Manufacturers decry ‘nightmare’ of steel, aluminum tariffs

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Four New Jersey manufacturers lamented the Trump administration’s tariffs on steel and aluminum, saying they are driving up expenses and preventing them from being able to hire additional workers.

The discussion took center stage Tuesday at the Bipartisan Legislative Manufacturing Caucus meeting at the offices of manufacturing company SPEX CertiPrep in Metuchen.

“New Jersey has a rich history of manufacturing and it is important that we grow it,” said Caucus Chairman Sen. Vin Gopal, D-11th District. “Our hope is to come up with concrete solutions.”

Gail Friedberg, vice president and co-founder of ZaGO Manufacturing, which employs 25 people in Newark, said the steel tariffs have become a major issue for the company.

“If we cannot source in the United States, there are 25 other countries that we can source from,” Friedberg said. “Now they are being subject to tariffs. Tariffs are taxes by another name. It becomes part of our expenses.”

As a result, Friedberg is contemplating whether ZaGO needs to raise its prices to its customers or take a hit in profits.

“New Jersey is not a big steel manufacturing state but it is a big steel-using state,” Friedberg said. “The three scariest words for a business owner are ‘I don’t know.’ These tariffs are creating a lot of uncertainly in our industry. We cannot say that we are starting to see increased prices from our suppliers.”

Marcia Frieze, CEO of Case Medical in South Hackensack, employs 130 people who manufacture medical devices. Her company’s biggest customers are the U.S. Department of Defense and Department of Veterans Affairs.

“Over 90 percent of the materials we use are made of aluminum and stainless steel,” Frieze said. “Since the beginning of the year, we have experienced a lack of supplies. We began to see a slowdown in deliveries. Lately we have seen an issue of hoarding. A majority of the aluminum and steel has been taken up by the aircraft and automotive industries.”

“I am particularly worried in 2019 the type of material we use will no longer be created by U.S. mills,” she added. “Costs have gone up. Like others, we have begun hoarding material.”  

Because of the tariffs, Frieze said she cannot hire.

Gary DuBoff, CEO of Arrow Fasteners in Saddle Brook, employs 350 people and manufactures the 350T staple gun. He said he applied to the federal government seeking a waiver on the tariffs and was denied.

“The tariff for us has been pretty much a nightmare,” DuBoff said. “The wire that is used in staples is manufactured in China.”

“We are doing everything we can to keep jobs in New Jersey and it is getting more difficult every day,” he continued. “We cannot pass along a price increase because our competitors are not subject to a tariff.”

James Minadeo, president/owner of Zero Surge, employs 10 people in Frenchtown who manufacture surge protectors. Zero Surge’s suppliers are located in the U.S. and Zero Surge is at the end of the supply chain.

“I cannot control where our raw materials are coming from,” Minadeo said. “These 10 percent tariffs are being passed down the line and by the time it gets to me it’s 15 percent. The effect on the tariffs is a multiplier.”

Assemblyman Anthony Bucco, R-25th District, said New Jersey manufacturers also face higher income taxes and property taxes than other states.

“The bigger picture is how do we make New Jersey the manufacturing state that it used to be,” Bucco said.

Sen. Ronald Rice, D-28th District, urged manufacturers to contact U.S. Sen. Cory Booker, D-NJ, to inform him of the negative consequences of the tariffs.

The New Jersey Manufacturing Extension Program is working with manufacturers to advocate on their behalf with lawmakers, said Peter Okun, director of marketing.