WASHINGTON - HVAC industry officials say contining steel tariffs will encourage U.S. companies to move factories overseas.

WASHINGTON - Representatives of the air-conditioning industry have cautioned the U.S. International Trade Commission that continuation of steel tariffs will encourage American companies to move manufacturing facilities abroad.

Citing huge price increases to manufacturers who use steel and broken long-term contracts, they told Bush administration officials to end the tariffs and help restore America's ability to compete before more jobs are lost.

"ARI urges the commission to consider the serious competitive impact of the steel tariff on our industry in its report to the president," said William G. Sutton, president of the Air-Conditioning and Refrigeration Institute, a group of HVACR manufacturers. Sutton was joined in submitting testimony at the June meeting by Terry L. Bowman, vice president of supply chain management with York International Corp., and Brian Kelly, president of National Refrigeration and Air Conditioning Products.

The air-conditioning industry employs over 175,000 workers and contributes $17 billion annually to the U.S. economy, Sutton told the commission.

"As one of my members told me, 'Steel is a fundamental component of everything we make - every day we pay extra for steel means more industry shifting to Asia,'" he added

Corporate pressure

Bowman, who said York uses 100,000 tons of steel annually and purchases more indirectly as components and subassemblies, testified "the continuation of the tariff will reinforce corporate management's perception of the tariff, and hasten the continual pressure on corporate buying to move work and sourcing to China or outside the United States. I challenge you to look at the 'country of origin' markings on various products on your next walk through one of the large discount stores, and remember that we need trade legislation that aids all American manufacturing. I believe that you will find that foreign products are expanding into new areas of manufacturing, and that the steel tariff is contributing to this end."

National Refrigeration's Kelly said the tariffs put American firms at a disadvantage in competing against foreign imports.

"Financially, we are in a fearful position," Kelly said. "Profits are falling. We are trying to sell more product (because of shrinking margins) to make less profit. This is a recipe for disaster. Our government, our elected officials, have fixed the price of steel for us consumers. For my business, this could not have come at a worse time."

He noted some foreign manufacturers "do not have taxes, duties or domestic tariffs to worry about. The price of steel did not go up 54 percent in 2002 and they are not paying a 34 percent premium in 2003," Kelly said. "They are in the process of taking large shares of the market by selling under our costs. Meanwhile, my government is helping raise the costs of my metal. It does not make any sense to me."