Zekelman Industries announced today that it will be closing its factory in Long Beach, California, which primarily manufactures a complete line of steel conduit under the Western Tube and Wheatland Tube brand names. Moving forward, customers will be served by the company's facility in Rochelle, Illinois, and additional distribution centers strategically located on the West coast.
According to a press release, the company said a contributing factor in the closure is the “surge of imported steel conduit from Mexico.” According to the US Census Bureau, the expected volume of imported steel conduit from Mexico will increase to an estimated 69,641 tons in 2022 from 11,960 in 2017, an increase of 480 percent.
The company said that after Canada and Mexico were granted an exemption to Section 232 tariffs as part of replacing NAFTA with the new USMCA trade agreement, it was “clearly understood that if volumes imported into the US from Mexico significantly exceeded (surged) historical norms, the US would have the right to reimpose the 25 percent tariff or institute some other measures to reduce the surge.”
The company said that as the “surge” continued in 2019 and into 2020, the Office of the United States Trade Representative worked with its Mexican counterparts to put a temporary permit control system (August 2020 to May 2021) in place to reduce volumes down to the spirit of the USMCA trade agreement, and the desired outcome was self-regulation after May 2021.
“This obviously did not happen,” the company said in the press release, “as Mexican conduit imports continue to climb unabated and are up six-fold from pre-USMCA levels. Additionally, starting one month after the permit control period was put in place and continuing to the current day, the Mexican steel conduit producers and their importers have misclassified their imported steel conduit into Chapter 85 rather than Chapter 73 to circumvent the control system. Based on reporting by the US Census Bureau, 77 percent of imported Mexican steel conduit was misclassified during 2021.”