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Aluminum tarrifs

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RandyAB

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As I've been reading the news over the past week, I can't help but wonder how kit prices are going to be affected by the imposition of hefty duties on imported metals. Anybody else pondering this?
 
We love visiting Canada regardless of the extra cost due to the imposed taxes of one form or the other across the border . A 10 percent increase in the import cost of aluminum does not bother me here in my country. I'm just glad we here have much lower taxes in all respects compared to many other countries? And the cost of flying is much less here.

Probably best to not push this political issue but I just can't imagine someone from another country complaining about an import tax other than there own? BTW we do love Canadians, no disrespect intended
 
We love visiting Canada regardless of the extra cost due to the imposed taxes of one form or the other across the border . A 10 percent increase in the import cost of aluminum does not bother me here in my country. I'm just glad we here have much lower taxes in all respects compared to many other countries? And the cost of flying is much less here.

Probably best to not push this political issue but I just can't imagine someone from another country complaining about an import tax other than there own? BTW we do love Canadians, no disrespect intended

I'm not trolling here for a political discussion. Those never end well. I'm not really complaining about the import tax although I think it's easy to see that this is going to have major implications for people living both inside and outside of the US. In that regard, I believe everybody has a right to have an opinion regardless of what country you call home. I'm merely wondering if kit prices are likely to rise 10% which might have a detrimental effect on the business as a whole. Ford and GM are worried about the effect on their businesses as they should be. I'd imagine that the effect on smaller companies like Van's might be greater.
 
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you can't imagine why your closest trading partner would complain about a 25% import tariff on steel coming out of the blue when we have a free trade agreement? You don't have much of an imagination then.
 
And yes, everything that is made with aluminum and steel will go up in price. That's a given. This is what a lot of law makers on both sides have been trying to warm the President about. There are a lot more jobs related to people who use those materials than the people who produce them.
 
As far as I know, almost all 4130, 6061, 2024 and 7075 used in US light aircraft is produced in the US already.

I believe the concern was mainly with subsidized industrial and architectural grade steels and aluminum produced offshore and being dumped here.
 
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Even if some aluminum alloys are produced domestically in the US, I would believe that broader inflation caused by the tariffs would have a spill-over effect across the board.
 
As far as I know, almost all 4130, 6061, 2024 and 7075 used in US light aircraft is produced in the US already.

I believe the concern was mainly with subsidized industrial and architectural grade steels and aluminum produced offshore and being dumped here.

In general, I believe tariffs will have the effect of increasing prices to U.S. customers of the materials and manufactured articles made from them regardless of national origin. I work in an industry already subject to significant tariffs on imported competing products.

I did call Van's yesterday about this and they were not able to say what effect the proposed tariffs may have on their pricing, as the tariffs are not official yet and no particular terms have been stated. However, I am in the process of placing my fuselage kit order as I write this post.

I speak for myself, and not my employer. All opinions expressed here are purely my own.
 
one barometer of cost?

I have to compare this to the corn price frenzy when ethanol became mandated in some fuels. Everyone was going to starve because the price of corn increased by x%.
An interview with a big cereal producer confirmed that, yes, the corn in a box of corn flakes used to cost 5 cents. It would now skyrocket, to 6 cents.:eek:

....I wonder what the value of manufactured aluminum sheet and stock really is in Van's kits. A 10% increase in materials, if labour stays the same, should not make the kit cost go up by 10%. There's a whole lotta other components in there as well.

....but then again, I never studied law, or logic, or politics, or manufacturing.....:)
 
By the time it works it?s way down the supply chain to retail and everybody has added on to that small increase, the box of cereal, loaf of bread and possibly a RV kit cost a lot more.
 
It has been said "trade wars are good" only has not been clarified for who?

We all will pay for it one way or another, if not directly for aluminum, perhaps for something else that is not airplane related or the retaliation that they apply their own tariff to the product we produce and sell.
 
...the industry has been integrated into the U.S. economy for more than 50 years and that the Pentagon considers Canadian aluminum production a strategic military supply.
 
As far as I know, almost all 4130, 6061, 2024 and 7075 used in US light aircraft is produced in the US already.

I believe the concern was mainly with subsidized industrial and architectural grade steels and aluminum produced offshore and being dumped here.

Ross, when I was using a lot of round bar 3" 7075 it all came from Switzerland...couldn't find any here in the states but that was 8 years ago. Wow, time flies.
 
