WARREN, Ohio – Over the last two years, Wheatland Tube has invested more than $21 million into its plant here to capitalize on the growing demand for oil country tubular goods, or OCTG, pipe in the Marcellus and Utica shale plays.
But despite a skilled and efficient workforce, a highly automated production operation, and a healthy oil and gas market, companies such as Wheatland are finding it difficult to do business in the face of what they claim are high level of imported OCTG pipe from South Korea.
"They're dumping the products," charges Nick Shubat, general manager of parent company JMC Steel Group's Energex division, which oversees the Warren plant. "Their raw material costs are being subsidized in some way, and they're not giving the Department of Commerce their cost on raw materials."
Shubat was joined by U.S. Sen. Sherrod Brown, D- Ohio, at the plant Friday to call attention to the issue.
They argue that these subsidies enable South Korea -- a country with labor and production costs similar to those of the United States -- to price finished OCTG pipe much cheaper than domestic producers, Shubat says.
In February, the Department of Commerce issued a preliminary ruling that determined nine companies including Wheatland Tube, Vallourec Star in Youngstown, and TMK IPSCO in Brookfield, were not being injured because of the glut of pipe coming from Korea.
It did, however, find that eight other countries were dumping OCTG pipe on the market.
"We don’t believe that they fully investigated the raw material cost side, and fully looked at the cost of producing steel coil, turning it into pipe, finishing it into a product, and coupling that product so it could be used in the United States," Brown told reporters Friday.
Increased dumping from Korea has led to 40 employees placed on layoff at the Warren plant, plus another 100 others on layoff at plants in Alabama and Arkansas, Shubat said. Another tube plant in Canada has been idled, he noted.
Shubat said that in 2009, South Korea imported 100,000 tons into the American market. Last year, that number stood at one million tons.
Without a favorable decision, future investments at this plant and others are in doubt, Shubat noted.
Brown said during a press event at the plant Friday that he is urging the Commerce Department and the Obama Administration to apply trade sanctions on South Korean imports.
"Korea doesn't even have a domestic market," the senator said. "Everything they make is to sell mostly to here, and they're clearly subsidizing their steel costing jobs. It hurts American workers, and we've got to fight back. Period."
The senator's office reports that South Korean OCTG imports have increased 40% and accounts for 20% of U.S. consumption.
Brown says he and Sen. Rob Portman, a Republican, sent a letter signed by 57 other senators, to Commerce Secretary Penny Pritzker that explains Commerce based their earlier decision on wrong information.
"The data they collected was for a cheaper kind of steel that is used in construction," and not drilling, Brown said. "We're laying this out about why their data was wrong initially, and need to make this determination and support American workers."
Brown added: "When a country illegally dumps its steel in the U.S. market, American workers pay the price. That's just not acceptable."