u.s. the problem Commerce will carry on
this investigation
cautiously and finally and unfired and
within from taking unilateral
restrictive measures are imported
aluminum products to this end US
government is encouraged to conduct
these proceedings in a balanced and
transparent manner and consider a
broader range of global stakeholders
opinions including Chinese aluminum
industry association and individual
companies who were not selected at this
public hearing
thank you for attention thank you very
much for that testimony does anyone on
the panel have questions for the
representative I do have a question you
mentioned that the government of China
has proactively undertaken many measures
to eliminate excess domestic aluminum
production capacity could you give us
some examples of those proactive steps
the government has taken and what the
results of that action has been so far
yes we will some needs retinol report to
the panel okay after that this is a
hearing thank you
good I think we're ready
any other questions thank you we are
ready for our next speaker from the
United Arab Emirates
secretary Ross esteemed panelists good
morning my name is Tala Volk I see and
I'm appearing here today as part of the
trade and commercial office at the
Embassy of the United Arab Emirates on
behalf of the Ministry of economy's
submission recently I appreciate the
opportunity to participate in this
hearing and we'll use the few minutes
allotted to me today to emphasize
several points develop more fully in our
written submission the fundamental point
I wish to convey today is the ue is that
the UAE exports a primary aluminum to
the United States are one part of a
robust dynamic and positive relationship
between our two countries the UAE
exports only primary aluminum which
contributes significantly to the growing
downstream u.s. aluminum sector from the
US perspective this trading relationship
enhances US economic and security
interests please allow me to explain why
first due to its fur trade policies
economic growth and history of economic
partnership with the US the UAE is the
largest export market for u.s. origin
goods in the Middle East and North
Africa over the past decade US exports
to the UAE grew by 118 percent with the
u.s. enjoying 19 billion an EIN teen
billion dollar trade surplus with the
UAE in 2016 this bilateral trade surplus
which benefits many US manufacturing
industries includes growing US exports
of aircraft Space Systems satellites
electrical machinery and electronics as
well as vehicles nuclear energy
technology and many other higher value
manufactured items according to the UN
Conrad data a con trade data sorry as
detailed in our written submission US
exports to the UAE are nine times higher
by value than UAE exports to the US
aluminum accounts for 27 percent of the
UAE exports to the United States but
only 3 percent of the UAE of the value
of US exports to the UAE moreover some
of the high-value US exports to the
United States such as GM a power
generation equipment are purchased via
aluminum industry the large US trade
surplus with the UE also reflects the
UAE s purchases of u.s. made military
hardware and technology according to the
and according to the Department of
Department's international trade
administration the UAE offers
potential for us exporters at the UE
accounted for 6.4 percent of total US
defense exports in 2015 and has one of
the largest projected growth rates for
US defense exports in the world second
this robust bilateral trade relationship
is accompanied by strong bilateral
investment ties in fact over 1000 and
500 US firms have invested in the UAE
many of whom employ the UAE
as a hub for the regional operations
conversely and according to data from
select USA the UAE investments in the US
are around 30 billion dollars and
supports some of the most innovative US
manufacturing industries to cite just
one major example the UAE is a 100
percent and that is 100% invested in
Global Foundries a manufacturer of
advanced semiconductors in New York
State and DoD is a customer of Global
Foundries
as well on avionics and satellite
systems for their semiconductors looking
at the full picture of the economic ties
between our two countries the UAE has a
trade relationship which supports jobs
in every single US state aluminum
supplied by the UAE industry to the u.s.
value-added manufacturers around the
country as part of this robust and
mutually beneficial economic
relationship third the bilateral trade
and investment ties I've just summarized
are further bolstered by US UAE
cooperation on a wide range of strategic
and security initiatives as categorized
categorized by the US Department of
State the US MB UE enjoyed strong
bilateral cooperation on a full range of
issues including defense
non-proliferation trade law enforcement
energy policy cultural exchange while
working together to promote peace and
security support economic growth and
improve educational opportunities in the
region and around the world in the
security arena the UAE is one of the USS
critical partners in the region
providing essential support for US
troops aircrafts and vessels operating
in the Middle East
indeed Secretary of Defense mattis was
in the UAE just last month to finalize
an updated defense cooperation agreement
during the past 25 years the US and the
UAE have military forces have worked
together on six military coalition
actions including the first Gulf War
Constable Afghanistan Libya and recent
operations in Syria and Iraq u.s. UAE
strategic cooperation extends to many
other areas in
in counterterrorism anti-money
laundering enforcement and non-nuclear
and nuclear non-proliferation this is
the mutually beneficial context for UAE
aluminum exports to the United States
finally I want to briefly mention the
connection between this investigation
and the rule rules-based international
trading system that the United States
has worked so hard to promote which has
helped me make help so much in spurring
global economic growth as the department
evaluates possible import restrictive
measures in this investigation I would
respectfully ask it to consider
compatibility of such measures with the
WTO mutually agreed blows rules on when
how and under what consider conditions
WTO members may lawfully restrict trade
again thank you for the opportunity to
appear before you today I hope my
comments are useful as the Department
formulates its findings and
recommendations in this investigation
well thank you for that thoughtful
presentation are there any questions
from the members of the panel thank you
thank you sir so our next speaker is
representative from the trade mission at
the Russian Federation good morning my
name is Yuri Stickney I'm deputy de
terras a representative of the trade
representation of the Russian Federation
in the USA the trader presentation of
the Russian Federation in the USA and
behalf of the Ministry of Economic
Development of the Russian Federation
expresses its gratitude to the US
Department of Commerce for the
opportunity to take part in these public
hearings we would like to present
briefly our comments regarding section 2
C 2 investigation initiated by the US
Department of Commerce to determine the
effect of aluminum imports of American
national security based on the principle
and that there are broad and narrow
interpretation of the notion national
security we are the position that under
either international interpretation
Russian import do not and cannot
threaten to impair US national security
we would like to know that Russian
suppliers do not rely on unfair trade
practices
reliable and competitive suppliers and
operate fairly in the US and global
market in the market condition in 2002
Russia was recognized as a market
economy country by the USA and the
European Union and since 2012 Russia has
been a WTO member importantly Russian
aluminium industry is completely private
owned and the Russian government has
never granted specific export subsidies
or provided unfair financial
contribution to Russian aluminum
manufactures aiming at the end market
extension expansion aluminum is an
exchange trade commodity and global
market prices for aluminum are
determined by the London market exchange
on the basis of global supply and demand
we believe that the Department of
Commerce should have substantial and
narrow and the approach on this in this
investigation and at me the the aluminum
imports from Russia can not harm US
national security imports from Russia
were not the cause of smeller's colores
in the USA the main reason for such
closures high energy cost high labor
cost the growth of secondary aluminium
products production so any restrictive
measures against foreign suppliers of
aluminum from market economies cannot be
justify and will only harm the American
woman industry I would like to emphasize
the end result imports there would be a
massive shortage of aluminum raw
materials required required in the US
market by all sectors of the aluminum
industry importantly it should be noted
that the Russian aluminum imports are
not supplied directly for any US
military purposes so there is no any
dependency of the American national
security on the supply of aluminum from
Russia we are convinced that Russian
import do not impair their capability of
American industry to satisfy the defense
needs of the country the available data
confirmed that the national defense
requirements for aluminum products are
relatively low and can be fully
satisfied by the US domestic industry on
the contrary the availability of import
and wrought aluminum from Russia enables
continuous further
the point of high value-added aluminum
production in the USA which drives
American economic development and allows
the aluminum industry contribute about
1% of the US gross domestic product
according to the aluminium Association
data for the reason mentioned above we
believe that there is no need for the
imposition of restrain of aluminum
imports from Russia moreover there is no
threat or damage to the national
security from Russian aluminum imports
and any restriction would cause injury
to the wide range of the US direct and
indirect consumers brings significant
adverse effect to the economic
development we believe that the trade in
aluminum products between the US and
Russia is mutually beneficial and should
be supported and developed thank you for
your attention thank you very much
are there any questions from the
panelist does the government of Russia
have any specific proposals to address
the global oversupply the overcapacity
issue I'm sorry I'm not easy to answer
this question okay thank you are there
any other questions thank you for your
testimony the next speaker from the
European aluminum Association
good morning mr. secretary distinguished
members of the panel I'm very honored to
be invited to participate in that a very
important meeting my name is Scott gates
I'm representing as director general the
European aluminium industry from
upstream to downstream recycling primary
production rolling extrusion was more
than 80 members with about 600 plants in
30 countries a considerable number of
our members operate production
facilities involves Europe and us
European aluminum shares the concerns of
the US government regarding the
significant Chinese aluminum of a
capacity and its impact on the US and
European industries despite the healthy
demand for aluminium worldwide we the
European industry believes that
addressing the root causes of these
problems requires continued joint
efforts of the US Canada and Europe
within the framework of the current
investigation we urge the US
administration to take into account
following elements first imports of
aluminium products from Europe in view
of both the quantity and characteristics
do not constitute a threat to the newest
national security within the meaning of
your statute although the percentage of
US imports of aluminium has increased in
the past years the percentage
originating from Europe has remained
stable over the past decade Europe
accounts for a relatively modest part of
yours imports and supplies specialty
high value-added products to US
consumers the vast majority of European
imports have little to no link to US
national security but are largely used
in commercial applications in other
words the u.s. is not dependent on
European imports for its national
security requirements including national
defense further the European aluminium
industry truly functions under market
economic conditions and does not suffer
from our subsidization government
ownership or excess capacity
finally Europe is a long-lasting
military ally of the US and the
fundamental player within NATO alliance
under these circumstances it's clear
that European imports
do not threaten to impair the capability
of us domestic industry to satisfy
national security requirements we call
your government to refrain from
targeting European imports with any
potential measure associated with a
section two three to investigation our
second point is that the American and
European aluminum industries are
strongly interlinked we are truly united
in our day-to-day business demand for
aluminium product is global and supplies
more and more structure globally not
regionally approximately 50
multinationals are members of post
European aluminium and the aluminium
association and supply daily a vast
majority of the entire Dominion value
chain on both sides of the Atlantic
together they are approximately 80
production manufacturing facilities in
Europe and 75 and the US employing a
large number of American workers these
companies constitute transatlantic echo
system weakening the European side of
their value trend would affect the US
business this would also impact
innovation and research and development
which are essential for the development
of advanced aluminium manufacturing and
applications intercompany shipments are
very common practice for these companies
and measures would also not be in the
interest of US consumers who could
suffer adverse consequences in terms of
material yield product quality material
availability and increased pricing third
let's talk about the nature of the major
threat we all facing you will understand
what I mean when I say that in our
struggle to we are United during my
presentation the u.s. ITC and the true
underlying problem of Chinese
overcapacity we testified together with
many of the parties in the room here
today about the importance of having a
global solution to this unsustainable
global risk the ongoing cooperation at
g7 and g20 level is indispensable to
address the root causes of the
structural threat this requires
continued joint efforts between the US
Europe and other like-minded governments
moreover we will continue to urge
governments globally to address the
effects of excess capacity on prices and
quantities with traditional trade
instruments including through the WTO
the conclusion is clear continued joint
efforts between the US and Europe are
necessary to tackle the root causes of
the global excess capacity and to secure
balance in the US and European Armenia
markets we are concerned that
restrictive actions based on the current
twist we to investigation could not
provide the lasting solution needed by
our markets and may have unintended
negative consequences for integrated
aluminium supply chains in any event
European aluminium import not be the
subject to proposed measures and as a
section to sweet to investigation since
I do not represent a threat to US
national security
well that European aluminium remains
open to continue to collaborate in this
investigation for the interest of all
our members was particularly interested
in those that had value to our economies
and societies on both sides of the
Atlantic thank you very much thank you
for your testimony
this is anyone on the panel have
questions does the European aluminium
Association have specific proposals and
a hard deal with the global overcapacity
issue yes we believe that the joint
activities as mentioned with regard to a
global solution may be the best solution
for the whole industry we have an
industry which is in growing demand and
from their perspective we should be able
to develop this industry in a thoughtful
manner playing with the same rules
everywhere which is today not the case
thank you we're ready for our next
speaker mr. Scott
good morning my name is Robert E Scott
I'm a senior economist with the Economic
Policy Institute thanks for holding this
hearing
imports threaten the entire domestic
aluminum industry which is today hanging
on only by a threat the threat is driven
by the growth of excess capacity and
overproduction in China Chinese primary
aluminium production capacity has
increased by nearly fifteen hundred
percent between 2000 and 2017 and China
is responsible for 82 percent of the
total increase in global aluminum
capacity in this period this growth has
been fueled by massive government
subsidies and other market distorting
practices Chinese overcapacity has
suppressed global aluminum prices
transmitting injury directly domestic
producers aluminum is a global commodity
and prices are primarily driven by total
global supply and demand regardless of
where aluminum produced sold or stored
the u.s. aluminium market effectively
imports the adverse price and volume
effects of China's excess capacity and
production via changes in the LME prices
collapsing prices have decimated u.s.
primary aluminum production capacity and
employment the LME market price of
aluminum fell 39% between 2007 and 2016
I would note anecdotally that over this
time the price of a six pack did not
decline by 40% in an industry with high
fixed cost and and most domestic
aluminum producers have not survived
this prolonged steady price collapse
since 2008
ss-sorry since 2018 of 23 domestic
smelters have shut down and more than
13,000 good domestic production jobs
have disappeared despite a slight
recovery in prices in early 2017 u.s.
primary alumina producers are barely
surviving the threat to US national
security posed by aluminum imports is
significant the domestic industry is
losing its ability to develop and supply
products for US defense and critical
infrastructure applications instead the
downstream gos producers are becoming
increasingly dependent on unreliable
sources of imports in the Middle East
Russia and elsewhere if current trends
persist in time of war
or or other national emergency the US
would find itself dependent on unstable
import supplies for these reasons it is
critical that section 230 to relieve is
brought specifically relief should be
structured in a manner that allows as
much primary limited production as
possible to restart in order to maintain
critical aluminum capabilities to
prevent reliance on unstable supply
moreover relief must account for the
fact that because so much US production
has been shut down due to China's market
distorting practices some imports are
needed in the US market as such a
contiguous source of stable supply
Canada should be excluded from relief
while establishing broad
across-the-board restrictions on imports
of post primary and downstream aluminum
products according to market reports the
u.s. consumed approximately 5.3 million
tonnes of primary aluminum in 2016
nearly 80% of that consumption was
serviced by imports much of that from
Canada less than a million tons were
supplied by US producers because
aluminum is a global commodity excluding
Canada from relief that would likely
result in virtually all of Canada's
available supply serving the US market
market analysts estimate the Canada
possesses approximately 3.3 million tons
of capacity the remaining available u.s.
