Cheap imports fail to arrive on U.S. shores
By Anne M Porter -- Purchasing, 5/21/1998
Buyers are still waiting for the Asian Flu to deliver the flood of cheap imports that many economists had been promising. Purchasing's recent poll of readers finds only 17% of buyers experiencing an influx of solicitations from Asian or other foreign producers. Only 8% think an import surge is still to come.But while the Asian Flu has produced no flood of cheap industrial imports to the U.S., the tide may be rising a bit for some commodities--especially for carbon steel and other steel products. Other markets that appear to be under siege from foreign producers: chemical blowing agents, epdm rubber, copy-machine toner, connectors, fasteners, some plastic resins, polyester films, refractories, electrodes, investment and sand castings, and bulk solvents.
The most strident discounting appears to be coming from Korea, buyers say. The senior buyer for an Indiana-based electronics firm remarks that, "Large Korean companies are becoming very aggressive." Other fire-sale commodities are coming from China, Taiwan, Malaysia, and Japan, buyers say.
Domestic impact
There is some evidence to suggest that competition (or the threat of competition) from importers may be preventing domestic manufacturers from passing along their rising costs. More than half (55%) of purchasers who buy offshore say prices for some foreign commodities stand significantly below U.S. domestic price levels. Nearly one in three say offshore prices are low enough to warrant switching.
Still, foreign competition has yet to become truly deflationary as 70% of the purchasers who buy offshore say domestic producers have not moved to match import pricing. Protecting domestic suppliers is a general perception that offshore manufacturers can match neither the quality nor the delivery performances of domestic suppliers. One California buyer says, "quality and supply availability have always been a problem for foreign producers."
Exporters suffer
While domestic producers seem to be holding their own against import competition, buyers suggest that exporters have been experiencing difficulties. Purchasers working for export-intensive companies report falling sales. "Sales of our products have slowed in the past two months due to the Asian Flu," says Pat Mack, purchasing manager for Georgia Gulf Corp. in Plaquemine, La. "For companies like ours who compete in world markets (Asia, Europe) any upward pressure on the dollar causes a downward pressure on sales," says James Hutchins, senior buyer for National Machinery, Co. in Tiffin, Ohio.
Forty-four percent of buyers polled believe U.S. companies may be forced to discount products that had been earmarked for export to Asia, versus 33% who expect no such discounting and 23% who express no opinion on the matter.
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