CEDAR FALLS — Kevin Harberts was looking forward to an improved 2018. Now he’s waiting for the other shoe to drop — a steel one.
Harberts runs Kryton Engineered Metals, formerly Iowa Metal Spinners, an 80-employee operation in the Cedar Falls Industrial Park that does metal fabrication work for a number of functions, including building heating, ventilating and air-conditioning systems.
He said the federal government’s proposed imposition of tariffs on steel and aluminum imports will drive up domestic prices as well and potentially affect his business. He had been contemplating an expansion this year, but that is now on hold.
“It’s (prices) going to go up pretty fast. It hasn’t yet, but it’s on the way,” Harberts said. “It’s a bit frustrating. We finally got moving. It’s going to cause heartburn for the customer.”
President Donald Trump ordered steep new tariffs on steel and aluminum imports to the U.S. last week, vowing to fight back against an “assault on our country” by foreign competitors. The president said he would exempt Canada and Mexico as “a special case” while negotiating for changes to the North American Free Trade Agreement.
The new tariffs will take effect in 15 days, with America’s neighbors indefinitely spared “to see if we can make the deal,” Trump said.
Aspects of the president’s executive order “were so vague” they caused “kind of an uproar,” though no one really knows their full impact, Harberts said. “The American steel industry raised their prices. And they’re making good money right now. The prices went up because the demand (for domestic steel and aluminum) is up, but the supply is down. They’re taking advantage of us.”
Kryton, founded in 1980 in Waterloo, is “a job shop,” Harberts said, working with commercial and agricultural-oriented customers. “And I’m under contract with some of my larger customers,” which means his company will have to absorb or “eat” some of the price increases.
“It’s going to affect our bottom line,” he said, but how that will impact the work force isn’t known yet.
“We’ve been hiring,” Harberts said. “I’ve got four openings to fill if I can find the people.
“We were looking at adding onto our building,” Harberts said — about 70,000 to 80,000 square feet onto the existing 110,000-square-foot building.
It would be the first addition since 2000, when the company moved to the Industrial Park from a site on Lincoln Street near the old Black Hawk Rollerdrome. But he’s taking a wait-and-see approach to that.
“I was optimistic at the beginning of this year. Now I’m just nervous. ... There’s 150,000 steel workers and 6.5 million people who use and consume steel,” he said.
Meanwhile officials at Moline, Ill.-based Deere & Co., with its massive Waterloo manufacturing complex, are hoping they’ve already weathered whatever storm is coming on steel prices.
“The cost of materials overall makes up about 50 percent of net sales of Deere equipment and of that 50 percent, steel is about 10 to 15 percent,” company spokesman Ken Golden said. “We believe it is possible that the U.S. market has already seen the biggest impact of the tariffs in existing pricing.
“Many of our steel contracts are indexed on a three- to six-month lag to steel spot prices,” Golden said. “On a global basis, Deere purchases the majority of steel required for factories from local mills. This includes the U.S., where we buy the majority of our steel from domestic steel mills.
“Increases in material costs would be considered in future decisions concerning pricing or structural cost reductions,” Golden said.