Tariffs cause loss at ATI’s Midland mill
Beaver County plant has had to scale back
Allegheny Technologies Inc. lost $2 million at its Midland mill in Beaver County during the last three months of 2018, as U.S. tariffs have forced the Pittsburgh specialty metals producer to scale back operations there to 40 percent capacity.
The company also reported that the plant — operated by a joint venture between ATI and a Chinese company — has paid $16 million in tariffs to import stainless steel slabs from Indonesia.
Despite the costs, company executives said they remain committed to running the plant in the hopes that the Trump administration will soon approve its request for an exemption from the tariffs, which were imposed in March.
The operating loss highlighted the financial strain for ATI, which restarted the mill last year with China’s Tsingshan Group, the world’s largest stainless steel producer. At the time, ATI expected to create more than 100 jobs with the venture.
Then came the 25 percent tariffs on steel imports.
ATI filed an exemption request a couple of weeks later — warning about the loss of jobs that pay average salaries of $125,000 — and has waited for more than 10 months for the Trump administration to issue a decision. In October, executives said they expected a decision by the end of 2018. That never arrived.
The month-long partial government shutdown has effectively delayed any answer from the U.S. Department of Commerce until lawmakers pass a bill reopening the agency.
Robert Wetherbee, who took over as chairman and CEO on Jan. 1 upon the retirement of Richard Harshman, told analysts on an
earnings call Tuesday that the Midland venture “was unable to fully overcome the negative impact of the Section 232 import tariffs.”
“We remain actively engaged at the highest levels with the U.S. Commerce Department,” Mr. Wetherbee said.
The details come as the U.S. and China negotiate an easing of trade tensions over the coming weeks. If ATI’s exemption is approved or if tariffs are removed entirely, the joint venture could scale up to full capacity by 2020, Mr. Wetherbee said.
“If the tariffs go away ... you should see a fairly significant swing in terms of that,” he said, noting that the joint venture paid $6 million in tariffs in the fourth quarter, contributing heavily to the $2 million loss. “We can’t sell a full product line today, [and] that’s a problem for us.”
Overall, the situation at the Midland mill was a small damper for the company last year.
Bolstered by the highest sales since 2014, ATI reported 2018 net income of $222.4 million, or $1.61 per share, compared with a 2017 net loss of $91.9 million, or a loss of 83 cent per share.
In the fourth quarter, ATI reported net income of $41.1 million, or 30 cents per share, compared with $1.7 million, or 1 cent per share, during the same period in 2017.
The fourth-quarter earnings per share missed analysts’ expectations of 33 cents.
ATI stock, which fell as much as 4 percent in midday trading, closed up a half-percentage point to $25.60.