Poplar Bluff nail manufacturer gets hammered by new tariffs on steel

POPLAR BLUFF, Mo. -- A Poplar Bluff, Missouri nail manufacturer could be out of business by Labor Day according to testimony Wednesday during a Senate finance hearing in which Republicans and Democrats cited concerns with tariffs placed on imported steel and aluminum products.

Mid Continent Nail laid off 60 of its 500 employees last week, George Skarich, the company's executive vice president for sales, said Thursday. Another 200 layoffs could come in the next two weeks, Skarich said.

A 25 percent tariff on steel that started June 1 on the wire used to make the nails is pricing Mid Continent out of the market, said Skarich. A 10 percent tariff is also now being assessed against aluminum. Only imports from Argentina, Australia, Brazil and South Korea are exempted from the tariffs.

Mid Continent Nail is among the top three manufacturers in Poplar Bluff, and produces half of the nails made in the United States.

News of Mid Continent's layoffs was announced by Sen. Claire McCaskill, as lawmakers detailed problems seen across the country because of the tariffs. The company will sell fewer than 4,000 tons of steel nails in July, versus 9,000 tons previously, McCaskill said.

Commerce Secretary Wilbur Ross argued the tariffs already have restarted steel and aluminum factories in Illinois, Ohio, South Carolina, Missouri and Kentucky. An aluminum smelter in New Madrid County was among those to announce in March it would reopen, generating close to 400 jobs.

Mid Continent believes the tariffs are another blow to an industry already struggling to compete with the foreign influx of goods, often from countries already cited for unfair trade practices.

"Eighty percent of the nails sold in the United States are imports from a variety of countries, predominantly China. We've been able to compete against the imports by sourcing our raw material from Mexico," he explained.

The company raised prices to cover the cost of the tariffs, and within two weeks saw business drop by half, according to Skarich.

The fight against foreign goods has been ongoing since 2008, when Mid Continent began filing trade cases against companies that were disguising the country of origin of their goods.

Foreign companies did this to avoid fees assessed for unfair trade practices. The fees were instituted after they were found to have imported merchandise into the United States and sold it at an unfairly low or subsidized price.

The original trade cases were brought by Doug and David Libla, who founded Mid Continent Nail in 1987. The company was purchased in 2012 by Mexico-based Deacero USA.

Sen. Doug Libla has been crucial in helping representatives of Mid Continent Nail get meetings in recent weeks with elected officials regarding these tariffs, said Skarich, who wanted to thank Libla for his help.

Mid Continent filed new paperwork last week with the federal government, asking for product-based exemptions from the tariffs, according to Skarich.

When asked how long the process could take, Skarich said, "There's just no answer to that. We're not sure."

There are about 15 nail companies left in the Untied States, he said. Mid Continent makes 50 percent of the nails produced in the U.S.

"There's no one remotely close to Mid Continent's size in the United States," Skarich said.

All of Mid Continent's nail manufacturing in the U.S. takes place in Poplar Bluff.

The company operates three plants here. The first closed last week, with no new orders and enough inventory to fill the current orders, Skarich said. The majority of workers from a second plant would be impacted next.

The company will look at acquiring wire from countries exempted from the tariff, he said, but that raises other problems.

"The problem is the majority of our wire is a material that rusts very easy. To buy it from offshore, ship it overseas and bring it into this country, the percentage of material that will come rusty and not be usable for us is something that's prohibited that in the past. But it is something that we need to look at," Skarich said.

Other restructuring is taking place to keep longterm and the most talented workers in place while the company continues to work on this problem, he said.

No notices have been filed with the state regarding a mass layoff, according to the Department of Economic Development. The U.S. Worker Adjustment and Retraining Notification Act sets rules that provide protection for workers and their families when a company of more than 100 full-time employees shuts down or reduces staff.

Skarich could not answer questions regarding why notices have not been filed and referred the matter to the Poplar Bluff human resources director. A message left Thursday morning was not returned as of press time.

McCaskill's office said Thursday the layoffs impacted contracted workers and not permanent employees, which did not require notice to be given.

Employees are not counted under criteria for mass layoff notices if they worked less than six months in the last 12 months, or average less than 20 hours a week for that employer.

In previous mass layoffs or closings in Poplar Bluff, a number of resources from the state were provided on-site, including help with filling out unemployment paperwork.

Further complicating the matter for Poplar Bluff is the fact a 2015 expansion of the company was paid for with $4.9 million in taxable industrial revenue bonds issued by the city. The new jobs created by that expansion were also used to secure grant funding for an industrial park overpass project expected to start construction next month.

No information was available on how these projects could be impacted by layoffs or closures.

The tariffs were issued under Section 232 of the Trade Expansion Act of 1962, which allows unlimited tariffs if the Commerce Department finds imports threaten national security.