capacity is approximately 1.8 million
tons consequently both candidate and US
producers could service virtue of the
entire US market therefore if US
production is to restart excluding any
other import sources from their relief
would undermine section 232 relief to
the point where US industry received
virtually no benefits consequently if
the administration is contemplating a
tariff or a quota the quota portion on
other import sources should be extremely
small and can be phased down to a very
small or de minimis level over six to
nine months as US production restarts
and the need for non Canadian imports is
eliminated moreover relief must be
predicated on adjusting for China's
attempt to capture control of the entire
value chain Chinese industrial policy
promotes downstream production and
exports through the use of massive
production subsidies
an export tax on primary aluminum
designed to channel cheap inputs into
manufacturing downstream aluminum
products Chinese exports of downstream
products have soared taking market share
away from domestic producers elsewhere
and reducing demand for primary aluminum
outside of China thus it's critical to
section 232 is relief relief is broad
and also encompasses release for
downstream producers of alumina products
downstream producers also manufacture
products for US military and critical
infrastructure applications in
conclusions for these reasons I
recommend that the Commerce Department
find that aluminum imports are
threatening to impair national security
and critical national infrastructure and
recommend that the president authorized
trade relief in the form of tariffs
covering all imports and HTS chapter 76
excluding imports from Canada thank you
thank you any questions from the panel
thank you so much thank you our next
speaker mr. Blas
good morning I'm Michael Blessed
president and CEO of century aluminum
company on behalf of my 1,800 colleagues
I'd like to thank you for the
opportunity to be here today with you
century is the largest remaining
producer of primary aluminum in the US
you've got three smelters two in
Kentucky and one in South Carolina
our smelters produced both standard
purity and high purity primary aluminum
used in US military and critical
infrastructure applications we are
strongly committed to producing the
highest quality aluminum products in the
US for the US market our ability to
continue to doing so is at risk this
investigation comes at a vital time the
domestic industry is in danger of
completely disappearing as you've heard
in 2000 the US was one of the largest
producers of primary metal in the world
there were 23 smelters in this country
today there were only five and of these
as you've heard only two are running at
full capacity and just the last four
years
employment production have fallen nearly
60 percent this statistic alone
highlights precisely why it is a matter
of national security
to maintain what is left of this
industry aluminum pricing is transparent
and efficient reflecting total global
supply and demand since 2011 prices have
crashed in the u.s. industry has seen
several of its remaining smelters
shuttered neither a decline in demand
nor higher costs explain this drop in
fact over this time demand has grown
significantly and energy costs in the
United States have declined this should
have been a healthy period for America's
smelters instead prices have collapsed
due to ever-expanding overproduction led
by state-owned and state invested
enterprises inside and outside China
market principles simply do not apply in
China China has no natural comparative
advantage its smelters are amongst the
highest cost producers in the world they
lose money yet continue to expand
capacity in China has increased by
nearly 1500 percent from 2000 to 2015
during that same period smelters have
closed across the u.s. from Washington
State to West Virginia
China's system incentivizes further
downstream overproduction since 2000
Chinese exports of downstream products
to the US have increased by over 10,000
percent
the surge in Chinese downstream exports
further displaces additional US primary
aluminum production thus it is vital in
our opinion that broad comprehensive
relief benefit the entire value chain as
China drove prices to drove metal prices
down US production collapsed and imports
from the rest of the world have surged
into the United States since 2012
imports from non Canadian sources are up
over 95 percent while US production it
down over 60% as you've heard because
all aluminum is priced on a global
exchange the LMA these imports further
transmit the Chinese price effects to
the US u.s. producers cannot restart
production with these large volumes of
low-priced aluminum imports from the
rest of the world in the market so much
of our production is collapsed that we
were on the verge of losing the ability
to produce all of them not just high
purity and once the smelter shuts it
rarely reopens we will then be entirely
dependent on imports from outside the US
some from even unstable and hostile
sources we need relief in order to
ensure the US industry is not lost
forever before I discuss how I'd like to
speak briefly about high purity
production high purity aluminum is used
extensively in the defense industry from
aircraft to armored plate high purity
metal can only be produced in large
commercial quantities at smelters like
ours and Havel Kentucky there are other
processes by which high purity aluminum
is refined further these methods cannot
produce large commercial quantities of
high purity and currently only Japan and
China employ these methods consequently
this is not a viable substitute for high
purity aluminum we produce recently we
suffered from a significant surge in
high purity aluminum from Dubai at
prices well below ours some of our
customers even testified in other
settings that they have switched sources
due to concerns over the US industry's
long-term viability as a result earlier
this year we were forced to cease all
high purity production losing this
volume jeopardizes our ability to
properly train our workers to continue
this production this production can be
restarted but only if imports are
adjusted it is vital however that we
maintain the capacity to produce not
just high purity in the US but all
primary aluminum primary aluminum is a
core input for such critical
infrastructure as transportation urban
centers energy transmission and
Vence we at century recognized that
imports are a necessary part of the u.s.
supply chain it is not our position that
the US can or should be totally
self-sufficient
however the status quo is unsustainable
we believe that other than Canada all
imports must be adjusted Canada is the
largest exporter of primary metal to the
US and a stable source of supply
therefore to adjust prices to reasonable
levels relief must be applied to all non
Canadian import sources excluding Canada
from relief will cause virtually all
Canadian supply to shift to the u.s.
along with remaining us capacity that
can be restarted quickly there is enough
stable North American to supply to serve
as nearly all North American demand we
believe a significant tariff on all non
Canadian import sources will cause the
appropriate adjustment these non
Canadian import sources are supplied
from long distances excluding additional
countries beyond Canada from the relief
would make any relief ineffective by
adjusting imports through this
investigation the administration could
preserve what is left of this industry
while addressing the route while
addressing the root cause of the problem
China's excess production and capacity
through the WTO process but without real
relief in this proceeding the nation's
security including its critical
infrastructure is at risk and we thank
you very much for your time thank you
you stated that the surge in Chinese
semi-finished exports further displaces
additional US primary a little mud
production could you elaborate on that a
little bit please yes certainly so that
production would have otherwise been
been served by US primary production
that that would have been producing and
as was noted I'd like to note there is
upwards of a million tons we believe
much of which is ours that could be
restarted to service that downstream
demand if we had a rationally traded
market thank you any other questions for
the panel thank you thank you so much
our next speaker mr. Lepidus
good morning mr. secretary members of
the Commerce Department and other
distinguished panelists and guests my
name is John Lapidus and I'm from United
aluminum corporation in North Haven
Connecticut I'm the president of a
fourth-generation family-owned rolling
mill in North Haven Connecticut I've
worked at United aluminum since my
graduation from Stanford Business School
in 1977 and I have served as president
for 27 years United was founded by my
great grandfather in 1891 and Harris was
an immigrant from Russia
my grandfather Louis bought the first
rolling mill in 1915 my father Robert
returned from return to United after
serving as captain of two destroyers in
world war ii and later served at the
Pentagon during the Korean conflict my
father became the company's second
president on the death of my
great-grandfather Harris originally
named United smelting and aluminum
Company Inc United began rolling over a
hundred years ago the company was a
founding member of the aluminum
Association in 1933 along with Alcoa and
Reynolds aluminum my points are brief
first the North American supply chain is
tightly integrated and Canadian smelters
are critical to the supply of slabs used
for rolling second Chinese over capacity
has caused low world prices and has
already significantly impacted us
smelting capacity causing numerous
curtailments and closures United
aluminium is concerned about the supply
of high purity aluminum third Chinese
overcapacity and subsidized pricing in
rolled products threatens the viability
of us rolling mills
in addition the imbalance of tariff
rates between the US and China and most
other major trading countries
disadvantages US producers China imposes
a 10% tariff on imports
and at the same time incentivizes
exports of rolled product with a 17% v80
rebate Europe and the UK impose a 7.5
percent tariff on imports of coil
including the freight costs while the US
only imposes a 3% duty on imports
combined with the weak euro the benefit
to the northern EU countries is
significant 4th Chinese subsidized
pricing of n use products threatens the
entire us downstream manufacturing base
the loss of know-how capability and
capacity and end-use markets will
continue to harm our readiness at our
national security when we need it will
we be able to beat build it and will we
be able to build it in time china has
unfairly exported not only their
products but also their unemployment
their pollution and potential social
unrest 5th the u.s. is uncompetitive on
tax rates vocational training
competitive truck weights and freight
and commuter rail capability we need to
address those issues as well last I
would suggest the following remedies
first impose a tariff on Chinese ingot
and coil but also in addition impose a
tariff on Chinese aluminum content in
any form to provide a disincentive for
Chinese dumping in end-use markets
second police interference and
sovereignty by sovereign states in
foreign exchange markets to prevent
currency manipulation benefiting those
countries third eliminate unbalanced
tariffs and non-tariff barriers which
harm US exports in China and the
eurozone Europe I might note has a 7.5
percent duty on Chinese imports of coil
and very little
oil is actually imported into the
eurozone so it's effective in closing
with a trade situation of what it is we
can't make America great again by being
totally dependent on other countries on
behalf of American workers and companies
that it that can invest in the United
States I thank you thank you any
questions from the panel thank you so
much thank you our next speaker mr.
Adams morning mr. secretary and
distinguished panelists I am John Adams
president of Guardian six LLC and
retired Brigadier General of the United
States Army there's no doubt in my mind
that aluminum imports are a threat to US
national security and that broad and
immediate section 232 remedies are
necessary to address this threat I'm a
proud Army veteran with over 30 years of
experience as an army aviator strategist
and intelligence officer my final post
prior to retiring from the Army in 2007
was as deputy US military representative
to the NATO military committee in
Brussels in 2013 I authored a study on
the military's growing and dangerous
reliance on foreign nations for the raw
materials parts and finished products
needed to defend the United States I
concluded then that the United States
growing reliance on imports of aluminum
bauxite and other materials places our
US national security at risk this
conclusion was true back in 2013 and is
especially so today as the domestic
aluminum industries financial and
operational condition is only worsened
due to imports aluminum is a raw
material with critical US national
security applications primary aluminum
and other aluminum products are used in
a variety of military applications
including f-18 and f-35 fighter aircraft
Navy and Coast Guard vessels and Army
and Marine Corps tactical vehicles
aluminum is high strength-to-weight
ratio for mobility rigidity and
ballistic protection are indispensable
to our modern arsenal as an army aviator
myself too
in 1980s I saw firsthand the importance
of aluminum and providing the
lightweight strength essential to my
aircrafts wings for high-stress flight
maneuvers aluminum is also used in
numerous critical infrastructure
applications including bridges and
highways buildings and other
construction aluminum is widely used in
utility grids in the event of war
natural disaster or any other natural
emergency emergency damage to our
critical infrastructure is likely which
would only increase our demand for
aluminum and reinforce the importance of
ensuring adequate domestic supply
therefore as it has done in Prior
section 232 investigations the Commerce
Department's should continue to broadly
define national security to include our
critical infrastructure it is no secret
that the Chinese government provides
massive subsidies to its aluminum
industry the result of China's growing
over aluminum over capacity and
production has been a complete collapse
in global aluminum pricing because all
aluminum is priced on the global
exchange us imports of aluminum simply
transfer the adverse price and volume
effects of Chinese excess capacity and
production to our market which has sent
us prices tumbling the collapse in u.s.
pricing has resulted in demotic declines
in US production capacity and revenue in
2010 the US industry had 3.3 million
tons of capacity and produced 1.7
million tons of primary aluminum last
year the industry had 1.9 million tons
of capacity and produced only 820,000
tons this year
these figures are expected to be even
worse hundreds of highly skilled jobs
have been lost in the process the
current state of the domestic aluminum
industry is simply unsustainable from a
national security standpoint our
national security relies on the u.s.
industries smelting capabilities however
given the dramatic declines in u.s.
primary aluminum capacity and production
the vast majority of primary aluminum is
now produced overseas this means that US
producers are finished products that are
directly used in our military and
critical infrastructure increasingly
rely on imports from Russia the Middle
East and elsewhere
critical input these are potentially
hostile sources of supply and at best
unstable sources of supply Qatar
provides a good example of the dangers
of relying on imports just two weeks ago
several of its middle-east neighbors
severed diplomatic ties with guitar
leaving the country without the
logistical capability to ship its
aluminum outside of the country and
placing those relying on guitars
aluminum exports in a vulnerable
position put simply having to rely on
aluminum imports to travel over water
during a conflict is a risk to our
national security it is also important
to consider the industry's ability to
supply national security products in the
context of the industry as a whole if
the commercial market is unprofitable
the defense production sector and with
it not only the smelters but also the Rd
cannot survive with this in mind
immediate relief for the aluminum
industry is imperative including one
recommending remedies that yield a
meaningful opportunity for the u.s.
aluminum producers to recapture lost
market share and rebuild broken supply
chains - taking a broad view of the
national security importance of aluminum
considering production for military
weapons and equipment as well as
homeland security and critical
infrastructure 3 providing relief to the
entire aluminum supply chain the US
industry must remain healthy throughout
the production chain by incentivizing
production from smelting to the finish
the fabricated product for establishing
enforceable mechanisms for the
elimination of global aluminum
overcapacity and lastly rigorously
applying domestic sourcing policies
already existing in our government
procurement of aluminum they're
distinguished panelists I applaud the
administration's initiation of this
section 232 investigation we cannot
allow our American aluminum capacity R&D;
and skilled workforce to disappear we
need concerted action to address these
national security risks to our domestic
aluminum capacity before we lose it
thank you
thank you questions from the panel thank
you so much our next speaker mr. hakama
good morning I'm actually John Donne an
executive vice president of Kaiser
aluminum we welcome your leadership
initiation initiating this investigation
and are pleased to be able to testify
today the products we produce from
high-strength aluminum alloys and the
capacity to produce those products in
the US are critical for u.s. national
security and we support measures that
effectively target unfair competition
and address the needs of the entire
aluminum value chain including
downstream us aluminum fabricators
commercial viability is a prerequisite
to national security availability broad
protective measures aimed at all
suppliers a primary aluminum will
maturely increase our cost and undermine
our ability to effectively compete in
global markets against foreign
downstream fabricators that are not
impacted those unintended consequences
would create an advantage for those
foreign downstream fabricators including
new government subsidized Chinese
rolling mills and put downstream
fabricators like Kaiser aluminum at risk
in addition our competitiveness and the
competitiveness of our domestic
customers will be substantially and
negatively impacted - an increased risk
of aluminum intensive finished products
supplied by unimpacted foreign
downstream fabricators by way of
background Kaiser aluminum is a member
of the aluminum Association and a
leading producer of fabricated aluminum
products for defense aerospace general
engineering automotive and custom
industrial applications we operate 11
fabricating facilities in the United
States and one in Canada we employ over
2,700 employees and ship within 600
million pounds of plates she extrusions
and other products to a global customer
base our facilities have a long history
supplying products to the US military
dating back to World War two
today our products are used on more than
50 military aircraft including the f-18
f-22 and f-35 Joint Strike Fighter we
also produce material for armor and mind
blast kits for a variety of military
platforms including the Humvee and MRAP
as well as extrusions for munitions
arms mortars and rockets as a downstream
participant the US aluminum industry we
convert a primary aluminum or secondary
aluminum purchase from third parties
into our products we purchase our
primary aluminum through a globally
diversified supply base which supports
our globally competitive cost position
and is integral to our surety of supply
the downstream sector of the u.s.
