Unveiling the Future of American Manufacturing

[00:00:05] Speaker A: So, Matt, here we go. [00:00:07] Speaker B: Hey, mate. [00:00:07] Speaker A: First show we're finally doing this thing live, I guess. Not live, but we're making our podcast. So every week you and I always end up on the phone for a quick call and then end up talking for about an hour and a half and cover a bunch of issues. So, sure, we thought we ought to put it on air so other people can hear our madness. [00:00:28] Speaker B: Yeah, well, both of us have been in the industry quite a while, so, you know, and it's part of what we do for a living. So it's, it's important to both of us. So it's kind of fun to kind of hash over what's going on in the steel industry and kind of see what the telltale signs are of things that's going on. But anyway, other people would be interested in the same thing. [00:00:53] Speaker A: Right. [00:00:55] Speaker B: So here we are. That's kind of what drove us to this point. [00:00:58] Speaker A: So I, I think I was telling you before we came on that I saw a podcast with, I don't know his last name. Lex. [00:01:08] Speaker B: Oh yeah, Lex something. [00:01:09] Speaker A: He always wears a black tie, black suit, I think, just so he had a, he had an interview with Trump and I don't know if he's a psychologist. He asked him a bunch of psychology questions. So. But I just thought it was Trump was, I guess galvanizing the fact, no pun intended, about how podcasts are, are becoming more viable versus tv. Trump, of course, was saying how many viewers he was going to get. This guy, he's, he told him that, he guarantees him that he will break a record. But you know, even on radio or versus tv, it's, it's, you know, everything now. Even everybody's overhead is less expensive if you want. We don't necessarily have to travel and people, a lot of people are working from home. [00:02:04] Speaker B: Right. [00:02:05] Speaker A: So I guess it's just the future. [00:02:07] Speaker B: So. Well, and people can catch those things at their leisure as well. And that's a big benefit having it there so they don't have to tune in at a specific hour. [00:02:18] Speaker A: Right. [00:02:19] Speaker B: To get the information. So. [00:02:20] Speaker A: Right. Remember Thiebaud? Or was it TiVo? TiVo. TiVo was Tebow. We thought that that was cool. So. Yeah, interesting day today. Woke up to the news. I was going to read it here. Let's see the anti dumping. It's here. So. Yeah, 854. [00:02:50] Speaker B: And I think maybe we ought to tell, you know, for those who aren't familiar with what anti dumping means or what we're even discussing regarding anti dumping, the simple version, I guess would be that foreign countries bring in low priced product. In this case we're talking specifically about steel, but it translates into other products. And so when they flood a country like the United States with low price material, the problem is that the domestic suppliers then have trouble competing or can't compete and therefore it affects our economy a great deal. And so that's what this anti dumping lawsuit and whatnot is all about. It's protecting our domestic supply chain of steel producers. [00:03:46] Speaker A: Yeah, I guess the big shocker, I mean we all knew that Vietnam was rumored. [00:03:52] Speaker B: Yeah. [00:03:53] Speaker A: And I had anticipated that. I had heard September 15 or even today, September 5. So they delivered it on time. I think the big shocker to a lot of people, including myself, was just, let's see how many countries. 12 countries. We got Australia, Brazil, Canada. Canada is the big one. [00:04:18] Speaker B: Yeah. [00:04:20] Speaker A: Mexico, the Netherlands, sometimes called Holland or you can call it Dutch. There you go, three names. And South Africa, Taiwan, Turkey, United Arab Emirates and Vietnam. And then real quick, just so the petitioners were Steel Dynamics, Nucor, US Steel, Bill and Nippon United Steel, Paper and Forestry, Rubbery Rubber, excuse me, Manufacturing, Energy Allied Industries and Service Workers International Union, the afl, the CIO and the clc. So looks like a pretty big war. [00:05:17] Speaker B: I was surprised. [00:05:18] Speaker A: Ten nations. [00:05:19] Speaker B: Yeah. Some of some of those other domestic entities were part of that. That filing. [00:05:26] Speaker A: Right. [00:05:27] Speaker B: Quite honestly. [00:05:28] Speaker A: Right. [00:05:29] Speaker B: And South Africa was a surprise to me, honestly. [00:05:32] Speaker A: Yeah. Yeah. I was surprised at Wheeling Nippon considering that they're a Japanese company. [00:05:41] Speaker B: Right. [00:05:41] Speaker A: And so I was surprised about that. What are your feelings though, real quick about on, I mean, for