzzling or bedevilling U.S. trade commentators as well as those around the world," he said.

Canada is the United States' biggest metal supplier, providing 40 per cent of the country's aluminum and 18 per cent of its steel.

At the same time, the United States is Canada's biggest market for aluminum and steel. Canadian aluminum exports to the United States are worth $11-billion, compared with $3.9-billion in U.S. imports, said Matthew Stewart, director of economics at Conference Board of Canada.

Mr. Stewart said domestic aluminum prices should have fallen after the tariffs were put in place, as Canadian producers of aluminum supposedly reduced prices to win local sales and make up for lost sales to U.S. customers.

But that's not what's happening, said Bill Connor, owner of Connor Industries, which makes heavy aluminum watercraft for commercial purposes, such as police and fire boats.

Mr. Connor said that even before the Canada-U.S. tariffs went in place, prices for aluminum sheet from mills in Quebec and the United States shot up by about 11 per cent. With the tariffs in place, prices rose again.

"They have added another round of increases. I don't understand the justification for it. They tell me the world price, which is in U.S. dollars, has gone up because of the demand. I don't know if I totally buy that," said Mr. Connor, whose businesses include Stanley Boats, a 50-employee boat yard in Parry Sound, Ont., and MetalCraft Marine in Kingston, which employs 80. He also owns a boat factory in Cape Vincent, N.Y., with a staff of 14.

Mr. Connor also faces rising prices for steering systems, lights and other equipment made in the United States from Chinese metals.

He figures 30 per cent of his supply costs are affected by the U.S. tariffs on Chinese steel and aluminum. Mr. Connor protected himself by hedging aluminum purchases until the end of July.

But he said he might be forced to consider raising prices, a step he tries to avoid in the middle of the summer boating season.

Mr. Connor is in the midst of opening a new 10,000-squarefoot plant in Florida that will be producing boats by next summer. The U.S. factory will give him access to a larger market, tariff free, as well as making it easier for the company to bid on U.S. government boat contracts.

It's a move he began even before the tariffs went in place, spurred by tax incentives offered by the local governments.

Mr. Szwez of Canada Metal said he, too, has seen Canadian metal prices rise. And the company is having trouble replacing imported steel and aluminum with domestic sources, which can be of different grades and in short supply.

The C.D. Howe Institute's Mr.Ciuriak said the higher prices on tariff-free domestic aluminum are "hardly surprising." He noted U.S. domestic steel prices rose, as well.

"When you put up tariffs, companies tend to price up to the tariff," he said by phone. "You have an oligopoly taking an advantage of the tariffs to raise its margins and that is to be expected."

Associated Graphic

Connor Industries, which owns Stanley Boats in Parry Sound, Ont., faces rising prices for aluminum, as well as for steering systems, lights and other equipment made in the U.S. from Chinese metals.


Boats are pieced together at the 50-employee Stanley Boats manufacturing plant in Parry Sound, Ont.


Huh? How did I get here?
Return to Main Murray_Campbell Page
Subscribe to
The Globe and Mail

Email this article Print this article

space  Advertisement

Need CPR for your RSP? Check your portfolio’s pulse and lower yours by improving the overall health of your investments. Click here.


7-Day Site Search

Breaking News

Today's Weather


Rick Salutin
Merrily marching
off to war
Roy MacGregor
Duct tape might hold
when panic strikes

Where Manley is going with his first budget



For a columnist's most recent stories, click on their name below.


Roy MacGregor arrow
This Country
Jeffrey Simpson arrow
The Nation
Margaret Wente arrow
Hugh Winsor  arrow
The Power Game

Rob Carrick arrow
Personal Finance
Drew Fagan arrow
The Big Picture
Mathew Ingram arrow
Brent Jang arrow
Business West
Brian Milner arrow
Taking Stock
Eric Reguly arrow
To The Point
Andrew Willis arrow

Stephen Brunt arrow
The Game
Eric Duhatschek arrow
Allan Maki arrow
William Houston arrow
Truth & Rumours
Lorne Rubenstein arrow
 The Arts

John Doyle arrow
John MacLachlan Gray arrow
Gray's Anatomy
David Macfarlane arrow
Cheap Seats
Johanna Schneller arrow

Murray Campbell arrow
Ontario Politics
Lysiane Gagnon arrow
Inside Quebec
Marcus Gee arrow
The World
William Johnson arrow
Pit Bill
Paul Knox arrow
Heather Mallick arrow
As If
Leah McLaren arrow
Generation Why
Rex Murphy arrow
Japes of Wrath
Rick Salutin arrow
On The Other Hand
Paul Sullivan arrow
The West
William Thorsell arrow

Home | Business | National | Int'l | Sports | Columnists | The Arts | Tech | Travel | TV | Wheels

© 2003 Bell Globemedia Interactive Inc. All Rights Reserved.
Help & Contact Us | Back to the top of this page