alumina industry requires and has seen
significant investment in recent years
Kaiser aluminum has invested over 630
million dollars since 2006 to increase
capacity lower cost and improved quality
maintaining our ability to effectively
compete in global markets invest in our
facilities and produce these products or
in the US are important not just for the
jobs provided and community supported
across the country but also for our
long-term national security global
market imbalances in the aluminum
industry are caused by unprecedented
excess capacity in China facilitated
through decades of illegal and
subsidized and investment in production
after exponentially expanding expanding
its primary aluminum production China
continues to create downward pressure on
world aluminum prices negatively
impacting US producers of primary
aluminum and contributing to the
shuttering of US aluminum smelters
similarly China has been and continues
to be engaged in massive predatory
government-subsidized expansion into the
production of downstream alumina
products with a stated intent to support
Chinese expansion of military aircraft
support new Chinese competitors and
export those products in addition
Chinese circumvention of US duties
through Mis classification and/or
transshipment through other countries
and the theft of intellectual property
also continue to be major competitive
concerns Kaiser liniment supports
effective solutions that address Chinese
overcapacity government subsidies and
unfair trade practices a broadly applied
measure that impacts all foreign source
primary aluminum will do far more harm
than good when it comes to US national
security maintaining and generating
secure domestic jobs ensuring global
competitiveness of US manufacturers and
maintaining a strong US manufacturing
base for domestic downstream fabricators
that supply aluminum products
critical defense applications to be
clear we support all measures that
effectively target unfair competition we
need a fair system if you put us on a
level playing field
Kaiser alumina and our employees can
compete successfully against anyone in
the world
we welcome embrace that opportunity as
noted in our brochure we are proud to
serve those that proudly serve thank you
for your time thank you for your
comments any questions from the panel
thank you thank you we're ready for our
next speaker mr. Smith
mr. chairman thank you for allowing me
to testify today my name is Robert Smith
and I'm president the United Steel
Workers Local 420 a based in Massena New
York I have over a decade of experience
in the lumina ministry and would like to
share with you my concerns over the
future of an industry that is critically
important to the national security of
the United States in addition I'd like
to make you aware that the United
Steelworkers union will be submitting a
comprehensive statement in support of
the investigation before the close of
the comment period this investigation
comes at a critical time for the
American aluminum industry domestic
aluminum production is an important
component of our nation's defense
industrial base and vital to our
critical infrastructure the Department
of Defense classifies aluminum as a
strategic material with uses ranging
from structural airframe material to
electronic components and armor plating
furthermore aluminum is increasingly
being utilized throughout our nation's
critical infrastructure whether it is
the development of solar panels an
extensive use in our electrical grid or
as a lightweight high strength building
material aluminum will continue to serve
a vital role in the rebuilding and
maintaining of our nation's
infrastructure ensuring that the nation
and military have a stable reliable
supply of this critical material is a
national security imperative modern
aluminum production especially of
military grade - elumen 'm is a highly
complex and highly technical process
that requires a trained and skilled
workforce the development of those
skills takes years once capacity is lost
bringing it back online is not something
that can be done overnight
today there is only one domestic
producers still operating that can
produce high purity aluminum and that
represents a national vulnerability if
that producer is forced to shut down
because of predatory trade practices it
raises the real and unacceptable danger
that the US would be forced to rely on
foreign sources in the event of
unforeseen future conflict or not
disaster and this situation is becoming
more of a potential reality each day
last year American primary aluminum
production dropped below 1 million tons
for the first time since the 1950s and
so many domestic smelters have either
closed or curbed production that only
two in the US are considered fully
operational this is being driven by a
glut of aluminum in the global market
which is causing a drop in global prices
and making it uh neck anomic for
domestic producers to stay in business
this glut of a global aluminum has a
sadly familiar cause China the Chinese
government has been illegally
subsidizing its aluminum industry for
years driving a massive expansion of its
production and capacity far beyond its
internal demand these state subsidized
Chinese producers are then dumping this
excess production on the world market
the proof is in the numbers between 2006
and 2015 Chinese primary aluminum
production grew by over two hundred and
twenty five percent and by the end of
2015 it accounted for more than half of
all aluminum production in the world
while as I mentioned earlier US
production reached its lowest point in
more than 60 years this trend shows no
sign of stopping
Swift governmental action is critical if
the American aluminum industry is to
survive and continue to provide good
jobs for American workers the highest
quality products to the American
military and the critical infrastructure
that we need as the government
government approaches this issue let me
emphasize that the driving force behind
our aluminum problems is Chinese
overcapacity unlike steel were dumped in
subsidized products have directly
impacted our market China's policies and
practices have suppressed world prices
via the London Metal Exchange where
aluminum is priced right now Canadian
imports are the largest single source
for consumption in our market but
Canadian production is not fueled by
illegal and predatory practices and the
approach and this 232 investigation must
be to target the Pradhan
of those countries which are engaging in
unfair trade as our international
president Leo Gerard has said Canada
should be exempted from any relief
measures that might be implemented as a
result of the administration's actions I
and other workers in the aluminum sector
here in the United States support that
approach thank you very much for the
opportunity to share my views on this
important topic
thank you are there any estimates that
you're aware of of how long it takes to
train skilled workers to work in the
aluminum industry there's really not a
lot of science behind that because we've
been continuously going down so we
haven't ramped up production over the
years what I do know is that when we
have when it's very rare but if a plant
decides to restart it's very it takes a
long process it's very expensive and
it's there's a lot of unknowns with it
there's a lot of safety concerns and
stuff just because there's not a lot of
science behind restarts put in
perspective our plant started in
nineteen in the late 70s and we haven't
had more than a 3-hour shutdown since
then so that's you know there's a lot of
things this is a continuous operation
right and we just don't restart very
often and then what's sort of the
average level of experience of say many
members of your local from my experience
it depends on the job but to to get the
folks that we need up to speed to run
reliable reliably probably half the jobs
you could train well in six months to a
year and then the other half are what
would actually take to run the pot line
and it's 10 to 12 years probably before
somebody's that good at knowing all of
the things that can come up and be able
to react to those things good thank you
any other questions thank you thank you
very much and our next speaker
II
good morning mr. secretary
members of the panel my name is Marco
Palmieri and I'm the president of
novelist North America and I'm a member
of the aluminum Association I like to
thank you for the opportunity to speak
on this important topic today
Nevada's believes that the department's
investigation is timely and vital to the
future of the domestic aluminum industry
Novalis is the world's largest producer
of flat roll aluminum products uses to
make beverage cans
cars and trucks and other diverse
products novalis a 10 billion dollar
company operates 24 facilities in ten
countries and it is the global leader in
aluminum recycling while we are a global
company we are deeply committed to our
North American operations and have made
significant investments in our US
facilities in recent years more than a
five hundred million dollars with
additional 500 jobs novelas employs
around 4,000 people in the US we did
scope or even regional headquarters in
global research and Technology Center in
Georgia 7 production sites in Georgia
Indiana Kentucky New York Ohio and West
Virginia and the sales engineer lab in
Michigan today I would like to highlight
three main points for the final
consideration first novelas believes it
is important for the department to
recognize that the aluminum indices of
the US and Canada are intertwined with
Canada playing a vital role in
supporting of us alumina manufacturing
efforts u.s. is mount operations cannot
meet the domestic demand for primary
aluminum art novellas we do source both
primary and recycled metal from the US
but because it is not possible for us to
be taking all of the primary aluminum
that we need to our USA purchases we
also rely on primary luminary
originating from Canada additionally our
facility in Canada works in turning with
our us-based facilities to manufacture
products as part of a complex processing
chain for example when making sales
automotive products aluminum across the
border at least four times before it is
fully finished and ready to ship to
customers throughout the US Canada and
Mexico
therefore to ensure the viability of the
u.s. aluminum industry the department
should exclude Canada from any remedy
recommendation made in its final report
second novelas believes in free and fair
trade but there must be a level playing
field import is originating from
countries like China with excessive over
capacity driven by government subsidies
having significantly affected the
aluminium industry putting novel as US
manufacturing facilities at risk
in fact unfairly prized aluminum from
China has already forced us to access
certain product lines in 2008 we left
the converter for business and shuttered
a facility in Kentucky only a few years
ago we sold our household foil business
and in April 2014 we were forced to
either some equipment and lay off
workers experienced workers at our
facility in India to date novelas has
maintained profitability by migrating
its product portfolio to emphasize
markets that have not yet being affected
by imports from China those imports
however have been entering new product
market segments in the u.s. novelist
sales people regularly report hearing
about offers of imported products at
extremely low price we also have strong
reasons to believe that the Chinese
produces will increase production of
automotive aluminum capacity within the
next few years if it is increase the
capacity of aluminum were permitted to
be export to the u.s. at subsidised and
unfair prices novelas could be forced to
slash production
lay off employees and shatter entire
facilities if it those facilities are
not able to deliver reasonable rates of
return turn the same equipment used to
process and row auto ship can be used to
make products for military applications
but those applications make up a smoke
for sure of the entire u.s. downstream
Illumina marketing
therefore if trade matters under this
investigation only were enacted to
protect the aluminum used directly in
defense related products such remedies
would not secure the stability of the
entire domestic aluminum industry nor
its associated hundreds of thousands of
US jobs in conclusion no various
respectful requests at the department to
recognize that one Canada should be
excluded for any remedy or
recommendation made in the department's
final report too unfair prices and
subsidized imports originate from
outside North America are negatively
affecting US national security interest
and tree
relief is needed for the entire lumina
supply chain including downstream road
products to ensure a healthy aluminum
industry in the United States thank you
very much thank you when you talk about
the entire aluminum's buy chain if
they're sort of a industry accepted
definition or group of HS codes that
would objectively identify what those
products are well going to talk about
the entire supply chain it comes from
the bauxite mining - is melting the semi
fabrication which is rolling products
extrude extrusion products and that's
the definition then we supply these
products today to the end makers like
stamping plants and things like that I
see thank you any question other
questions from the panel thank you thank
you very much ready for our next speaker
right good morning ladies and gentlemen
and thank you for the opportunity to
testify today I'm Jamar Jermaine CEO of
constellar based in Baltimore Maryland
and a member of the aluminum Association
as well Const areum is a downstream
aluminum leader listed on the New York
Stock Exchange we have 12,000 employees
generate 5 billion dollars in revenue
and the US is about 40% of our business
we have a large industrial presence with
plants in West Virginia Alabama Michigan
Kentucky Georgia and are indeed have in
Michigan our main clients include Boeing
Airbus Lockheed Martin space X a beam
Bev ball Ford General Motors BMW to name
a few in the defense market we have been
a key partner to US defense industry for
decades working with US defense
companies such as Lockheed Martin we
also partner with the US Army to develop
new aluminum solutions for armored
vehicles in our plants in Ravenswood was
West Virginia we are manufacturing
advanced alloys for military aircraft
and armored vehicles we supply place for
military aircrafts and jet fighters such
as the Boeing c-17 Globemaster the f16
or the new f-35 Joint Strike Fighter we
consider the u.s. to be one of our key
markets this is why we have invested in
the last five years over 1.8 billion
dollars in our u.s. plans and in
Ravenswood alone 170 million dollars our
current positioning as global leader is
a direct result of this significant
investment program however our business
is threatened today by China's long-term
practice of market distorting policies
the risks that we are facing today are
directly linked to the cost undo cost
advantage the chinese aluminum
converters are benefiting from in
particular non reciprocity in the
to look us raw material puts us at a
great disadvantage primary aluminum
traded on the Shanghai Futures Exchange
as regularly a price advantage over the
price paid by us players which is based
on the London Metal Exchange price but
known Chinese players cannot access that
raw material as there is a 15% export
duty on primary metal and an aluminum
scrap out of China this cost advantage
is driven greater for the Chinese
aluminum conversion industry as Chinese
rollers and extruders in addition to
benefiting from lower production cost
and lower raw material cost also
profiting from vhe rebate on their
exports of 13 to 17 percent concretely
this means that for a product that would
sell for say $3,000 China would have a
$500 and more advantage through tariffs
and duties structure which represents
more than half of our value add so this
unfair pricing has already impacted our
business even though we believe the
worst is still to come
already we have witnessed a significant
increase in for instance China's US
imports of plates from 5,000 tonnes in
2012 to almost 70,000 tonnes in 2015 in
the span of three years and that
represents more than 25 percent of the
market and more than our own plate
shipments of our mill in Ravenswood
this obviously resulted in missed
revenue for our US business miss profits
and pure jobs this situation threatens
our downstream business which relies on
both high value-added products and
larger volume standard products because
of the fixed cost incurred by our
facilities large installed capacity and
equipment furthermore as China's
interest and skills in aluminum
value-added products are rising our
industry that even greater risk in the
coming years China is expected to
acquire the technical knowledge to
produce also higher-end products and is
already pushing into the global
aerospace and automotive markets
thus attacking us and more Franck's
with us having little ability to fight
back such a situation is obviously not
sustainable in the long term and as a
direct impact on our capacity to invest
in our plants and in our Essex what
actions are needed to address the excess
capacity and unfair pricing from China I
would like to express our strong support
of fair rules based trade of aluminum
among the United States Canada and
Europe industry is interlinked by a
global supply chain and it is critical
for our success for these reasons I
respectfully request that the Commerce
Department for the and the
administration firm in its actions to
address China's unfair trading practices
remedies should consider the whole value
chain and should target all Chinese
originated products without exclusions
they should be tailored to address
China's trade distorting subsidies while
protecting existing relationships in the
US Canada and Europe thank you again for
your time and we appreciate the
leadership and foresight that the
administration is showing in addressing
this issue early on thank you thank you
for your comments questions thank you
and we're ready for our next speaker
good morning my name is Bob prozac i am
the CEO of magnitude seven metals
magnitude seven metals recently
purchased an idle smelter located in New
Madrid Missouri which had previously
been operated by niranda aluminium prior
to their bankruptcy in 2016 thank you
for this opportunity to testify today
and explain why section 232 relief is
necessary for the domestic aluminium
industry domestic primary aluminium
production is in the midst of a crisis
driven by Chinese overproduction this
Chinese overproduction has led directly
to declining global prices put simply
our industry is at a critical turning
point and at risk of disappearing absent
much-needed relief the number of
domestic alumina smelters in the United
States has fallen from 23 in 2000 to 5
today with only 2 running at capacity I
would like to talk to you about two of
these smelters today the arete smelter
in had of ohio and our facility in New