example, Canada, you kick Canada out. Let's just say, you know, they're at 40%, Vietnam's 20%. These percentages being what's being imported into the US right now. [00:06:04] Speaker B: Yeah. [00:06:05] Speaker A: Well you add all these countries up and that's a hundred percent, basically. [00:06:12] Speaker B: Yeah. [00:06:13] Speaker A: Of foreign material, of what they call core corrosive resistant material. [00:06:19] Speaker B: Right. Well. And I'm kind of surprised with Canada as well. I don't think people realize just how much import comes from Canada, not only in steel, but other industries. So the United States buys a lot of material from Canada and obviously, you know, we've had this NAFTA trade agreement with both Canada and Mexico, which are both named in this. Which means that that's going to get renegotiated. It got renegotiated earlier in President Trump's presidency with section 232, which I know we're going to talk about. But yeah, it looks like that's going to get renegotiated again. And to what end? I don't know. But if they're, they're talking about putting tariffs on there, you know, what level of tariff they're going to try to put on there, I can't see them, you know, just like literally closing the border saying they can't bring it in here necessarily. But obviously I think they want to make it tougher and tougher on, on all of these named countries to, to bring imported corrosive resistant material in here. [00:07:39] Speaker A: Yeah, yeah. The biggest thing again like you said, Canada, Canada is huge. I can't remember, I should have brought it in on how, what percentage offshore or foreign steel is coming from Canada, but I know it's a chunk. Yeah, I, I, I mean I believe it's almost half the pie. Or let's just say they say 30%, Vietnam's 20%, that's 50% right there. But these other small countries and like you said, as far as NAFTA's concerned or their, what is it? What, what's the new name for nafta? The MSA or something? Yeah, I don't, I'll just call it nafta. But you know, I think the crux of the problem that they're having with these guys is that look, China is, can produce 50% of the world's steel. [00:08:43] Speaker B: Right? [00:08:44] Speaker A: 50%. And so really the bad guy here or where the problem, the nucleus of the problem is with China because China, I think the US is feeling that these guys are circumventing, which is what they're suing them for. Anti dumping and circumventing. Right. And circumvent is just saying, okay, well we can't ship directly to the US so we'll ship it to Mexico, reroll it and then Mexico can send it into the US Right. [00:09:17] Speaker B: Well that's an age old problem that's been around for as long as I can remember in the steel industry as far as, you know, tracking supply chains. You know, China's been doing that for as long as I can recall. And so that's been something that they've, they've battled time and again and China's not about to give that up, I'm sure. So, but then there's always kind of two sides to the coin on this kind of thing. So recently I had the opportunity to sit down with a direct, with a mill representative and I posed the question because on Galvaloo material, which is part of this corrosive resistant material, right. The domestic suppliers have been putting in a lot of Infrastructure. So we have domestic producers that are really wrapping this up. And so I posed the question to him. I said, why are they investing so much money domestically in the ability to produce product that has been coming in from offshore for so long at such a price that the domestic suppliers, they can't even sell it? And admittedly, they. They admitted to me that they could hardly even sell this. Well, you take somebody like Canada, we, as Americans, we, we tend to think that Canada is just like us, but really they're not. You know, they have their own economy and all those kinds of things, and, and they are very formidable as far as the price is concerned. People, I think, have the opinion that if it comes from Canada, you know, it's roughly the same amount of money as it would be produced in the United States. But that is completely not true. [00:11:06] Speaker A: Right. [00:11:07] Speaker B: Those prices are quite a bit lower. So it begs the question, you know, if you slow this import stuff down, are the domestic suppliers, do they have the ability to step up and meet the demand? [00:11:21] Speaker A: Yeah. So during Section 201, they had basically an audit on the industry, right. Answering that question, saying, okay, do the American mills make enough to meet the demand for the US Consumers? And the answer was, no, they do not. [00:11:43] Speaker B: Correct. [00:11:45] Speaker A: So, yeah, I'm perturbed by it. Just