As I've been reading the news over the past week, I can't help but wonder how kit prices are going to be affected by the imposition of hefty duties on imported metals. Anybody else pondering this?

Steering back to the original post. I briefly thought about it but I also know raw materials are just one aspect driving costs in Vans supply chain. I predict that kit prices will continue to escalate no matter what the price of the raw material is.
 
Seems like RV kits are a lot closer to the raw material in the process of creating a final, finished product than a lot of other things (like cars). I don't know their manufacturing process, but it seems like what they're generall churning out are stamped and roughly formed pieces, just a few steps away from the raw stock of whatever temper rolls of Al sheets are appropriate. Thus, I'd guess that an increase in the cost of the materials for an RV would end up as a greater price driver than a product where there were many more steps to follow (final fit, assembly, finish, paint, etc.).
 
Raw raw materials?

Obviously this is still on the drawing board, but I wonder if Bauxite itself would be tariffed? If not, and Id bet not, that might be a hidden looppole in this blustering that wouldnt change much, but makes for good theater......

(DR you can delete this if I'm too close to the political line, not intentional).
 
I think the way this works is that if there are import tariffs then the prices across the board will go up, irrespective of the country of mfg. If your competitor's prices go up (i.e. aluminum from outside the US becomes more expensive) then you can charge more. Cheaper aluminum was driving the price down for domestic aluminum - that's the whole point of the tariff - to bring prices up. Now it's true that a 2 cent increase in the price of a beer can is not going to get anybody upset. But an airplane uses more aluminum than a beer can, as does a ford truck. So anybody making anything out of aluminum is going to have to pass on that cost.

Mfg in western countries has been decimated in the last 20 yrs - there can't be any doubt about that. Same in Canada - more than half of the tool and die shops have closed and that is the base of the mfg food chain after raw materials. So I understand that there is an appetite for something to be done - no question. But the wages in Canada and the labor and environmental laws are of the same order of magnitude as those in the US. We are not China, working for $2 per day under slave labor conditions. I don't think this policy is being properly targeted.

But the President said he was going to do something about this, people voted for him and this is "something"...
 
As far as I know, almost all 4130, 6061, 2024 and 7075 used in US light aircraft is produced in the US already.

I believe the concern was mainly with subsidized industrial and architectural grade steels and aluminum produced offshore and being dumped here.

That is not correct concerning 4130. Chinese 4130 has been a problem for many years in the US. It is junk and I would not consider using it on an airplane. Dillsberg in PA was a large supplier of 4130 for homebuilt aircraft. They had been selling Chinese 4130 for years, when they closed the doors the remaining chinese 4130 was sold to Wicks Aircraft. Aircraft Spruce claims to not knowingly sell Chinese metal. Wicks will supply non Chinese but only on request.
Much of the 4130 tubing is German so this is not a trade issue or political issue for me. I do however wish that all Chinese junk would disappear from the US.
 
By the time it works it?s way down the supply chain to retail and everybody has added on to that small increase, the box of cereal, loaf of bread and possibly a RV kit cost a lot more.

Why would "everybody else" be tacking an additional increase on top of the cost of the aluminum?

Cheaper aluminum was driving the price down for domestic aluminum - that's the whole point of the tariff - to bring prices up.

Why shouldn't the American steel or aluminum producer get a fair price for their product? Is it fair when China has vastly excessive production capacity and dumps their steel on the world market below cost?

Mfg in western countries has been decimated in the last 20 yrs - there can't be any doubt about that. Same in Canada - more than half of the tool and die shops have closed and that is the base of the mfg food chain after raw materials. So I understand that there is an appetite for something to be done - no question. But the wages in Canada and the labor and environmental laws are of the same order of magnitude as those in the US. We are not China, working for $2 per day under slave labor conditions. I don't think this policy is being properly targeted.

I'm not an economist by any stretch of the imagination and maybe my mind is a little clouded by my bias [disclaimer: I am a corporate pilot for a major US steel producer], but I don't follow your reasoning.
 
That is not correct concerning 4130. Chinese 4130 has been a problem for many years in the US. It is junk and I would not consider using it on an airplane. Dillsberg in PA was a large supplier of 4130 for homebuilt aircraft. They had been selling Chinese 4130 for years, when they closed the doors the remaining chinese 4130 was sold to Wicks Aircraft. Aircraft Spruce claims to not knowingly sell Chinese metal. Wicks will supply non Chinese but only on request.
Much of the 4130 tubing is German so this is not a trade issue or political issue for me. I do however wish that all Chinese junk would disappear from the US.

