Monday, August 26, 2013

Fair Trade Initiative - It's a Marathon, Not a Sprint

AEC Past Chairman Duncan Crowdis
In the last blog we talked about the process that we must go through in order to maintain our hard fought, and dearly needed orders from the Department of Commerce (DOC) that have applied level-playing-field duties on Chinese imports.

What we know now is that this is clearly a long term initiative. Where we perhaps had entered into the process thinking that this was a sprint – a two- to three-year all-out effort which would slow down significantly once we cross the finish line – we must now think of as a marathon. There is no real finish line. Where winning a race is typically measured on crossing some sort of finishing line, our success in this process will be measured by the continued growth and health of our industry over time. Metrics of success will be things like improving P&Ls (beyond historical levels), strong cash flow, the domestic industry’s penetration of aluminum extrusions against other materials, domestic industry’s growth that is well beyond simple GDP growth, increased capital investment and more.

Like any marathon there are many challenges associated with not having that finish line clearly visible in front of us:
  • We start questioning why we are putting out all this effort. After all, things are getting better.
  • The passion that got us started begins to wane
  • We become distracted with other more short-term issues and opportunities that have risks/rewards that are perhaps more clearly visible
  • We start to question if this issue is perhaps as urgent as we originally thought and does it still makes sense for it to continue to garner the attention and resources of both money and time
  • We start to think that perhaps without “my support,” the fight will still be carried on by others
  • And the list goes on.

You WILL be asking yourself all of these questions. Most of us have already.

However, at the same time ask yourself this question-perhaps the most important question. “Will the Chinese give up? And if they don’t what will the outcome be for me; for the industry?”

To us, this is a very easy question to answer. THE CHINESE WILL NOT GIVE UP. They can’t afford to give up. They have created an aluminum extrusion industry in the past 10 years with a capacity that far exceeds the domestic needs and MUST export. In fact, the capacity of the Chinese extrusion industry has the capability to supply most of the world demand. Countries around the world have felt the on-slot of Chinese imports and a number (Canada and Australia, in particular) have taken action and applied dumping and countervailing duties. The United States is an obvious large and attractive target for them. We MUST NEVER think that they will simply go away. They have extremely strong strategic, economic and political reasons for continuing the battle and they obviously have the financial clout to keep it up.

So, our question is a simple one. “Are we going to let it happen?” Or are we going to stand up for our customers, our employees, our shareholders and all of the families connected to our industry.  Once we won our original case, Chinese imports plummeted from roughly 20% of the domestic demand to close to zero. So based on this success, we KNOW that when we ban together, we can win even against a foe as mighty as the Chinese industry and the Chinese government. Without this concerted team effort, we don’t stand a chance and they will run over our industry in quick order.

Is the fight worth it? I would expect each of us to have seen an improvement in our respective businesses over the past several years. Certainly the slight improvement in the US economy has helped to a certain extent and I am sure that each of us have not been idle in taking internal action that has improved our bottom line. But let’s not kid ourselves; without these current duties that have leveled the playing field on Chinese imports, the gains we would have experienced would have been much, much less than what we have actually realized.

If you answered a resounding “NO” to the above question of “Are we going to let it happen?” you need to contact the AEC and find out how you can help to control our industry’s destiny.

Visit www.AECfairtrade.org to find out more.

This post was written by AEC Past Chairman Duncan Crowdis

Thursday, August 22, 2013

Fighting the Fair Trade Battle: A learning process for long-term success

AEC Past Chairman Duncan Crowdis
When we embarked on this process to defend our industry against an exponentially escalating level of Chinese imports in 2009, there were many things we did not know about the journey we were about to take.

What we DID KNOW was that the industry’s future was at stake. We had done enough research to understand what China was doing and why (to be covered in a future blog) and that the 20% market share that they had taken was not going to be their stopping point. Something had to be done or we strongly believed that we would eventually lose the bulk of our market. What we also knew was that extruders are generally passionate about their businesses. It has been a lifetime’s livelihood for many of us, often starting with our parents and now one in which many of our children are counting on for their livelihood. No – while the Chinese are obviously formidable, what they were doing was and is predatory and illegal and we weren’t about to let them do this to us.

What we didn’t truly understand is where the process we faced was going to take us. Our original understanding was that it was a front-end-loaded process – a lot of work and information to pull together as we prepared our original case presented to the U.S. Department of Commerce and the International Trade Commission (ITC). Following a successful outcome, defined by duties being levied against imports from China, we anticipated the following steps:
  • A year or two of work to fight some potential appeals and what are called “scope requests”, which are requests for clarification from a U.S. importer who believes the products they import from China do not fall under the scope of the Department of Commerce orders
  • We also knew there would be an annual “administrative review” but were led to believe this was just a “minor” formality
  • And finally, every 5 years there would be what is termed a “sunset review”, which basically opens up the case to ensure there is still dumping and subsidies going on and, if so, the domestic industry remains “in harm’s way” because of them

Chock it up to naivety, a victim of our own success or the luck of the draw, but in our case, from the time we won the case in April 2011, we have battled over 50 scope requests (a number of them very involved and complex) and over half a dozen appeals. On top of that, the annual administrative reviews are turning out to be anything but a “non-event” with more than 70 importers and Chinese producers entering a challenge to the level of duties. While not quite as complex and demanding as the original case, it is not far from it.

What this means is time and money. These cases are very technical and legally complex requiring the expertise of a specialized legal firm which, of course, is not inexpensive.  The time commitment for those involved in the case is significant, often taking several days a week of time--time away from our businesses that are always in need of our focus. In addition, a number of us have travelled to Washington on multiple occasions to meet with staff at Commerce, the ITC and our various members of Congress.

Our learning is that this process, at least in our case, is NOT simply a front-end-loaded two- or three-year project. It is likely a process that will go on for many years to come.

As naive as we were when we started this process, we are no less passionate today than we were in in 2009. We took on this case because we believed the industry was in peril. We believe that today more than ever. 

The AEC has responded by settling in for the long haul by committing an appropriate level of resources and establishing an infrastructure and fund raising process that will allow us to keep fighting to maintain the benefits of this hard-fought win for years to come.

All U.S. extruders and suppliers to extruders need to stand up and be counted.  By banding together, we leveled the playing field.  Now we need to recommit to stay together to keep the field level, the rules enforced and the customers coming. What part are you playing in this fight? Contact the AEC to see how you can help.

For more information on the AEC Fair Trade...It Matters! campaign visit www.AECfairtrade.org.

This post was written by AEC Past Chairman Duncan Crowdis

Monday, August 19, 2013

Welcome to the AEC Blog!

Testing - 1,2,3....Is this thing on?  The Aluminum Extruders Council is proud to announce the launching of our first blog!

This Shaping Solutions Together blog will feature timely, relevant information written by guest authors who are respected leaders in the industry, as well as staff.   Topics will range from Fair Trade Initiative updates to technical information and everything in between. 

Check back often for new and exciting blog posts.  Also, AEC welcomes comments and supports discussions on each entry.  Share this blog with colleagues within your company and within the industry, as well as end users; all will find posts of interest here!

We look forward to connecting with members of the industry on this forum.

Check back soon for the next post!