Editors note: Dan DiMicco is CPA's Chairman as well as former CEO of Nucor. Nucor is a CPA member who has experienced tremendous growth already due to the tariffs, along dozens of other CPA members.
Berkeley County steelmaker Nucor Corp. was having a pretty good year before President Donald Trump imposed tariffs on imported aluminum and steel in March.
[David Wren | September 9, 2018 | Post and Courier]
Since then, business has kicked into overdrive.
“There was a global recovery then tax reform and some deregulation in our country that really stimulated consumer and business confidence,” said Giff Daughtridge, vice president and general manager of Nucor Steel Berkeley. “Then the tariffs came along ...”
Daughtridge said the tariffs — 25 percent on steel and 10 percent on aluminum imported from most foreign countries — have done their job by removing unfairly traded imports from the U.S. market.
“Imports are still coming into our country, they are just not priced at illegal dumped levels,” he said.
The company began pushing back against unfair trade practices under former CEO Dan DiMicco, who was a trade adviser to Trump during his 2016 presidential campaign. Now chairman emeritus of the steelmaker, he is a member of the U.S Trade Representative’s Advisory Committee for Trade Policy and Negotiations.
The company, which is based in Charlotte and expanded to the Huger area in the mid-1990s, reported second-quarter earnings of $683.2 million in July, more than double the previous year’s total and the highest second-quarter earnings in the company’s history. The company said it expects further improvement over the rest of this year.
“We have increased our workforce by 18 percent and invested $8 billion since the last cyclical peak in 2008,” Nucor CEO John Ferriola said in July. “Now, against the backdrop of a strong market and economy, we are capitalizing on those investments to move up the value chain and profitably grow our company.”
About $200 million of that investment has been in the Berkeley County plant, including modernization and new equipment that lets the plant produce thinner, wider and higher-grade steel than in the past. Another $35 million worth of improvements — already planned before the tariffs — will begin next year.
On Friday, the company announced a $650 million expansion of its Nucor Steel Gallatin, a flat-rolled sheet steel mill in Ghent, Ky. The expansion will nearly double the mill’s capacity to roughly 3 million tons per year. The expansion is in addition to a $176 million investment currently underway to build a hot band continuous pickle galvanizing line at the plant.
Ferriola said the Kentucky expansion “increases our presence in the important Midwest market, specifically in the automotive, agriculture, heavy equipment and energy pipe and tube sectors.”
Daughtridge said the Berkeley County investment “is due to our trust in the team and the plant here more than any current trade negotiations.”
But don’t discount the tariffs’ impact on the U.S. industry as a whole. Daughtridge said the tariffs were designed to get domestic steel plants producing at 80 percent capacity — up from about 70.4 percent a year ago. For the week ending Sept. 1, the rate had climbed to 79.8 percent — the highest since 2014.
Utilization at Nucor mills was 95 percent during the second quarter.
Daughtridge said he doesn’t see the tariffs as an end-game for the nation’s steel industry.
“They are leverage and a negotiating ploy to get trading partners to treat our country fairly,” he said. “When that happens and we get fair trade, it is a win for the overall economy — hopefully for generations.”
And he hopes those who are upset about the tariffs are directing their displeasure at the proper target.
“I hope that anger is well-placed at the countries who first took advantage of unfair trade practices and now are targeting American products with retaliation in a war they started years ago,” he said.