Magnesium tariffs harm U.S. die casters, says NADCA

Jan. 21, 2011
Tariffs imposed on imported magnesium alloy have undercut the U.S. die-casting industry.

Tariffs imposed on imported magnesium alloy have turned a domestic supplier into a monopoly, cost more jobs than they protect, and undercut the U.S. die-casting industry, says president of the North American Die Casters Association (NADCA) Daniel L. Twarog.

“In 2005, U.S. Magnesium in Utah filed a lawsuit against Chinese and Russian magnesium-alloy manufacturers, claiming they were dumping on the U.S. market at low prices,” he says. “Antidumping duties are supposed to protect U.S. businesses from unfair trade practices, so Washington imposed tariffs on the foreign magnesium producers. But the tariffs just caused them to take their business elsewhere, in lieu of paying the high duties. In effect, the duties have turned U.S. Magnesium — the main magnesium alloy supplier in the U.S. — into a virtual monopoly. After the tariffs took effect, the company upped its prices $0.80 to $1.00 higher-per-pound then the price of magnesium alloy in any other country.” (U.S. Magnesium did not reply to Machine Design's offer to provide its side of the story.)

In turn, domestic automotive designers wanting to use magnesium die-casting for a lighter-weight vehicle were forced to use other materials such as aluminum, which is much heavier and not as strong, because of magnesium’s volatile pricing and the cost discrepancy, says Twarog. “And those who stuck with magnesium moved their parts elsewhere in the world where magnesium prices are significantly less."

This is a shame because from the mid-90s until 2005, the magnesium die-casting industry had grown significantly in the U.S., says Twarog. “There were 42 different die casters that cast magnesium,” he says. “Since the tariffs were imposed, that number has dropped to a little over 20, while around the rest of the world, the number of magnesium die casters has grown.”

Twarog explains that when a tariff is imposed, the International Trade Commission (ITC) reviews it after five years. “The ITC reviewed magnesium tariffs last year and there was a hearing on Dec. 7 where it listened to testimony from those in favor to the tariffs, which was solely U.S. Magnesium, and those in opposition to them —predominately the U.S. die-casting industry as well as the Russian and Chinese magnesium producers.”

The NADCA worries about its customers moving away from magnesium. “When a company changes a product material, it’s not like it decides today and goes to another material tomorrow,” says Twarog. “Even if the tariffs were lifted today, it would take a long time to rebuild what we’ve already lost because design cycles can be two to four years."

“What’s really the killer though, with the tariffs in place, U.S. Magnesium is selling magnesium domestically at $2.20 to $2.40 a pound, but selling it into Mexico at $1.60 a pound,” says Twarog. “So the question is, how can the company afford to sell to Mexico at $1.60 per pound but not at that price domestically? There is really no good answer. Worse yet, the magnesium die-casting industry in Mexico had grown substantially in the last five years. All the tariff has done is put magnesium die casters in this country out of business. And when the NADCA took a look at all the numbers, it estimated a direct job loss of around 1,800 jobs.”

Even while undercutting the U.S. die-casting industry, U.S. Magnesium has come out smelling like a rose. “In 2005, U.S. Magnesium had a Canadian competitor,” says Twarog. “But it has since gone out of business, giving U.S. Magnesium another $100-million market. In addition, there is a titanium operation opening-up right next door. Magnesium chloride is used in the processing of titanium. The facility is buying magnesium from U.S. Magnesium, so the firm has increased its market opportunities in both areas."

Interestingly, magnesium is the only metal to have a tariff in the die-casting industry — zinc and aluminum don’t. “Zinc and aluminum are traded at prices on the London Metal Exchange (LME),” says Twarog. “Those prices are set worldwide. Magnesium does not have a set price.” The NADCA thinks lifting the tariffs would make the price of magnesium less volatile, essentially a world price. The U.S could then be competitive again and cost fears would not drive designers away from magnesium die casting.

“What’s really crazy is the Federal Government is actually helping to undermine U.S. manufacturing,” says Twarog. “Washington is providing research money in vehicle technology through the DoE to advance the use of lightweight materials such as magnesium and composites in cars. So, U.S. taxpayers are going to pay for research on magnesium that is going to end up benefiting concerns elsewhere in the world.”


Authored by Leslie Gordon, [email protected]
North American Die Casters Association (NADCA),

About the Author

Leslie Gordon

Leslie serves as Senior Editor - 5 years of service. M.S. Information Architecture and Knowledge Management, Kent State University. BA English, Cleveland State University.

Work Experience: Automation Operator, TRW Inc.; Associate Editor, American Machinist. Primary editor for CAD/CAM technology.

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