I had heard this a few years back but as of 2017/18 I have not heard of much Chinese material being sold any more by the big vendors like ACS. ACS learned from the backlash on the Chinese AN fittings a few years ago that they can't have questionable materials just because they are going into Experimentals.

My point was mainly that Cessna and Boeing don't use offshore produced metals unless they come from vetted sources.

But you bring up a good point to tell vendors you want Western produced raw materials when you're buying.
 
Honestly, I'm surprised this scandal didn't have a bigger impact on aluminum and steel prices.

It impacted cars, trains, planes, ships, just about everything.
 
My QB is due for delivery late this months. Will update everyone on duty if applicable. Aluminum duty is 10% so I am mentally and financially prepared. Still, hope for the best...
P.S. I have spent time reading new (unratified) agreement, the US side is very clear that aircraft parts and aircraft under some gross weight are exempt.
 
and in 2017 the u.s. exported 2.8 million tons. how does all that make sense?

It means they can't produce it as cost effectively as their competition that is exporting it to the US, so they cannot compete effectively in their home market. They need to export it in order to get the price they are looking for. The ability to make more by exporting is often due to currency exchange issues and not necessarily competitive pricing.

Larry
 
It means they can't produce it as cost effectively as their competition that is exporting it to the US, so they cannot compete effectively in their home market. They need to export it in order to get the price they are looking for. The ability to make more by exporting is often due to currency exchange issues and not necessarily competitive pricing.

Larry

I just cannot pass on this one , sorry. But if that were the case , are you saying the countries that are bring in their products into the USA are too stupid to find the markets the US has supposedly found at the higher price?
 
It means they can't produce it as cost effectively as their competition that is exporting it to the US, so they cannot compete effectively in their home market. They need to export it in order to get the price they are looking for. The ability to make more by exporting is often due to currency exchange issues and not necessarily competitive pricing.

Larry

I bet it is to do more with the type of aluminum.

Import cheap stuff and recyled stuff and process it into high quality Aerospace stuff, like the Chandler plant I linked to earlier in this thread.

It will be all in the grade exported and value added to the imported stuff.
 
...4130... is produced in the US already.

A while back I bought a bunch of attractively-priced 4130 from one of the big US aircraft materials places. It was mill marked as having been made in China. It seemed every bit as strong as all the other 4130 I'd worked with, but this stuff didn't seem to drill or cut the same; the chips came out sharper and more ragged. I was glad to see the last of it, and all subsequent orders were mill marked from the US or Germany.

--Bob K.
 
Nothing new

The SR 71 was made with titanium the bulk of which was made in Russia

Boeing airliner air frame (components) have been largely been made in China for over 12 years and assembled and test flown in WA.
 
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Boing airliner air frames have been largely been made in China for over 12 years and assembled and test flown in WA.

No Boeing's have been made in China to my knowledge... They are building a completion center in Zhoushan I believe but won't be building complete airframes for some time there.
 
I just cannot pass on this one , sorry. But if that were the case , are you saying the countries that are bring in their products into the USA are too stupid to find the markets the US has supposedly found at the higher price?

First, I said that currency exchange rates often create this advantage, not that the competitors are too stupid to attempt selling to the countries we are. To elaborate, a more favorable exchange rate between our country and the buyers country, compared to the competitors countries exchange rate with the buyers country allows our companies to price more aggressively without sacrificing profits, which are measured in dollars not the currency of the buyer. Second, I didn't say that they export more than they sell domestically. I was referencing data posted by two other members that indicated they did and asked why it was that way. I assumed those posters were accurate with their facts and was answering the question why. The simple fact that US makers sell 3/4 of their goods to other countries, would indicate that it is more profitable for them to do. I am sure there are other factors, such as political alliances, that drive buyers abroad to favor US aluminum. I can assure you they are not exporting because it is easier.

Larry
 
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I bet it is to do more with the type of aluminum.

Import cheap stuff and recyled stuff and process it into high quality Aerospace stuff, like the Chandler plant I linked to earlier in this thread.

It will be all in the grade exported and value added to the imported stuff.

That could be. Hard to say from the very non-specific data we are using to compare import vs export.

Larry
 
An important point regarding tariffs are that they are not charged on the "retail price" of the product. They are charged on the wholesale price or an even lower origination price at the factory to the exporting middleman.

Therefore, a 10% tariff should be 5% or less on the price paid by Van's customers.