Madrid Missouri I have a personal
connection to both I served on the board
of a Met Corporation a domestic producer
of primary aluminum from 2007 to his
closure in 2014 and early 2013 Armour
announced it was curtailing the
operations of its 270 mm ton smelter in
Hannibal Ohio which is located along the
West Virginia bording south of Wheeling
our men started producing aluminum at
its reduction plant in 1956 like other
u.s. smelters in the years leading up to
its closure
ermm its production suffered from
falling aluminum prices and rising
imports largely driven by global and
principally Chinese overproduction
or met laid off roughly 1,000 workers in
2013 most of them unionized steel
workers with market conditions
continuing to deteriorate at the end of
July 2014 or met could no longer
withstand the onslaught and announced
the permanent closure of its smelter
firing the last 20 workers and dashing
any hope that its operations would be
revived
not only did arm its closure deal a
heavy blow to the workers and their
families relying on the company for a
decent wage it also sends shockwaves
throughout the Ohio River communities or
met was effectively the sole employer in
both Clarington and her
Hannibal Ohio and was the largest
employer in New Martinsville West
Virginia when our met closed these towns
were decimated
unfortunately this story has been
repeated in communities throughout the
United States just last October
my company purchased Miranda's
distressed smelting assets out of
bankruptcy as with our met the New
Madrid smelter was forced to shut down
after more than 45 years in operation
the New Madrid facility produced primary
luminol and semi-finished aluminum
products used in both US military and
critical infrastructure applications
that are vital to u.s. national security
roughly 900 high paying high skill jobs
were lost when Aranda closed many of
these workers are still out of work
today
more than a year later when the smelter
was operational the company and its
employees spread roughly 45 million
dollars throughout southeast Missouri
with this money gone everyone from local
restaurants and businesses to the local
school district felt the pain New Madrid
County where the smelter is located it
also took a big hit losing millions of
dollars in tax revenue annually as a
result the local government was forced
to delay projects Institute hiring
freezes / infrastructure spending and
postponed in wage increases community
programs are negatively impacted as well
as the local police and ambulance
services because the revenue from the
Durant from niranda
comprised nearly 17 percent of the
entire budget for the school district a
budget deficit resulted leading to
layoffs staff reductions and program
cuts
six months after nuran disclosure the
unemployment rate in the county more
than doubled for meta magnitude seven
are only two among a number of shredded
smelters we are not yet operational we
are currently negotiating a new power
contract and hope to restart operations
soon however without comprehensive
section 232 relief our ability to fully
restore operations is far from certain
relief is nothing short of critical to
get us up and running and bring
southeast Missouri back to life this
leads me to my final point section 232
relief
we brought legal granted to the domestic
aluminium industry relief on high purity
alone is insufficient to bring the
aluminium production back to the United
States if we continue to allow imports
to erode our market share of primary
aluminium we will lose the ability to
produce primary aluminium of any grade
high purity or otherwise high purity
aluminium will only ever be a small
portion of the output at even the most
efficient aluminum smelters in the world
our basic primary aluminium production
must therefore be viable in order to
allow high purity production
domestically finally I would like to
stress that excluding any import sources
other than Canada from section 232
relief would undermine and relief
granted to the point where the US
industry would see virtually no benefits
if the United States is going to
maintain its ability to produce the
aluminum that is vital to our national
security we cannot allow the relief to
go under mine thank you for your time
and consideration thank you for your
comments questions thank you sir we're
ready for our next week
good morning my name is Thomas Robb and
his chief operating officer of new day
aluminum and it's nor and a bauxite and
Aranda alumina subsidiaries I welcome
this opportunity to offer my company's
unique perspective on the Commerce
Department's section 232 investigation
into imports of aluminum our perspective
is unique because we operate through
niranda alumina the only smelter grade
alumina refinery remaining in the United
States alumina is the critical raw
material in the production of aluminum
tracing aluminum back to its source the
aluminum process begins with bauxite
which is refined to produce alumina
which is then converted to aluminum
through an electrolytic process it takes
approximately two pounds of bauxite to
produce one pound of alumina and two
pounds of alumina to produce one pound
of aluminum our alumina refinery is
located along the Mississippi River in
Gramercy Louisiana it currently produces
more than 1.1 million metric tons of
alumina annually and employs 440 people
through our niranda bauxite subsidiary
we also operate a bauxite mining
operation in San E and Jamaica that
supplies our alumina refinery niranda
alumina is the principal source of
alumina supply to century aluminum the
largest remaining us-based producer of
primary aluminum for two of its three
operating smelters in the US century is
a significant us-based producer of high
purity aluminum which is necessary for a
number of national defense and military
applications we are proud of that
partnership and its service to our
nation we respectfully recommend that
any trade policies considered in this
that investigation should include
protections to ensure the continuation
of a us-based supply of alumina we
further recommend that any review of the
national security effects of imports of
aluminum must also include a review of
the u.s. supply of and access to bauxite
ore from which alumina alumina itself is
derived as the department may be aware
there are
no longer any bauxite mining operations
in the US the closest sustainable
foreign source of bauxite is in Jamaica
where an oranda bauxite is strategically
positioned the other three major mining
facilities in Jamaica are wholly or my
majority owned by Chinese Russian &
hongcun and Kong interests and none are
permitted to export bauxite out of
Jamaica rebuilding the u.s. stockpile of
bauxite ore which began in the 1930s and
which was reinvigorated by President
Reagan during his administration would
be one way for the u.s. to alleviate the
risks associated with sourcing this raw
material exclusively from foreign
countries and/or foreign interests we
therefore suggest that this
administration gives strong
consideration to creating a u.s.
stockpile of bauxite and we would be
willing to work with the government on
building up and managing that strategic
reserve as the importation of aluminum
itself we understand the department's
needs to review a variety of trade
policies related to this issue however
and we share this with great deference
we believe trade policies that might
significantly restrict or eliminate
foreign imports of aluminum may have
unintended but significant negative
consequences for example in 2016 the US
produced approximately 60% less primary
aluminum than it produced in 2012 over
the same period US demand for raw and
semi manufactured aluminum increased by
more than 40 percent this tells us that
the importation of primary aluminum is
necessary and must continue especially
in the near term I'm a businessman and
not in economies but I believe that the
current Chinese dominance in the
production of both alumina and aluminum
creates an ability for China to
manipulate the aluminum value gene for
its benefit if such manipulation puts US
and other allied countries alumina and
aluminum production facilities out of
business
we and our allies will become dependent
on foreign sources of these critical raw
materials we recognize that may that be
the worst of all possible scenarios but
merely suggest that all eventualities be
considered in your investigation
in conclusion we recommend the
department consider creating a strategic
reserve of bauxite in the US we also
recommend that the various unintended
consequences of severe tariffs or trade
regulations on foreign imports of
aluminum only one of which was
postulated here be examined in robust
detail and considering whether and how
such restrictions should be imposed
thank you for the opportunity to offer
our comments I welcome any questions you
may have thank you on the issue of no
bauxite mining in the United States is
that because there are no bauxite
deposits left or is it for other
February's and for other vectors there's
no economically extractable bauxite from
a quality perspective so that's not kind
of a trade issue it's just the natural
resources of short thank you other
questions thank you sir I keep them
ready for our next speaker
good morning mr. secretary and members
of the panel thank you for the
opportunity to share Jupiter aluminum in
its employees view here today my name is
Paul Henry Chevalier I'm the president
of jupiter aluminum corporation an
american privately held aluminum
producer based in this Plaines Illinois
I'm here today because we need to
preserve our industry and manufacturing
jobs by establishing a level playing
field with honest and fair competition
so market distorting behavior sees
jupiter aluminum is tottenham 20
sterling 25 this year and since 1992
grew from a few turns to over a hundred
tons shipped annually we are about 400
people working with three plans to in
Indiana and one in West Virginia 24/7 we
transform aluminum scrap sourced
domestically into cars into the soul in
the construction automotive distribution
and government markets your car must
probably has a license paid cash in our
Mills one day over 95% of our products
are sold in the US and Canada while
relatively small compared to many other
element producers Jupiter's impact on
the local and domestic economies is much
larger than its own size when you factor
in the various vendors and partners our
parishioners require and there is no
need to remind everyone that
manufacturing and manufacturing related
jobs pay very well with excellent
benefits today I will focus on three
specific damaging consequences of the
Chinese trade practices the first
damaging consequence is directly related
to fair trade the aluminum market
started attracting the Chinese in 2003
the alumina sociation organized a
meeting with the deputy assistants to
describe to the Secretary of Commerce in
December 2003 to raise the issue with
the Chinese threat practices that
allowed them to sell below market price
not much resulted from that meeting
since then Chinese the ribbon production
soared from 11% of world war supplier to
55% today 21 american smelters closed in
the same period China developed this
extraordinary capacity during one of the
world's worst recessions
Jupiter aluminum adapted to the
economic environment our patented high
temperature of sexual technology save
70% of our natural gas consumption the
technology by the way also reduces co2
emissions by 70%
however innovation did not suffice we
also trained cost investments and growth
competition is good at it forces you to
continuously improve that however only
works when standard economic rules apply
to everyone in China financial viability
doesn't seem as important as providing
jobs and maintaining social stability
once American aluminum production is
gone nothing will block Chinese
companies from moving downstream and
directly sell finished goods to our
customers customers today China is still
increasing production resulting in
dangerous oversupply this battle of job
creation in China versus financial
performance in the US is unfair the
second damaging consequence is related
to a children's future that second
consequence is global as it affects
human health
EPA regulations are good for a reason
however its standards only apply to
American industries the rim Association
has found that if Chinese aluminum
producers energized by coal-fired power
plants constituted a country that
country would be the 16th largest
emitter of greenhouse gases in the world
North American production by comparison
is cleaner because regulated replacing
clean production by dirty production is
unfair the third damaging consequence is
on our country's future
Jupiter meals are based in the heart of
the steel industry over the last thirty
years the region has seen the steel
mills bankrupting and downsizing during
that time demand did not really
disappear only production moved to China
the same is happening to aluminum it has
become increasingly difficult to attract
the next generation in our industry as
it has seen its parents lose their jobs
and beyond their jobs they face in the
future the questions are can our country
thrive without it without an industry
should our country become completely
dependent on China for its manufactured
goods
it's clear today that we must work with
China on an agreed-upon path forward
that said that path forward has to be
fair and honest without market
distorting behaviors Thank You mr. sixty
secretary and thanks to the members of
the panel for this opportunity to be
divisive the industry's concerns today
thank you for your comments any
questions from the panel all right thank
you
we will now take a 15-minute break so we
will reconvene at 10:55 thank you
I was
well
for God man
sure
these guys
you
yes
[Music]
if I could ask everybody to find their
seats so we can resume in a few minutes
thank you
okay we will go ahead and reconvene with
our next speaker who I hope is here yes
come on up secretary Ross distinguished
panelists thank you for the opportunity
to assist the administration in the 232
investigation on the North American
aluminum industry my name is Henry
Gordon ear and I'm the chief executive
officer of tri arrows aluminum tri Rose
is a downstream producer of rolled
aluminum sheet serving the North America
beverage container and automotive
markets we are a member of the aluminum
Association it's our belief that a
healthy North American aluminum industry
is vital to national security our
manufacturing operations is in is in the
Commonwealth of Kentucky where we employ
over 1200 employees at the Logan
aluminum rolling mill a production joint
venture with Novelis corporation the
Commonwealth of Kentucky has more than
150 aluminum facilities from mills to
makers of end-user products and the
industry employs nearly 18,000 full-time
workers aluminum accounts for two
billion in the state's gross domestic
product since 2014
tri arrows has invested approximately
four hundred and twenty five million
dollars in our manufacturing facility
creating 250 high-skilled manufacturing
jobs these investments will increase our
capacity by approximately 30% and expand
our manufacturing capabilities to serve
a wider range of products in the North
American market notably these
investments protect the capacity needed
to serve our existing customer base and
support the developing automotive sheet
market at the outset I would like to
emphasize the Tri arrow supports for
fair and free competition where this
competition is based on cost efficiency
and productivity based on these measures
the Logan rolling mill is regarded as
one of the most
give mills in the world yielding a
low-cost position in the marketplace but
we cannot compete on government
subsidies direct intervention of capital
labor land raw material and basic inputs
has led to massive overcapacity in
chinese aluminium assets upstream and
downstream with the chinese over
capacity we believe both our current
business as well as future investments
and job expansions are at risk today
imports of our core products are
relatively small
however they are growing at
approximately 30% per year and that we
have seen forecasts that showed China
targeting over 75 percent of the West
Coast market recently try arrows has
been displaced from West Coast plants in
favor of Chinese metal metal costs for
the Chinese manufacturers are not the
same as in other market-based countries
Chinese metal is advantaged over
domestic supply due to subsidized
smelters unique metal index the Shanghai
foreign exchange which typically trades
at loot at lower levels than the LME and
export policies in tariffs which favor
the export of value-added materials over
primary aluminum due to these advantages
Chinese Mills can offer fabricated
products for import at extremely low
prices prices that are so aggressive no
Western mill would be able to generate a
profit I can present two recent examples
that illustrate where subsidized Chinese
imports are impacting the North American
aluminum economy today these examples
show that the threat of harm is shifting
from conceptual to transactional first
in a recent multi-year North American
contract discussion Chinese price points
were used to anchor the negotiation as a
global reference point leveraged in this
manner the economic impact of these
imports is far greater than the actual
volume shipped would be it would
indicate second semi fabricated products
from China are being offered today at
prices below the exchange base price for
metal in the US with the intent for
these products to be repurposed as raw
material if semi fabricated product can
be sold in North America below the base
price for aluminum it's not a leak to
see where this level of discount might
be applied to more highly engineered
products in conclusion try arrow seeks a
level playing field in which to complete
compete with all market participants as
the administration considers potential
trade remedies we believe that the
unintended consequences can be minimized
through recognizing the following one
the north american aluminium industry is
part of and depended on a global supply
chain where the vast majority of our
trading partners operate on market-based
principles to the full aluminum value
chain should be considered given the
ability for policy to redirect shift
values between upstream and downstream
products and three the threat of the
threat to the North American aluminum
industry stems from Chinese overcapacity
and non market based trading principles
thank you thank you the the Chinese
overcapacity I think has of course been
in existence for some time so it's
interesting that trials did is
substantial investment since 2014 sort
of notwithstanding that jus explain a
little bit the rationale that led to
that well there is there is growth in
the North American automotive sheet
market so you know our approach has been
how can we grow our business participate
in growth in the North American
automotive market but but at the same
time sustain what our core products have
been in our core customer base so I mean
