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TARIFF WOES: Dianne Devore, owner of Design Fabrication Inc., says she was caught off guard as the cost of steel has increased about 40 percent on average from last year.
SBJ file photo
TARIFF WOES: Dianne Devore, owner of Design Fabrication Inc., says she was caught off guard as the cost of steel has increased about 40 percent on average from last year.

Local businesses weathering the trade storm

Companies find ways to adapt and press on as international trade war wages on

Posted online

When she started seeing some increases in steel prices in November 2017, Dianna Devore of Design Fabrications Inc. didn’t really know what to expect.

The price bumps were slight but not of great concern. Then at the end of the first quarter this year, the prices really started jumping, she said, as President Donald Trump ordered tariffs on imported steel and aluminum. Steel tariffs were set at 25 percent, with 10 percent for aluminum.

“We’ve had continuous increases,” Devore said, adding she regularly gets notices about the price changes from steel mills.

On average, she said prices this year have been about 40 percent higher than in 2017. “The increases have not been as significant percentage-wise this last month,” she added.

Devore, who also is president of the Springfield Contractors Association, said the volatility of the market due to the tariffs is certainly on the minds of those in the construction industry.

“It really hasn’t been a big topic in board meetings, but definitely has been when networking,” she said.

Michael Nesbitt, president of Nesbitt Construction Inc., said his company has been seeing double-digit percentage increases from suppliers and manufacturers of structural steel, which includes steel beams, tube steel and metal studs.

In years past, suppliers were typically able to guarantee their prices for 30 days, he said. Now, some will hold the price for a week, while others hold them for as little as three days.

“We can hedge our bets a little bit, and the increases won’t be too detrimental to the overall costs,” Nesbitt said.

In response, the contractor is trying to lock in pricing earlier on projects and ordering materials earlier even though additional storage fees are incurred.

“We bid a building that came in at $1.5 million earlier this year that was mainly structural steel with additional components like door frames,” Nesbitt said. “A year ago, it would have cost $30,000 to $50,000 less.”

Solar impact
Steel and aluminum are far from the only products that have been subject to tariffs, as imported solar panels were added to the list in January by Trump. The 30 percent tariff is expected to last for four years, decreasing by 5 percent each year, according to the Office of the U.S. Trade Representative.

Some of Sun Solar LLC’s equipment suppliers are in Canada, a tariff target that company founder and CEO Caleb Arthur said he did not anticipate. That led the southwest Missouri company to form a plan to recede overhead cost by developing its own in-house software. In addition, more competitive financing options with local banks were created to reduce loan fees. Those banks included OakStar, Hawthorn, Landmark and Southern, said Chelsey Bunch, Sun Solar’s marketing director.

Initially, the company was anticipating a 70 percent increase on product cost from the tariff, but it ended up being only 30 percent, Arthur said, which allowed Sun Solar to renegotiate prices on panels. Sun Solar officials estimated the moves saved the company about $1.5 million.

Ozark-based Skywire Electrical Systems LLC owner James Bartley said there was a lot of hype when the solar tariff was announced, but it has had no direct effect on his business. As electricians that specialize in solar installation projects, Bartley said his company does about 20-30 jobs per year. He said Skywire primarily buys its panels from Texas-based Mission Solar Energy LLC, and he kept in contact with its sales representatives who told Bartley he had nothing to fear.

“We have seen no issues at all as a side effect six months later, and don’t expect to see any,” he said.

Farm aid
Blake Hurst, Missouri Farm Bureau president, wishes he could say the same about no issues facing farmers of soybeans and corn. Those commodities were included in a Chinese tariff retaliation after $34 billion in tariffs were placed on Chinese goods by Trump in early July. The latest tariff impacting the farming community nationwide was tempered a bit July 24 when $12 billion in emergency aid was announced by the Trump administration.

Still, Hurst, a third-generation farmer in northwest Missouri, said he’s personally taken on losses in the tens of thousands of dollars. As the tariff continues, he expects the value of soybeans to go down, just as they have this year. He said his family farm has about 3,000 acres of soybeans, and a good crop can generate about 150,000 bushels. With the price per bushel already reduced by $2, he fears that could translate to losses of $200,000-$300,000 this year.

Hurst said he knows of several other farmers preparing for six-figure losses, adding just like when droughts or other weather issues arise, farmers have to hang on and hope things get better.

“What else can you do?” he asked.

As the steel tariff also shows no end in sight, Devore said she’s trying to keep an optimistic attitude even as she sees a shop yard completely full of steel – some of which won’t be needed for maybe six-eight weeks. She said the unsettled prices have forced her to purchase material as soon as she’s awarded the job, instead of usually waiting a month or more for approved shop drawings to come back to the office.

“It was just a change to our model that we weren’t used to,” she said. “Hopefully, things will level out so I don’t have to continue to worry about it.”

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