Further, as far as Van's aluminum parts, probably the material cost of the average RV part is less than half the final part price, due to the machine time, labor, overhead and profit applied to that part. It would surprise me if there were greater than a 2-3% real increase in the cost of a Van's kit.

That being said, will some companies in the supply chain that have been waiting for an opportunity to increase prices, claim their larger price increases are due to tariffs? I'm sure that could happen.

Ideally, all the additional folks getting jobs at US plants will increase the GDP by an amount far offsetting any negative impact from tariffs.

Countries like Norway have historically had exceptionally high tariffs that essentially rule out importation of most goods, yet have almost 100% employment and high standards of living.
 
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Therefore, a 10% tariff should be 5% or less on the price paid by Van's customers.

Further, as far as Van's aluminum parts, probably the material cost of the average RV part is less than half the final part price, due to the machine time, labor, overhead and profit applied to that part. It would surprise me if there were greater than a 2-3% real increase in the cost of a Van's kit.
This is only true if profit is charged as a fixed amount on every part, and not a percentage markup on cost. At least in the consumer electronics space, percentage markup on cost is the way it works. If costs go up 10%, and your markup is 40%, the end price still goes up 10%.
 
Ideally, all the additional folks getting jobs at US plants will increase the GDP by an amount far offsetting any negative impact from tariffs.

Countries like Norway have historically had exceptionally high tariffs that essentially rule out importation of most goods, yet have almost 100% employment and high standards of living.

If you follow the news about the effects, *many* more domestic jobs are lost due to tariffs than are gained. I'm afraid to quote actual numbers from memory, but the ratio was something in excess of 5-1; for every steel worker job gained, there were 5+ jobs lost in mfg fields, and ripple effect downstream losses.

Countries like Norway have a *lot* of things about them that are positive, and drive that high standard of living. Unfortunately, most of those things are unpalatable to people who believe a policy is good just because someone that they like says it's good. :)

You really can't condense economics down to bumper stickers.

Charlie
(no Holiday Inns lately, but an economics degree in my distant past...)
 
If you follow the news about the effects, *many* more domestic jobs are lost due to tariffs than are gained. I'm afraid to quote actual numbers from memory, but the ratio was something in excess of 5-1; for every steel worker job gained, there were 5+ jobs lost in mfg fields, and ripple effect downstream losses.

Countries like Norway have a *lot* of things about them that are positive, and drive that high standard of living. Unfortunately, most of those things are unpalatable to people who believe a policy is good just because someone that they like says it's good. :)

You really can't condense economics down to bumper stickers.

Charlie
(no Holiday Inns lately, but an economics degree in my distant past...)

Shhhh. We can totally bring back all the manufacturing jobs, pay a living wage to those workers, not dramatically increase the cost of said manufactured goods, and still be competitive on the world stage where other laborers are paid in cents per day... :rolleyes:
 
The SR 71 was made with titanium the bulk of which was made in Russia...

The titanium was made in the heart of some long-forgotten star, whose last glimmer of nova-shed brilliance has escaped the edge of our galaxy.

Russia just mined the ore and turned it into ingots to sell to us.
 
If you follow the news about the effects, *many* more domestic jobs are lost due to tariffs than are gained. I'm afraid to quote actual numbers from memory, but the ratio was something in excess of 5-1; for every steel worker job gained, there were 5+ jobs lost in mfg fields, and ripple effect downstream losses.

Countries like Norway have a *lot* of things about them that are positive, and drive that high standard of living. Unfortunately, most of those things are unpalatable to people who believe a policy is good just because someone that they like says it's good. :)

You really can't condense economics down to bumper stickers.

Charlie
(no Holiday Inns lately, but an economics degree in my distant past...)

Norway's "good thing" is what it controls under the ground (or North Sea). From the EU web site -

Norway is in the global top 5 exporters of crude oil. The oil and gas sector constitutes around 22% of Norwegian GDP and 67% of Norwegian exports. Norway is Western Europe's most important source of natural gas.

They can do all of the stuff and standard of living because of "drill baby, drill" :)
 
Norway's "good thing" is what it controls under the ground (or North Sea). From the EU web site -

Norway is in the global top 5 exporters of crude oil. The oil and gas sector constitutes around 22% of Norwegian GDP and 67% of Norwegian exports. Norway is Western Europe's most important source of natural gas.

They can do all of the stuff and standard of living because of "drill baby, drill" :)

uh huh. And what's the standard of living for the average person in Saudi Arabia, and the other Gulf states?
 
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