it was a targeted decision to figure out
what kind of investments that we could
make that would allow us to sustain
what's been a very healthy North America
trading partnership of commercial
relationships today balance that with
how we could begin to grow in the
automotive so it's really been how do we
have a sustained north how do we be a
sustained North America provider to both
markets thank you other questions from
the panel thank you
thank you we're ready for our next
speaker
good morning thank you for the
opportunity to testify at this very
important hearing my name is Heidi brach
and I'm president and CEO of the
aluminum Association the Association
represents the aluminum value chain our
membership consists of large global
companies as well as small companies
with a domestic or local focus we
represent primary producers of aluminum
producers of semi fabricated products
and aluminum recyclers as well as
industry suppliers the u.s. aluminum
industry supports nearly seven hundred
and thirteen thousand direct indirect
and induced jobs as well as 186 billion
dollars in economic in output more than
1 percent of US gross domestic product
we are proud of the fact that this
industry has committed to invest more
than 2.3 billion dollars in domestic
plant expansions in the United States
since 2013 regarding the question of
whether imports threaten US national
security we see three reasons why it is
important to look at aluminum as a
strategic material and the aluminum
industry is highly significant in its
industrial contribution to national
security first aluminum is used in
numerous national defense applications
including major components of army
ground vehicles Jets flown by the Air
Force and warships deployed by the Navy
aluminum is in the most conflict-ridden
hot spots on the globe keeping America's
servicemen and women safe this speaks to
the versatility of the metal aluminum is
lightweight corrosion resistant easily
formed highly conductive non-toxic and
durable and aluminum as a base metal can
be combined with other materials to
create and repurpose alloys for a wide
variety of products for example in 1954
there were 75 unique aluminum alloys
registered at the aluminum Association
today there are more than 540 active
alloys that
just for different applications for
example the army uses high-strength
blast resistant aluminum in its vehicles
for the Humvees and Bradley fighting
vehicles aluminum reduces weight which
resists rust and stands up under tough
conditions second aluminum is a
critically important material for the
nation's infrastructure aluminum
products are essential for energy
generation and transmission satellite
communication and the construction of
bridges and buildings as well as for
machinery and equipment that build and
maintain that infrastructure and third
aluminum manufacturing and the products
made from aluminum supports significant
economic activity activity that
contributes to the well-being of
Americans and fosters problem-solving
innovations in packaging jet planes wind
turbines trucks and cars electronics
among many other things having an
economically healthy u.s. aluminum
industry is vital for the manufacturing
and defense industrial base of the
United States as an industry we have a
unified position on a set of principles
that we recommend be considered in the
current investigation and any
recommendations that might emerge from
it first we respectfully ask that any
trade remedies should specifically
address Chinese overcapacity and its
effects second we also ask that trade
remedies not impact current trading
relationships between the US and
critical trading partner countries which
have been determined by the Department
of Commerce to be operating as market
economies especially Canada and the
European Union and finally we ask that
trade remedies consider the entire
aluminum value chain including both
primary and downstream US producers and
their employees I mentioned at the
outset that the u.s. aluminum industry
is united in recognising Chinese
overcapacity as the fundamental trade
issue hurting the domestic industry
today as an association we're working
with different government agencies to
address this acute and persistent
problem we've supported efforts by the
US Trade Representative to
to bilateral discussions to raise
aluminum overcapacity in China as an
issue we've raised our concerns about
Chinese Mis classification of fake
semies to US Customs and Border
Protection and we've worked with
colleagues in Canada the EU and other
countries similarly affected by Chinese
overcapacity ultimately our view is that
the best solution for the u.s. aluminium
industry and the jobs it supports would
be a negotiated government-to-government
agreement with China that results in
measurable reductions in Chinese
aluminium capacity that would address
the problem directly and set the u.s.
industry both upstream and downstream on
a course of expansion rather than
contraction creating more jobs and more
opportunities I'd like to thank
secretary Ross for this investigation
our association stands ready to assist
in any way possible thank you any
questions from the panel thank you so
much we're ready for our next speaker
good morning my name is ben Carson I'm
senior vice president for strategy
technology and corporate development for
Alcoa on behalf of Alcoa aluminum
Association member we welcome the
Department of Commerce for section 232
investigation on the effect of aluminum
and imports on US national security and
to consider actions that will address
unfair trade Alcoa pioneered the modern
aluminum industry in 1888 and has been a
global leader for nearly 130 years today
the Alcoa is focused primarily on the
upstream sector of the aluminum industry
where we mined box.i refine it into
alumina and smelt it into aluminum in
the US we have five operating locations
including two smelters in one rolling
mill with three other production
facilities currently curtailed Alcoa
represents 47 percent of all US aluminum
smelting capacity aluminum is a vital
component in defense applications
including armored vehicles and fighter
jets and while we believe that there is
the ability to produce enough high
purity aluminum in the US for defense
applications we see a risk for national
security that there is not ampuls access
to primary aluminum in North America or
from other US defense partners in recent
years that supply it's been threatened
primarily due to one reason the
oversupply of aluminum being produced in
China
Alcoa seeks to compete on a level
playing field we believe that if United
States wants to ensure an ample supply
of primary aluminum to help protect
national security three steps should be
taken number one address over capacity
of Elune in China to protect the u.s.
aluminum industries integrated critical
supply chain and three provide a
competitive environment for the u.s.
aluminum industry including regulatory
reform affordable energy and critical
investment in 2000 China produced only
10% of the global supply a primary
aluminum today it's about 55 percent
from 2000 until the global financial
crisis China increased its production
year-over-year while at the same time
its economy was growing at a record pace
China was essentially consuming all the
aluminum they were producing as China's
economy began to slow however domestic
Chinese capacity began to outpace its
ability to absorb all its production
this year China's over capacity is
estimated to reach new heights with a
surplus more than 2 million metric tons
that's just slightly below alko is total
global smelting operating capacity and
nearly half of all North American
production in 2016 in total Chinese
domestic consumers consume roughly 30
million metric tons of primary aluminum
annually when compared to the 2 million
metric tons of excess primary production
4 million metric tons of net semi
fabricated products and 9 million metric
tons of curtailed capacity Chinese
current over capacity is 15 million
metric tonnes per year or 50 percent of
China's own consumption this is
equivalent to the total direct supply
from North America South America Europe
and the Middle East combined we believe
China is exporting its domestic problems
China is unfairly subsidized smelters to
maintain employment and keep smelters
online when they should be curtailed and
while China's government is committed to
reducing production there is a lack of
credible data and transparency to show
what actions have been taken
we believe that unfair subsidies for
Chinese smelters persist possibly in the
form of tax breaks loans or lack of
enforcement on policies already on the
books the result has been a significant
curtailing or shuttering of aluminum
smelting capacity outside of China with
no greenfield investment in the u.s.
because of overproduction in China
aluminium prices never fully recovered
from the global financial crisis and
remain 25 to 30 percent lower than
before the crisis and the over capacity
has tremendous impact on the number of
aluminum plants operating and jobs here
in the US
Alcoa has closed curtailed or divested
43 percent of its melting capacity and
35% of its refining capacity since 2007
and in the u.s. this has impacted more
than 1,500 jobs in New York Washington
Indiana and Texas in just the last
couple years as such the US government
should directly engage with the Chinese
government to address the ongoing of a
capacity problem in the aluminum
industry and to ensure that Chinese
overproduction no longer spills out into
the rest of the world outside of China
the aluminum industry has an integrated
supply chain essential to the health of
the entire aluminum value chain
unencumbered trade flows between our
vital trading partners including Canada
and Europe are critical to the success
of the u.s. aluminum and aluminum
industry Alcoa smelters in Canada
exports 60% of the metal to the US
serving customers in 25 states and
supporting our economy through
downstream jobs we need to protect vital
supply chains and
160,000 jobs that depend on them indeed
maintaining a diverse supply chain among
long-standing allies and vital trading
partners bolsters our national security
providing a favorable business
environment that allows our operations
in us to compete globally is also
essential to the long-term viability of
the u.s. primary industry we must have
efficient regulatory policies
competitive energy prices and an
environment that allows our plants to
compete fairly in addition our
production facilities would benefit from
investment in innovative technologies in
the form of a public-private partnership
to advance our smelting industry to the
next generation with investment in R&D;
and the commercialization of
technological breakthroughs we can
ensure the competitiveness of existing
smelters and secure jobs in the u.s. in
conclusion Alcoa greatly appreciates the
US government's sustained commitment to
addressing the challenges facing our
industry we look forward to the findings
in section 232 and remain committed to
continued engagement on these critical
issues thank you thank you
any questions I thank you so much ready
for our next speaker
good morning I'm Dan Langer with phb
incorporated thank you for the
opportunity to appear on behalf of phb
incorporated with facilities in Fairview
and Erie Pennsylvania our company was
founded in 1906 phb incorporated is a
us-based supplier of aluminum and zinc
toy castings the CNC die casting
machining molds and toilet we ask that
the department consider the impact its
decision will have on the entire supply
chain particularly American defense
suppliers using aluminum a night our
registered company PHP has over 500
skilled employees in Northwest
Pennsylvania Manufacturing castings for
some of the largest corporations in the
United States our employees make
critical products for the defense
automotive appliance and lighting
industry among others last year alone we
produce more than 15 million castings
and pour nearly 50 50 million pounds of
alloy with over a hundred years of
aluminum die cast and experience our
company is one of the global leaders in
aluminum casting we typically use
aluminum alloys 363 83 83 and 413 we
also use zinc aluminum alloys z8z a 12
and Z a 27 along with number three zinc
alloy as a supplier to the US military
we manufacture military radio castings
used by all branches of the US military
and special operations around the world
a woman consumers like PHP in
Pennsylvania are critical to national
security not only are we the customers
setting in demand
but we are the us suppliers helping meet
the needs of our warfighters
PHP is a critical part of the defense
industry supply chain and any
disruptions in our raw material can send
a ripple effect throughout the military
in fact we are already facing
significant challenges or
self-importance of aluminum castings
from India why I know Washington focus
much much of its attention on excess
Chinese aluminum and rightfully so I
encourage the department to look at
imports and downstream products from
around the globe having a strong and
growing domestic aluminium supply is
critical not only to national security
but also to economic growth while phb
does not import any aluminum directly we
do purchase globally produce secondary
aluminum through our domestic suppliers
we are very concerned at restricting
imports or placing tariffs on aluminum
will simply lead to more castings coming
into the US with foreign aluminum all
duty-free shifting the injury to another
part of the defense supply chain will
not help I want you as aluminum
producers what caused all of us to lose
we strongly urge the department to not
only look at the impact of imported
aluminum on national security but also
on products primarily manufactured from
aluminum downstream suppliers like us
are often family small businesses and we
already face a number of challenges our
company continues to grow to meet the
needs of our defence and other customers
but we are very concerned about an
increase of import castings and other
aluminum containing products of India
China and elsewhere
we asked the department take a broader
look at the aluminum marketplace and not
take action that will shift the injured
injury to our industry by giving
imported castings with cheap aluminum of
free pass thank you for the opportunity
to testify thank you are there
particular types of aluminum castings
from India that you're seeing coming
into the United States yes
automotive related castings and
appliance related casting is our largest
competition thank you
questions rest of the panel thank you
for your we're ready for our next
speaker
good morning my name is Margaret
Cosentino I'm vice president for
government affairs and defense for our
chronic we value that administration's
engagement with our industry and
appreciate the opportunity to
participate in today's to 3-2 hearing we
submit that a healthy u.s. aluminum
industry enhances our national security
and that solutions identified during
this investigation support all segments
of the value chain including mid and
downstream our Connick is a lightweight
metals manufacturer who works with our
customers to solve complex engineering
challenges transforming the way we fly
drive build and power our businesses
have helped shape the aerospace defense
automotive and building industries since
the days of the Wright brothers and
Henry Ford today we continue to advance
cutting-edge technologies from metal
powders optimized for additive
manufacturing to next-generation
automotive alloys that are significantly
more formable and stronger than those
and use today our conic is tremendously
proud of our twenty two thousand seven
hundred and fifty employees in the
United States since 2009 we have
invested more than three billion dollars
to modernize our US facilities adding
more than 2,600 high quality advanced
manufacturing jobs we are an active and
long-standing member of the u.s.
aluminum association our connick is
proud to serve as a leading aluminum
products supplier to Department of
Defense programs providing engineered
solutions that increase survivability
reduce weight and enhance performance
across air land and sea platforms today
our Konica Lumina Mol's flies and sails
on over 80 major defense programs of
record our defense solutions are
produced across 45 plants in the United
States armor plate manufactured at
Davenport Iowa can be found on nearly
every new u.s. combat and tactical
vehicle program of record single piece
aluminum bulkheads Fortune Cleveland
formed the backbone of the f-35 Joint
Strike Fighter
the demand for aluminum on critical US
military platforms is expected to grow
significantly over the next five years
driven by the planned ramp a program
like the jsf and the joint light
tactical vehicle demand for cold rolled
aluminum alone for armor plate and
marine applications is expected to
triple by 2021 we have long collaborated
on research and development with the US
Army Air Force Navy and Marine Corps on
alloys and manufacturing processes for
example we work with the US Air Force to
develop next-generation propulsion and
airframe structural components through
the metals affordability initiative this
is a consortium dedicated to leveraging
government and industry resources to
reduce costs and lead time associated
with producing metallic aircraft
components our conic has a long history
of manufacturing partnerships with the
DoD including those that helped build
the world's widest aluminum rolling mill
in Davenport Iowa and the 50 kiloton
press in Cleveland which produces some
of the largest close.i fortunes in the
world through these investments we help
ensure robust industrial capacity
supporting military readiness and
enhancing the country's technological
edge and manufacturing our conic has
continued to invest in these assets over
the years including a recent 100 million
dollar upgrade to the Cleveland Forge
and nearly five hundred million dollars
in investment at Davenport our conics
defense portfolio is overwhelmingly
commercial item
this means we leverage the best of our
innovation developed for commercial
application to meet the unique needs of
the warfighter this means our defense
products are manufactured across
hundreds of commercial flow paths rather
than on their own dedicated assets to
best maintain the health of our advanced
aerospace and defense product lines we
rely on a strong backlog across our
product portfolio to include business
and automotive industrial and packaging
this allows us to optimize mix across
our plants and produce our parts in the
most efficient and cost-effective manner
possible
regarding high purity aluminum new
defense platforms have requirements that
call for higher purity aluminum than
legacy programs and we expect this trend
to continue our Connick invented a
refining process that produces high
purity aluminum using fractional
crystallisation this is in operation
today at our plant in Davenport our
Connick aerospace and defense products
account for the majority of total u.s.
