Some Windsor companies fear new White House guidelines could drive up steel prices

·4 min read
Jonathon Azzopardi, president and CEO of Laval Tool in Tecumseh, Ont., said new U.S. guidelines will ultimately drive up the price of steel which has already been hard to come by.  (Katerina Georgieva/CBC - image credit)
Jonathon Azzopardi, president and CEO of Laval Tool in Tecumseh, Ont., said new U.S. guidelines will ultimately drive up the price of steel which has already been hard to come by. (Katerina Georgieva/CBC - image credit)

Some Windsor companies are concerned new guidance from the White House may drive up steel prices, for the commodity already in short supply.

U.S. President Joe Biden's administration is taking steps toward ensuring that federal money will support U.S. manufacturing, by issuing requirements for projects funded by a $1-trillion infrastructure package.

New guidance issued Monday requires that the material purchased — whether it's for a bridge, a highway, a water pipe or broadband internet — be produced in the U.S. However, the rules also set up a process to waive those requirements in case there are not enough domestic producers or the material costs too much, with the goal of issuing fewer waivers over time as U.S. manufacturing capacity increases.

"The United States and Canada have had a great relationship ... this relationship will have a lot of stress put on it now because Canadian suppliers of steel now will be excluded from potentially a lot of the market," said Jonathon Azzopardi, president and CEO of Laval Tool, a mold manufacturing company in Tecumseh which primarily uses steel to create those molds.

"So we need to really understand the details. So my analysis is let's not overreact yet. Let's understand the details behind what is the offer and then work around and find solutions."

Azzopardi said it's not clear yet if the guidelines will apply to the supply chain or the tooling industry in Canada.

"For example, an EV plant that might be put up in the United States might receive federal funding and if that plant actually has a mandate to source U.S. steel, that may trickle all the way down the supply chain to us who makes the tooling. So it could be difficult," he said.

One thing Azzopardi is sure of is that the new guidelines will affect the cost of the commodity, which is already hard to come by. Many products made in Windsor-Essex land in th U.S., causing some tension for local business owners.

Katerina Georgieva/CBC
Katerina Georgieva/CBC

"The price is just going to continue to climb. Which makes it hard for Windsor businesses," said Ryan Jordan, president of RJ Steel and Copper in Windsor, a company that manufactures steel railings, steel structures and beams for buildings.

"Businesses in Windsor who are doing steelwork, aluminum stainless steel work ... it's very hard to put a price on a project not knowing what the cost of steel, aluminum and stainless will be tomorrow."

Jordan said it is already had to get steel at a reasonable price, and spends more time calling suppliers to figure out prices ahead of big projects.

Biden continues 'Made in America' approach

President Joe Biden hopes to create more jobs, ease supply chain strains and reduce the reliance on China and other nations with interests that diverge from America's. With inflation at a 40-year high ahead of the 2022 midterm elections, he's betting that more domestic production will ultimately reduce price pressures to blunt Republican attacks that his $1.9 trillion coronavirus relief package initially triggered higher prices.

"From Day One, every action I've taken to rebuild our economy has been guided by one principle: Made in America," Biden said Thursday in Greensboro, North Carolina. "It takes a federal government that doesn't just give lip service to buying American but actually takes action."

The administration could not say what percentage of construction material for existing infrastructure projects is U.S.-made, even though the federal government is already spending $350 billion on construction this year. The new guidelines would enable government officials to know how many dollars go to U.S. workers and factories.

Tucked into the bipartisan infrastructure package that became law last November was a requirement that starting on May 14 "none of the funds" allocated to federal agencies for projects may be spent "unless all of the iron, steel, manufactured products, and construction materials used in the project are produced in the United States." That's according to Monday's 17-page guidance.

The guidance includes three standards for these requirements to be waived: if the purchase "would be inconsistent with the public interest"; if the needed materials aren't produced "in sufficient and reasonably available quantities or of a satisfactory quality"; or if U.S. materials increase a project's cost by more than 25 per cent.

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