Osmundson Mfg. Co

Section 232

Posted on 05/08/2018 at 12:00 AM by Joe Sampson

Whether you like or dislike our current president he does have an interesting way to negotiate.  It’s kind of like taking the keys of the car away from your teenager for breaking curfew.  Does it annoy and upset the teenager? Of course it does!  But after hauling your kid around to every practice, meet, lesson and event guess who else is upset and annoyed?  You got it, you are!!  Whatever the case Trump’s tactics spark a conversation for the involved parties.  It is to be determined whether his goal is to prove that he is the leader of the free world or if he truly wants to negotiate.  Time will tell.

The majority of steel and aluminum tariffs that the Trump administration imposed were scheduled to take effect on May 1.  The big decisions left are what the tariff/exemptions for Canada, the largest U.S. supplier of steel, and Mexico and China.  At the time of writing this blog, talks are continuing with these countries to either restructure current trade deals or negotiate new ones.  Some negotiations were already made with countries like South Korea, Japan and others.  Exceptions may have been lifted but quotas have been implemented.  Depending upon how it all shakes out some of these changes may drastically affect the steel industry as we know it today.

What does all this mean for Osmundson Mfg. Co.?  The honest answer is right now it’s too early to tell.  The uncertainty is definitively ubiquitous in the steel industry as well as any trade heavy industry like agriculture.  We know steel prices and lead times have increased.  We know farmers are questioning whether or not they will have sustainable foreign market for their crops.  It’s all “up in the air” right now.  But does that mean we just sit back, relax and enjoy the turbulent ride or can we learn to adapt and thrive in this uncertainty?

One advantage we have over some of our foreign competitors is the fact that our steel is all processed and made in the United States.  We are “in effect” except from any foreign residual tariffs.  The purpose of these tariffs is to drive the U.S. steel industry back into global prominence.  That can only benefit us, our customers and the American farmer.  As we sit today, corn prices are hovering around $4 and soybeans are above $10.  Those are much more sustainable numbers than we have seen the past couple of years.  Farm equipment sales are up anywhere between 20 and 30% across the board and distribution parts are trending along those same lines.  These are all positives for our industry.  As our president Jim Tibbles points out…there are certain things in our industry we cannot control so make sure we put an emphasis on the things we can.  

 

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