demand for high purity aluminum
our process is reliable efficient and
produces the highest levels of purity we
currently produce a significant share of
our own utilization and this is an
easily scalable process finally us mid
and downstream producers rely on primary
aluminum imports the majority of these
imports are Canadian and origin and
producer factories that are part of the
US defense industrial base action on
primary aluminum imports would do little
to address global overcapacity and
potentially harm the US defense
industrial base by disrupting the
integrated North American supply chain
in conclusion we appreciate the
administration's engagement on a topic
of great importance to our industry and
the US defense industrial base we look
forward to working with the team to
ensure an outcome that supports us
competitiveness and enhances our
national security thank you thank you
any questions thank you thank you we're
ready for our next speaker
good morning my name is Billy Hughes and
I'm a proud veteran of the United States
military I've worked in aluminum in the
industry for the past ten years I
appreciate the opportunity to speak to
you today about the importance of
domestic aluminum production to national
security and why section 232 relief is
necessary for our industry I've been a
reduction services superintendent at
century aluminum hawse ville in Kentucky
for the past two years and in this role
I administer activities of the pot lines
as well as its Ellery lighting I'm on
the floor day in and day out to ensure
that we produced the highest aluminum
production possible prior to this
position I worked at Alcoa in work for
eight years I was a supervisor there and
I was also early as a process control
operator I left there in 2015 just
before the shutdown for the past ten
years aluminum has been a big part of my
life and lives of my friends and family
I'm grateful to my job at Havel and I'm
luckier than most is to have a job in
this industry however I'm concerned
without much needed relief this will not
be the case much longer
what was once a thriving industry has
all but disappeared in my time in the
industry I saw conditions deteriorated
as China expanded production and crashed
prices as just one example in the
industry our Berlin with bonuses are
often faced on the company's performance
this means that as the market started to
get bad so did our bonuses sometimes
there were none today I feel fortunate
to work at Havel the last remaining us
smuggler that can make high-purity
aluminum however even this facility is
at risk over the past five years Havel
has issued two separate notices that
were primarily shut down operations in
660 days lucky for us on both occasions
the smelter was able to pull its
business back from the brink but not
without layoffs in the past two years
alone the facility has been forced to
let hundreds of workers go has been
scrapping unused machinery for cash to
help us get by pause valise aliy become
the next aluminum smelter to go under
unless relief is granted I would stress
that the production of high purity
aluminum requires highly technical
skills that are not easily replaceable
the high purity production process is
complex and leaves no room for error
this process is part art and part
science even the slightest amount of
can throw the entire pot off when these
jobs go so the specialized skills needed
to produce the high purity aluminum the
domestic industries problems have taken
its toll on its workers and families
many who have lost their jobs remain
unemployed to this day not a week has
gone by where I don't receive a phone
call from a former colleague looking for
work our communities have also suffered
like hawesville smelters are typically
located in small family-friendly towns
when their largest employer is forced to
shut down and reduce jobs the whole town
fills it as a veteran of the US Army I
know first firsthand how important
luminol is to the men and women who put
their lives on the line for their
country I served in both of' and OIF
following September 11 when I first
arrived in Iraq 2003 Humvees were no
match for the IEDs we're losing soldiers
left and right because our vehicles had
little protection from roadside bombs at
this time members of my unit were forced
to align our vehicles with scrap metal
sandbags bulletproof vests for added
protection by the time my younger
brother arrived in Iraq for 2008
conditions thankfully improved the army
began using high purity aluminum alloy
and it's vehicles which is significantly
more effective at absorbing a blast only
one can imagine how many US soldiers
lives were saved because the switch I
fully agree with secretary Ross that the
brought the primary and high purity
aluminum produced at hawesville is
usually important thing to defense my
fear is that if we allow imports to
continue entering in the US market and
harming harming US production and
workers the domestic aluminum industry
will become a thing of the past and our
national security will suffer it is
critical that we maintain the capability
to produce aluminum and not are forced
to depend on unreliable and unsafe
sources of supply to meet this need I
don't know how important aluminum is to
protect I know how important that lumen
is protecting our soldiers and wouldn't
want to depend on imports from the
Middle East or somewhere else during a
time of war or other national emergency
for these for these reasons is you
granted me to hit section two three -
relief for domestic aluminum industry on
behalf of myself my colleagues and
friends and family thank you for your
time and attention thank you for your
comments a similar question I had for
mr. Smith can you give us a sense
of the amount of time needed to get the
experience to have the people like you
and people who work with you and for you
to do that specialized work on the pots
I can tell you that once a smelter goes
the people are going to share people
like me are going to be looking for jobs
and different industries it's gonna be
hard to come back it's not going to be
an easy task to restart a pot line no
matter where you go it takes a lot of
technical experience you're looking for
guys of you know 10 to 20 to 30 years
experience to start these pylons other
questions from the panel thank you thank
you we're ready for our next speaker
good morning my name is Alf Barrios I'm
the chief executive of Rio Dental M&M; I
sit on the Rio Tinto Executive Committee
and serve as the company's country
sponsor for Canada and the United States
Rio Tinto appreciates this opportunity
to offer comments to assist the partner
to Commerce and Department of Defense in
the section 2/3 to national security
investigation of aluminum imports
routine to commend the Trump
administration focusing attention on the
vital role that aluminum plays in
defense capability my comments today
will highlight the essential nature of
aluminum to the North American integrate
supply chain that is the basis of that
capability
Rio Tinto is a leading global mining and
metals company that focuses on finding
mining and processing essential mineral
resources we have been in business for
more than 140 years and some of our
longest operating assets are located in
the United States one of our major
products is aluminium largely produced
in North America
Rio Tinto is proud to have operations
the United States they have provided
critical minerals to US customers for
over 100 years
for example Bingham Canyon Mine in Salt
Lake City Utah is a fully integrated
copper gold and molybdenum mine and
smelter that has operated for hundred
ten years and supplies over 30 percent
of u.s. copper demand Rio Tinto is also
investing for the future
prioritizing mirror explorations in
North America that will support future
US manufacturing demand to date we are
team two has invested over 1.3 billion
to develop the resolution copper mine in
Arizona this mine will require six to
eight billion of investment to the next
several years and is one of largest
private investment currently pending in
the US permitting process Rio Tinto's
operations such as those in Utah
California Arizona are strong
contributors to the United States
economy and employment in the primary
aluminium sector we attended as a
significant contributor to the
integrated manufacturing supply chain in
North America as the largest producer of
primary aluminum our smelters in Quebec
in British Columbia
have a long history of supplying the US
manufacturers particularly customers in
the defense sector in regard to the
national security focus of this hearing
the United States and Canada have
treated each other as indispensable
partners in national defense for nearly
a century the Canadian American defense
industrial alliance known as the defense
production sharing program predates the
US entry into the second world war in
1940 Canada United States established
the permanent joint board on defense
which still operates today the Hyde Park
declaration of 1941 allowed
american-made war materiel to be
produced in Canada and provided to Great
Britain closed defense coordination
between the u.s. and Canada continues
today for over 20 years
US law has defined the national
technology industrial base to include
Canada Canada was the only country to
receive such treatment until Congress
recently added Australia and United
Kingdom this long-standing in deep
cooperation between United States and
Canada has been recognized in Prior
section two three two investigations in
a recent 232 investigation that the poem
could common recognize that quote Canada
is largely integrated with the United
States in the defense arena and is
considered part of the North American
industrial base in defense planning Rio
Tinto's crier to play a critical role in
supporting the US manufacturing base 75%
of Rio Tinto's Canadian aluminum
production is shipped to the US where we
have sales in more than 35 states among
many historical example of Rio Tinto's
operations in North America and their
connection to the defense supply chain
here's our ship Shaw hydropower plant
this plant was built in 1943 with
encouragement from both the US and
Canadian governments the ship Shaw
hydropower station and the aluminum
smelting operations that fed proved
vital in the ramp up of Allied forces of
our life defense manufacturing
capability today it is a key component
of a hydroelectric power network which
feeds the aluminum smelters that provide
reliable aluminum supplies to north
and customers the United States has long
considered Canada's resources and
manufacturing capabilities to be a vital
part of the North American defense
industrial base consistent with US law
and policy Rio Tinto has long been a
proud partner to the US government
private industry and local communities
we look forward to continuing and
deepening these relations thank you
for lining to participate today thank
you as Rio Tinto seen any impact in its
Canadian operations from the Chinese
oversupply when we we have seen in the
past some impact from the Canadian
smelters from the Chinese oversupply and
I must say that the recent statements
from the Chinese government who
recognized the oversupply of the iminium
sector and offer some hope I believe
that the best akram always is a
negotiated solution led by the US with
the Chinese this will probably look more
sustainable long-term solution which
will give clarity and predictability for
the industrial future industrial
investments in North America thank you
thank you for your time Specter we're
ready for next witness
good morning my name is Allison Keene
and I'm the president and CEO of the
flexible packaging Association flexible
packaging represents over thirty billion
dollars in the in annual sales in US and
it's the second largest and fastest
growing segments of the packaging
industry the industry employs over
80,000 workers in the United States it's
produced from paper foil plastic film or
any combination of these materials this
includes bags pouches labels liners
wraps roll stocks and other flexible
products with respect to aluminum foil
this packaging includes everyday food
and beverage products such as Hershey
Kisses Pringles dan and yoghurt
capri-sun as well as health and beauty
items such as Tylenol
Clinique Plus Gillette saving and
Gillette shaving cream aluminum foil is
used by the flexible packaging industry
for medical device packaging as well to
ensure that the products packaged such
as absorbable sutures human tissues and
artificial joints are maintained
maintain their efficacy and sterility at
the time of use this section to 32
investigation seeks to determine what if
any affects imports of aluminum have on
national security
FPA is not aware of any impacts aluminum
foil imports for the use in the
packaging industry has on national
security we support the efforts to
protect domestic manufacturing and
ensure national security but believe any
such efforts must consider the impact
and consequences on all US manufacturing
sectors accordingly the scope of these
actions must be limited to address the
specific objectives aluminum foil
imports should be excluded from
consideration without any application to
national security and if it's in its
investigation the administration is to
consider a range of factors related to
national security including the economy
the effects of foreign competition on
economic welfare and impacts on
employment any import restrictions we
believe on aluminum foil will have a
significant negative impact on the
flexible packaging industry and its
employment in the United
States this investigation is paralleling
an international trade commission
investigation of Chinese aluminum foil
imports the petition claims that dumped
and subsidized aluminum foil from China
is causing or threatening injury to the
domestic aluminum foil industry the ITC
petition steek seeks deep import duties
exceeding 140 percent the unintended
consequences of potential remedies under
this investigation combined with any
imposed by the ITC on the ability for
flexible packaging manufacturers to get
the aluminum necessary to create
innovative and functional products for
food beverages candy and pharmaceuticals
would be the loss of flexible packaging
manufacturing jobs in the United States
aluminum foil is used by the flexible
pack aluminum foil that is used by the
flexible packaging industry is simply
not manufactured in the quality and
quantities needed in the United States
failure to invest and quality lapses
including gauge width and lack of
appropriate alloys contribute to the
fact that US producers of aluminum foil
are not able to serve the u.s. flexible
packaging industry in fact at the ITC's
preliminary hearing on March 30th the
the staff found the domestic ultra-thin
foil production may be limited or
non-existent the ITC also found that
despite the aluminum associations
arguments about economic harm by imports
domestic aluminum foil manufacturing
jobs declined by only 137 workers from
the period of 2014 to 16 to put this
number of perspective again the domestic
flexible packaging manufacturing jobs in
the United States are over 80,000 the
negative impact on American jobs cutting
off the supply of aluminum foil flexible
packaging will far outweigh any job
benefits that are envisioned by the ITC
were section 232 investigations high
tariffs or quotas will only lead to US
companies sourcing aluminum foil from
other non US manufacturers Chinese
suppliers have printed or otherwise
converted aluminum foil entering the US
market since these products will not be
part of the actions and/or US companies
moving flexible foil manufacturing
outside the United States altogether
there is simply no scenario where US
aluminum foil manufacturers benefit
and in most cases us flexible package
oblong FPA shares same goal as domestic
aluminum foil producers who want more
American jobs we understand the
importance of national security we
believe that the administration should
find ways to work together to improve
our country's competitiveness we believe
that everybody loses in unfair trade
cases particularly the American consumer
the ITC's preliminary findings make it
clear that their case is not going to
result in any Bennett benefit to the
aluminum foil producers and the
unattended consequences of including
aluminum foil and any remedy under this
investigation will be more damaging to
the US manufacturing industry and the
economy than the benefits sought thank
you thank you any questions thank you
for your testimony
thank you to secretary rosted panel for
inviting me to speak today my name is
Robert Lauterbach and I'm the vice
president of global sourcing at ball
corporation today I'm testifying on
behalf of the cane manufacturers
Institute CMI who's member companies
including bulk corporation produced over
90 billion aluminum beverage cans every
year create 11 billion dollars in
economic activity and employ 10,000
individuals in 23 states in order to
make the products that we sell we must
purchase very large quantities of
aluminum can cheat in aluminum ingot the
names of these products along with their
corresponding hto HTS codes have been
provided in our submissions we
respectfully request that commerce
exclude the aluminum products that we
purchase from any upcoming trade action
to assist commerce in your analysis we
offer the following reasons number one
the aluminum products that we purchase
do not have any defense applications
number two the aluminum can sheet
producers have been and continue to ship
their production away from aluminum can
sheet that we purchase to higher margin
higher value-added products such as
those used by the automobile industries
as such can buyers like us are forced to
qualify other sources outside the US
this is blameless trade number three
even still we purchased the best
majority of our can sheet from the US or
in the case of aluminum get from
longtime strategic allies such as Canada
in fact only one two to two percent of
the aluminum products that we import
into the u.s. come from China consider
on the other hand the products that are
being imported from China into the u.s.
in large quantities are lower
value-added commodity products such as
aluminum foil for food aluminum finstock
for the HVAC industry and building and
construction
number four imposing tariffs on the
aluminum products that we purchase would
have the unintended consequence of
harming us campaign based manufacturers
while benefiting foreign can sheet
companies doing business in the US let
me explain
three of the four major suppliers of
aluminum kaanchi in the US are foreign
owned novellas con stellium and tri
arrows we heard from them earlier
tariffs will raise their prices increase
their profits but will not have but will
not make the u.s. in aluminum industry
any stronger
number five bauxite the most important
or of aluminum is not mined in the US
and because of high energy costs and low
concentrations of bauxite in US soil it
will not be mined in the u.s. even with
a tariff on imported aluminum number six
the importation of bauxite alumina and
aluminium products we purchase is
properly characterized as blameless
trade and it would be unfair to punish
US based companies who depend on such
blameless trade so we asked why the
decline in u.s. primary aluminum
production it really boils down to three
major reasons high us energy prices
relative to other regions
lack of Ivette investments and u.s.
melting assets in an exponential
increase in domestic aluminum scrap
availability making the need for primary
aluminum less number seven trade action
proposed would likely result in the loss
of high-paying k manufacturing jobs and
compromised the competitiveness of us
downstream aluminum aluminum users
number eight trade remedies would have
the chilling effect of investments on
our industry over the last five years
alone CMI companies have invested well
over 1 billion dollars in their US
manufacturing facilities even small
tariffs will result in greater
uncertainty about prices supply
financing and would dramatically curtail
investment in
the US in number nine finally a tariff
on aluminum products would have a
two-fold impact first consumers would
pay more ultimately harming the US
consumers that rely on affordable canned
products and second our products would
be unfairly text making cans less
competitive when compared to competing
packaging substrates such as plastic and
glass with these concerns in mind we
respectfully request the Commerce exempt
the aluminum products that we purchase
from any tariff or trade remedy thank
you thank you for your comments
questions thank you
we're ready for our next speaker
good morning my name is Jim McGreevey
I'm the presidency of the beer Institute
thank you for the opportunity to provide
the US beer industry's views on the
department's investigation I speak on
behalf of the beer of the beer industry
which represents 1.9 percent of the
nation's gross domestic product and the
direct indirect and induced jobs of 2.2
3 million Americans the Brewers
Association and the American Beverage
Association join us in our written
comments a majority of the volume of
beer sold in the US is packaged in
aluminum cans and aluminum bottles made
from aluminum cans sheet while 98% of
our cans sheet is domestic imported
primary aluminum is an essential input
tariffs or other measures limiting the
importation of primary aluminum or can
sheet will hurt our economic activities
and the jobs our industry supports
imports of primary aluminum fork and
sheet manufacturing do not threaten US
national security us smelters and
reliable US trading partners can satisfy
the military's demand the competitive
challenges us smelters face are the
result of factors unrelated to imports
aging facilities high energy costs and a
strong US dollar we urge the secretary
not to impose any tariffs or
restrictions on imported can sheet
primary aluminum or ingot the department
has trade remedy tools that can use in a
targeted manner to address unfair trade
practices as it did in its recent scope
determination concerning Chinese
aluminum pallets and its recently
initiated an investigation of aluminum
foil imports from China we urge the
secretary to recommend the continued use
of such targeted actions consistent with
US trade remedy laws and regulations and
with our international commitments we
also urge the secretary to consider that
energy costs are a key factor driving
smelter competitiveness the u.s.
producers are at a severe energy cost
disadvantage relative to their foreign
competitors lower energy costs help
smelters and may encourage investment in
the you
rather than in other countries today I
would like to speak to another issue
that should be part of the department's
inquiry and is of great concern to the
beer industry serious irregularities in
the trading of primary aluminium
contracts and in the storage of aluminum
at warehouses approved by the London
Metal Exchange these irregularities
seriously distorted the aluminium market
and cost aluminium users billions of
dollars aluminium producers themselves
have some responsibility for current
market conditions by taking incentives
from london metal exchange warehouse
owners to funnel aluminium away from the
market today US producers have taken
production offshore by investing in
building smelters to reduce their cost
of production here in the u.s. at the
expense of American jobs in November
2014 the Senate permanent Subcommittee
on investigations issued a report that
found quote troubling issues involving
conflicts of interest market distortions
and the potential to gain unfair trading
advantages which likely added billions
of dollars in costs to a wide range of
aluminum users from beer makers to car
manufacturers to defense companies that
make warships for the Navy
though the London Metal Exchange enacted
reforms that resulted in significant
market Corrections irregularities and
distortions of the market may not be
over we've recently seen price movements
that appear disconnected from market
fundamentals there are two reasons I
raised this first as the secretary
considers whether to recommend import
adjustments keep in mind the negative
impact that restrictions on supply of
primary aluminum will have on our
industry and that of other aluminum
users we just exited a period when
artificial restrictions in the market
distorted prices and hurt aluminum users
import restrictions would likely have
the same effect leading to higher costs
and in turn lost sales second high
aluminum prices coupled with a strong US
dollar make the US market attractive to
global aluminum savate suppliers
incentivizing additional imports if the
concern is imports of primary aluminum
it is critical to evaluate the role
aluminum price irregularities and
distortions played in creating the
current situation while imports of
primary aluminum 4k
do not threaten US national security
there are actions the secretary should
recommend to the President to facilitate
a functioning aluminum market one
further scrutiny of aluminum price
irregularities and distortions policy
changes focused on lowering energy costs
for smelters and three no restrictions
on can sheet or its imports thank you
for the opportunity to appear before you
today thank you for your testimony any
questions Thank You member members of
the panel I thank you for the
opportunity to speak with you today
my name is Matt Abood and I am the
president of hydro aluminum metals USA
with offices in Baltimore Maryland hydro
is a global aluminum company with
production sales and trading activities
throughout the value chain from bauxite
to alumina energy consumption energy
excuse me energy energy generation to
the production of primary aluminum and
rold products as well as recycling
headquartered in Norway the company has
13,000 employees involved in activities
in more than 40 countries in the u.s.
hydro is a supplier of rolled aluminum
and other metal products the company has
two dedicated aluminum remelting
facilities in Henderson Kentucky and
commerce Texas in addition we operate a
Technology Center in Zeeland Michigan
where we are conducting research to find
and improve advanced solutions for
aluminum and our end markets hydro has
serious concerns regarding the
distortion of trade flows resulting from
over capacities in the aluminum market
caused by state interventions therefore
we welcome all evidence based inquiries
into the current situation faced by the
aluminum industry we agree that the
crisis caused by overcapacity requires
decisive government reaction however we
are concerned that the potential trade
remedies resulting from a 2 3 2
investigation namely duties tariffs and
quotas do not effectively address the
fundamental cause of today's situation
which is over capacity in the primary
aluminum industry stemming from
practices which are not compliant with
trade law this coupled with the fact
that the u.s. is a deficit market and
rely on imports to supply the annual
demand for primary aluminum we urge the
Department great caution many in this
room would agree that the tools afforded
to the President as a result of the 232
investigation are far from perfect or
appropriate unfortunately there is no
substitute for free and fair trade based
on a level playing field and is our
opinion that we shouldn't try to distort
the market back into compliance that
being said we are all hopeful that if a
trade remedy is chosen there will be
minimal unintended consequences for the
integrated u.s. aluminum supply chain
the aluminum industries in Europe the US
and Canada are interlinked adding value
to our societies as a whole in
strengthening national security in the
u.s. tariffs or quotas imposed on
European or Canadian aluminum with their
4b examples of such unintended
consequences both Canada and Europe have
been long-standing commercial and
military partners of the US and are
characterized by strong market economies
and legal systems the Canadian and
European aluminium industry stand and
fair competition to each other and to
their American counterparts and they do
not pursue any unfair trading practices
therefore we would like to kindly
request the Department of Commerce to
exclude Canadian and European imports
from the scope of any potential trade
remedies we continue to believe that the
best course for our industry is to
continue working with our global trading
partners and national trade associations
to find a negotiated solution the
request in March 2017 to the g20
countries from the aluminum associations
of the US Canada and Europe to handle
the overcapacity
is one such forum another route is
utilising the WTO dispute settlement
system like the USS WTO complaint
against the alleged Chinese subsidies to
primary aluminum production launched on
the 12th of January this year the WTO
dispute settlement mechanism is based on
clearly defined and accepted rules and
will not cause market distortions while
maybe not everyone in the room agrees
that aluminum is a matter of national
security I think almost all would agree
that a healthy and well-functioning
aluminum industry is in our national
best interest
as such we in the u.s. must stand
together with our colleagues in
government and those throughout the
globe who play by the rules to ensure no
further harm is done to our great
industry thank you very much thank you
has high growth seen any impact on any
of its operations from the Chinese
overcapacity the major impact that hydro
has seen has been through our downstream
joint-venture in Sapa extrusions soft
extrusions is the world's largest
extrusion company and I believe you'll
hear in just a moment from the head of
the aluminum extruders Council who can
comment very directly on the impact that
has happened in the over capacities on
the downstream side but certainly there
has been quite a bit of market
distortion throughout the world thank
you
question thank you for your testimony
hello and thank you for the opportunity
to testify before the panel my name is
garni Scott I'm the president and CEO of
sceptre Inc my company is primarily
engaged in the recycled aluminum market
I'm here today in my capacity as
chairman of the aluminum Association a
position I've been privileged to hold
since October 2015 the aluminum
Association represents the entire value
tire aluminum value chain from primary
producers to recyclers to fabricators
and their suppliers our members employ
160 1000 workers and have manufacturing
operations in 35 states an account for
70% of the aluminum and aluminum product
shipped in North America in creating a
hundred and eighty-six billion dollars
in economic activity the domestic
industry remains a leader in innovative
aluminum technologies and applications
but it is at a juncture will it will
either be able to take advantage of
growth opportunities or will continue to
be irreparably injured by unfair trade
practices that undermine its ability to
do so our industry has been hurt and its
future is threatened by global
oversupply more specifically the US
industry is being harmed by massive
Chinese overcapacity resulting from
substantial subsidies by the government
of China such that China's capacity now
far exceeds its domestic demand China's
huge and growing aluminum oversupply has
distorted the world market and adversely
impacted us producers of both primary
and downstream products Chinese /
supplies puts severe downward pressure
on world prices which in turn has
resulted in the shuttering of us
aluminum smelters and semi fabricating
facilities we have major concerns about
China's rapid and aggressive expansion
into value-added downstream products and
their history of circumvention of US
duties through Mis classification and/or
transshipment transshipment through
third countries to burden to bring its
production into line with domestic needs
and not to export its oversupply China
and the EADS to
eliminate market distorting policies and
close or idle at least two million
metric tons of smelter and semi-finished
product annual capacity the trends in
Chinese capacity production and exports
have enormous negative impacts on the US
industry and have adversely affected
industry that is a vital component of
our US defense industrial base in order
for the u.s. aluminum industry to supply
these defense needs and continue to
probably provide jobs in our communities
we need to be competitive and
economically healthy absent actions that
ensure robust and healthy commercial
markets in the United States for
aluminum and aluminum products domestic
producers will not be able to sustain
their mills and facilities that also
produce aluminum products that are vital
for defense applications think of it
this way the North American aluminum
producers ship about twenty six billion
pounds per year perhaps 1 to 1.5 billion
pounds of this metal is ship for defense
applications about 5 percent there is no
way to sustain a viable industry on
these volumes alone and no plant makes
exclusively for military applications so
if we do not address the Chinese
overcapacity issue our entire commercial
market may not be viable to the US and
will be completely at the mercy of
global producers for its defense needs
the u.s. aluminum industry embraces
competition that is fair and transparent
we believe that it is vital to the
Chinese government to address the
negative effects of the long-running
rampant over capacity in both the
primary and downstream sectors by
closing smelters and semi fabricating
mills until demand can meet supply this
includes at a minimum forcing
inefficient unpermitted and antiquated
facilities to close in China and to
pursue policies that align with its own
stated sustainable development goals and
eliminate Chinese subsidies and Chinese
lending and other incentives that
artificially support the Chinese
aluminum industry and its resulting
pricing practices that negatively affect
world markets through its exporting of
aluminum a 232 remedy
should address the negative impacts of
Chinese overcapacity in the United
States and help protect an industry that
is vital to the country's national and
economic security US border measures
will not fully address the problems we
face because the domestic industry
complete competes globally and has
international supply chains unless a
broader agreement is negotiated to
reduce and eliminate the massive over
capacity in China the negative effects
will persist and continue to threaten
the u.s. industry's long-term health and
vibrancy thank you to the panel we
appreciate your focus on our industry
thank you
questions thank you thank you
good morning I'm Steve Casey senior
director of procurement for being this
company incorporated Bemis a
manufacturing of packaging headquartered
in Neenah Wisconsin believes it has a
useful perspective to provide to the
Secretary of Commerce and the Department
of Commerce as they develop their
analysis and recommendations for the
president pursuant to the section 230 to
national security investigation of
aluminum imports Bemis is concerned that
potential measures resulting from the
aluminum investigation could
inadvertently have a negative impact on
the supply of aluminum foil used in
manufacturing flexible packaging in the
United States with potentially negative
consequences for Bemis customers
competitive position and employment any
import restrictions on aluminum foil and
especially the ultra thin foil used in
flexible packaging could negatively
affect our business in the United States
given that one there is not adequate
capacity in the United States and Canada
to meet our quantitative and qualitative
needs and to our products compete with
imported packaging that would not be
covered by any measure impacting foil
imports accordingly Bemis respectfully
submits that aluminum foil should be
excluded from any eventual measures
recommended to the president pursuant to
the investigation of national security
effects of aluminum imports Bemis
manufacturers packaging for the largest
food consumer products and medical
device companies in the world though we
are not a household name our products
are found in virtually every aisle of
the grocery store our products keep the
food you buy safe and fresh through
distribution and keep patients safe
during surgery we have 59 facilities in
12 countries and about 17 thousand five
and 500 employees worldwide within the
United States Bemis has 31 manufacturing
plants in 14 states and almost 9,000
employees 5,000 of those in Wisconsin
the states with the largest number of
Bemis employees are Wisconsin Indiana
Ohio and Pennsylvania
as a core part of its packaging business
Bemis uses aluminum foil for barrier to
protect the food and medical supplies
that go into our packaging without
aluminum foil many food and medical
products would be less safe and subject
to higher waste and redistribution while
Bemis source is a large percent of a
percentage of its aluminum in the United
States there is only one domestic
producer of converter foil and that
firms entire capacity is not enough to
supply Bemis annual requirements in
addition a large portion of Bemis toil
requirements are for ultra-thin foil of
gauges less than point zero zero zero
three inches thick
such ultra thin foil is used for
applications like ketchup packages cream
cheese packaging powdered food and
beverages and medical device packages
Bemis customers such as Kraft Heinz
McCormick and vecten dicket's of
Dickinson require this thin converter
foil but u.s. foil producers do not want
or are unable to make gauges under
triple L three inches as such Bemis has
been required to source this key
material from offshore suppliers
Beeman's Bemis operates in a highly
domestic highly competitive domestic and
international market many of Bemis
aluminum foil containing products
compete with suppliers of packaging from
outside the US increased prices or
quotas for aluminum foil will open the
door for imports of finished packaging
resulting in a loss of market share
profitability and ultimately important
employment Packaging foil is not made
from military-grade high purity aluminum
we are not aware of any significant
defense production needs for aluminum
foil packaging foil the only military
application we have identified for
aluminum packaging foil is for meals
ready-to-eat for MREs however MREs are
typically made with a thicker foil than
be misuses which can be easily sourced
domestically finally we understand the
importance of protecting domestic
manufacturers is in key industries to
the extent that the secretary and the
department are concerned about
distortions in the aluminum foil market
we note the ongoing trade around
any proceedings before the Department of
Commerce and the US International Trade
Commission provide an appropriate tool
to address any needed Corrections those
proceedings entailing thorough factual
market research and animal analysis are
at a preliminary stage allowing the
proceedings to run their course will all
consumers time to adjust the present
section the present section 232
investigation should not be used to
restrict imports of aluminum foil for
commercial uses as the result would be
grave economic consequences to the
domestic manufacturing facilities of
bemis other protecting producers and our
customers with no increase in defense
security thank you I'd be happy to take
your questions thank you you did say
that
bemis source is a large percentage of
its aluminum in the United States but
the one supplier can't meet all the
demands or the neat be misses needs and
then you go on to say for a large
portion of the ultra thin foil is not
available in the United States can you
give us a sense of the proportion of
those those two categories yes so we we
source the vast majority of our foil
that's over triple L three domestically
the foil that's under triple L 3 we have
to import the the majority of that
because it's not available and it's
about 25 to 30 percent that's above
triple o three and the balance would be
below to the triple L 3 thank you yes
any other questions where do you import
they're very good then the ultra thin a
significant portion does from come from
China we can import from Europe as well
as other Asian countries as the trade
remedy proceedings are taking place we
have been investigating alternate
sources and honestly we are struggling
to find enough capacity to meet all of
our needs outside of China thank you
we're ready for the next speaker
good morning my name is jorge vasquez
and founder and managing director of
Harvard lumina billions Harvard is an
independent privately owned research
firm based in Austin Texas that
specializes in the analysis of the
global aluminum industry and its various
markets my testimony will be factual
over 98% of the aluminum products the
u.s. consumed in 2016 were produced here
in the United States by aluminum
products
I mean milk products and castings
actually net us imports of aluminum
products have declined in the last 10
years both in absolute and in relative
terms
this explains why net exports of
aluminum products to NAFTA partners have
more than tripled in the last 10 years
to 690 thousand tons in fact the u.s. is
a net exporter of kenji to the world
contrary to what many may imagine the US
has had for many years an aluminum trade
surplus with China the u.s. exports more
aluminum scrap units to China than the
flat world products the US imports from
China although this trade surplus still
exists today it has deteriorated in the
last 10 years
u.s. military demand for aluminum
products is more than 99 percent sourced
from US producers in fact domestic
production is about 40 times larger than
US military aluminum demand volumes with
respect to high purity aluminum US
production is essentially three times
larger than what the US military
consumes every year moreover existing
u.s. high purity inventories can cover
almost two years of US military
consumption what if US production of
high purity aluminum were cease to exist
well the you
as military could alone produce its
entire needs using fractional
crystallisation technology which is
readily available in the US and
currently operates at commercial levels
has China over produced primarily minim
and cost us smelters to close honestly
evidence doesn't support this notion
consider these four facts us smelting
production had already declined 40
percent by the time China's primary
aluminium production and consumption
started to take off in 2002 average
catch profit margins for smelters
outside China have been higher in the
last 12 years than in the prior 12 years
when China's primary aluminum production
and consumption took off
China's total primary aluminum stocks
today equate to approximately four weeks
of consumption versus 30 weeks of
consumption outside China and China
doesn't export primary aluminum please
note that US primary luminal production
has been declining since 1980 this is
several decades before the Middle East
and China became relevant primary
aluminum producers u.s. primary aluminum
production has experienced an organic
long-term decline as a result of an
exponential increase in domestic
aluminum scrap availability high
electricity prices relative to other
developing countries lack of investment
in smelting assets in a long-term
decline in aluminum consumption per
capita moreover this decline has been
particularly driven in the last five
years by a strong rally in the US dollar
which are appreciated around 20% over
this period it is technically clear to
me that growing US primary aluminum
imports have been a natural economic
effect of the gradual long-term decline
in uncompetitive u.s. primary aluminum
production not vice-versa declining u.s.
primary aluminum production is
kind of an organic maturity process
where the US economy and aluminum
industry have moved away from low value
energy intensive and less competitive
industrial segments to more profitable
and energy-efficient sectors just like
it has happened in other developed
countries like Germany Japan in the UK
it is my technical view that exports of
value-add u.s. aluminum products like
can ship extrusions and foil would
decline in a significant way if the US
were to impose any type of restriction
or duty on primary aluminum that ends up
in impacting prices lastly my analysis
of physical transactions in the u.s. is
leading me to believe that an artificial
increase in the Midwest premium may have
artificially attracted more primary
aluminum imports than otherwise may have
occurred
I can gladly share these analyses upon
request thank you thank you questions
for the panel thank you for your
testimony
next speaker please
hello my name is Charles Keating I'm the
owner of Seco metals in Fort Worth Texas
sickled has been in business since 1983
and we make manufacture aluminium pellet
from primary aluminum only which is used
by major chemical companies and alloy
metals Seco produces aluminium products
impurity grades up to ninety nine point
nine nine eight percent pure the US
smelters can only produce purity as high
as ninety nine point nine eight which is
ten percent less and that that metal is
not available to Seco from downstream
produce or downstream producers in fact
Seco is the only approved supplier of
high purity aluminium used in the
domestic manufacture of titanium alloys
made for aerospace and military
application an average of seventy
percent of our production is sold
domestically nine percent is sold into
China and 20 percent into other foreign
countries we buy nolan aluminum from
china and they sell no primary aluminum
into the u.s. cost of aluminum
production in the united states is
higher than anywhere else in the world
this is primarily due to the cost of
energy which is 38% of the cost of total
aluminum production aluminum can be
produced in canada for approximately 12
cents per pound less than in the united
states because of lower power cost other
countries have similar advantages over
us in the past in the year 2000 there
were 21 operating smelters in the u.s.
today there are only five smelters owned
by two companies only two smelters of
which are at capacity
the average of age of those smelters is
44 years versus less than 10 years for
those in asian the middle east the u.s.
smelters are operating with a distinct
disadvantage because of their old
facilities and higher cost of
electricity the US has a large
downstream aluminum industry which is at
least 10 times larger than the smell
industry and which creates vastly
greater number of jobs and I belong to
that it will become less competitive and
lose many more jobs than the smelters
currently have with higher cost imposed
by any tariffs Seco imports high purity
aluminum from over ten suppliers across
the globe a tariff will affect the
prices of material that cannot even be
produced in the United States the cost
for aluminum in supplier and customer
contracts written in the u.s. is based
on daily published indexes costs move up
and down with the market there's never
been a tariff on primary aluminum in the
US and therefore contracts do not
anticipate tariffs if a tariff ISM is
passed it will cause havoc in the market
for instance at Seco we buy and sell in
the same market see the chart our
contracts with our suppliers and
customers allow for the price of
aluminum to go up and down based on the
the indexes this allows us to sign
contracts as long as four years since
the rise and fall of the aluminum price
is covered within added fixed cost per
pound to convert the aluminum to pellets
this conversion cost cause covers our
direct cost as well as overhead and
profit if a tariff is imposed Seco would
have to pay it with no way to recoup it
we have no way in our contract to recoup
a tariff we would soon be bankrupt
margins are small in this industry and
it and terrorists could cause the
failure of many companies such as Seco
in 2015 the US military used only forty
two thousand metric tons of high purity
aluminum the u.s. production capacity
was 192 thousand metric tons of which
75,000 tons were idle in addition there
were 75 thousand metric tons of domestic
inventory this equates to 4.6 times
the production capacity with 1.8 times
the inventory of military usage in
conclusion why on earth
do we need any type of tariffs on high
purity primary aluminum to protect to
companies currently operating in the US
who have chosen to stay with outdated
facilities in a country with extremely
high energy cost who have four times as
much capacity as the military needs when
we have one eight point one point eight
years of inventory when a tariff would
create havoc in the downstream market
causing downstream producers to be less
competitive caused bankruptcies and
caused a higher loss of jobs than any
tariffs purports to protect why do we
want to protect all of this when
aluminum purities are available in many
countries throughout the world will we
no longer have allies such as Canada the
source of 63 percent of the u.s.
aluminum imports is our military all at
once going to go to war with every
country in the world that has aluminum
producers I don't think so I am strongly
opposed to any tariffs to adjust primary
aluminum imports because such tariffs
are totally and completely unnecessary
thank you for your testimony the high
purity that seco produces is that a
result of seacoast processes or is that
really result of the high purity primary
it imports is I'm sorry I don't hear
very well what did you show so you said
that Seco produces the highest purity
aluminum US companies don't produce that
you're importing aluminum as part of
your process which is the high purity
that your pecos producing as a result of
what you're importing or result of what
Seco does with the imported it's both we
import the high purity aluminum that's
not available in the United States we
can't get the high purity that we need
from the United States so we import it
and then we convert it and we also took
us three years to develop a process that
would would keep the purity in that
aluminum at its high level when it runs
through every part of our plant without
picking up any contaminants at all I see
thank you other questions thank you
last but not least mr. Henderson good
afternoon I am Jeff Henderson president
of the aluminum extruders Council the
AEC the ACC has over 100 US members that
are manufacturers of aluminum extrusions
our members and their suppliers employ
over 35 thousand workers directly and
nearly 100,000 indirectly in hundreds of
plants spread over 35 States we applaud
the administration's initiation of this
investigation as it recognizes the
extreme importance of the u.s. aluminum
industry and its workers to the national
security of the United States in this
investigation
aluminum should be defined to include
both primary aluminum and semi
fabricated aluminum items indeed
aluminum is produced on a continuum at
one end are the producers of primary or
unwrought aluminum mainly in the form of
England primary aluminum is intended
almost exclusively for further
processing into a semi fabricated form
such as sheet foil plate and extrusions
all of which fall on the other end of
the production continuum the threshold
question in this investigation is
whether aluminum is critical to u.s.
national security the answer is yes
numerous finished products made with
aluminum are critical to the u.s.
defense industrial base which we will
address in more detail in a written
submission indeed not only is a thriving
aluminum industry critical to our
nation's national security certain
foreign industrial policies pose a
significant threat to the u.s. aluminum
industry this
material particularly the case with
China and more recently Malaysia and
Vietnam while aluminum's defense
applications are extremely important
protecting that segment of the market
alone is not sufficient on its own to
ensure the continuation of a viable US
aluminum industry which is ready to meet
full wartime demand rather the entire US
lumina production continuum must be
protected to prevent further weakening
of this critical industry so what is
required to protect the u.s. aluminum
industry
well first you must understand the
aluminum crisis the crisis confronting
the u.s. aluminum industry is China
plain and simple as with other critical
industrial sectors China's aluminum
strategy is to continue to build
production capacity and employ tens of
thousands of excess workers by
artificially increasing aluminum output
China uses massive subsidies and other
protectionist policies to accomplish
these market distorting objectives
unless President Trump and this
administration take decisive action and
corrective action the u.s. aluminium
industry's ability to continue producing
defense and other critical
infrastructure items may be set back
permanently or destroyed the u.s.
aluminium industry has paid the price
for China's self-interest at policies as
has our national security seven years
ago the AEC led the charge in bringing
anti-dumping and countervailing Duty
cases against Chinese aluminum
extrusions since imposition of the
orders however the Chinese have worked
overtime devising multiple transshipment
and other evasion schemes to avoid the
duties for example the Chinese have
greatly increased their exports of
extrusions to Vietnam since 2011 these
exports increased by almost 4,000
percent during that same period exports
to the United States from Vietnam have
increased by close to 8000 percent
similar trends are occurring in Malaysia
and other Southeast Asian countries
China's practices
had a devastating impact on the u.s.
aluminum industry as they have
fundamentally distorted the US market
let me highlight how the AEC believes
that the administration should address
the aluminum crisis key to our
recommendations is that the
administration must ensure that its
actions do not reinforce or exacerbate
the existing distortive Chinese policies
as such the AEC does not support the
imposition of tariffs or other
restrictions on the import of primary
aluminum is that will simply support
China's aluminum policy goals especially
since China does not even export primary
aluminum imposing tariffs on primary
aluminum would adversely impact the
ability of us semi fabricated producers
including AEC's members and their
customers to compete against imports of
their products from other countries
including China's transshipped semi
fabricated products the administration
should instead seek to restore the
economic viability of the u.s. aluminum
primary industry and a holistic fashion
by addressing the underlying regulatory
environment that has made the primary
industry increasingly less competitive
to the extent the administration
determines that tariffs or other
restrictions on imports of primary
aluminum are necessary it should ensure
that US producers of semi fiber catted
fabricated products including extrusions
are not negatively impacted regarding
extrusions the administration should
impose duties on aluminum extrusions
from countries that are allowing China
to evade the department's orders thank
you thank you for your testimony any
questions thank you well that concludes
all of our scheduled speakers so I want
to thank the speakers for taking the
time to come and give us their
presentations the panel members and also
those of you in the audience who have
attended yeah and the remember the
comment period will remain open until
tomorrow so
there are some that have not yet
submitted written comments for the
record in this education you have until
tomorrow to do so thank you again and
the hearing is concluded