on understanding, I mean, for lack of a better word, I think it's just reckless. So, I mean, what happens today to a. To a trader like myself? I can't do anything. I'm. I'm paralyzed. I can't. You know, even, even in your case, I mean, we got an order, let's say with you. Well, that's not going to go. It's not going to work. [00:12:14] Speaker B: Right. [00:12:15] Speaker A: So, you know, so, for example, if I may, we had an inquiry from a company for 18 gauge today, asking us for the prices of 18 gauge just for their reference. But I mean, what am I supposed to answer them? I'm not going to be able to get a quote from YP or prosperity or Vietnam. So this customer has the ability to buy from domestic. So, you know, go ask your domestic guys, but then you guys are going to go ask your domestic guys. And, you know, so overall, I think this is where it gets confusing to the consumer and where I get exhausted explaining this. But basically, at the end of the day, let's say that you wanted to buy 18 gauge for me. I'd go over to say Taiwan, Vietnam, South Africa, the United Arab Emirates, and I'd get you a price, but I can't do that anymore. So I don't have anything to offer you. So now you got to go to the domestics. Domestics are essentially just going to raise your price. [00:13:22] Speaker B: Right. [00:13:23] Speaker A: That 18 gauge, you know, I think for a building manufacturer, you guys would use it for like base angles. [00:13:30] Speaker B: Right. [00:13:33] Speaker A: But I mean, overall it just gets nickeled and dime to where you guys are going to pass on your price to your building. So you price your guys's buildings just went up. [00:13:42] Speaker B: Right. [00:13:43] Speaker A: Basically, which makes it harder for a farmer, let's just say, that comes in and wants to build a building. Let's say he was going to pay 80,000, now he's going to pay 100,000, and he's probably not going to buy the building. So at the end of the day, this type of stuff, at least in my logic, ends up hurting the U.S. rather than helping the U.S. now, granted, it helps the mills. [00:14:08] Speaker B: Right. [00:14:09] Speaker A: You know, there's only 10 mills and there's 300 million people. Sure. So, I mean, what do you think about that? [00:14:17] Speaker B: Well, I think we're at kind of a breaking point to some extent when people talk about the overall economy. Everyone, you know, they're talking about gas, food and all those kinds of things. But this plays right into that same scenario where a company is trying to expand or to grow or, you know, and then they get the price on. In our case would be a metal building package, for example. They price this for a metal building package and all of a sudden, you know, it's just too far out of their reach. And so people start pulling back. We've seen this happen more than once over the course of the last, you know, 25, 30 years where the price tag just gets so high that people pull back. And I think we're basically reaching that point. And if there's. There's another thing here at play. I mean, the mills have been pushing prices up already without this in that mix of things. So you add this to it and yeah, it's a very real problem, I believe. And I think it's going to kind of stymie the economy in a lot of areas, in a lot of respects. So, you know, I think it's something that definitely need to be careful of. I don't know. The mills have also over the last few years made the most money that they've ever made in the history. Steel mills, you know, domestic mills. So I'm glad they're healthy. I'm glad they're financially healthy, and it's been nice to see them put money back into it and all those kinds of things. But there's another thing to consider here as well. When we're talking about supply and demand and then throw the price in there. The mills have announced multiple outages coming up, which is one of the reasons that they are saying the price is going up is because they're not going to be able to handle that, that demand. Well, you add something like this to it, that just compounds it. And I don't feel like they're ready to step up and meet the demand by pushing the, these foreign entities out of the country altogether. I'm the first guy who wants to line up and say, hey, let's just buy, you know, all domestic. But at the same time, let's be real about it. The domestic suppliers have kind of taken advantage of the economy and the market, and they've not really given any deals out for a long time. [00:17:03] Speaker A: Yeah, and I think it's interesting, too. I mean, we got, we're one big country, but we got, we got basically two sides, east and west. On the West, I mean, where are you going to buy Gavin Steelscape, right? So that's a one, that's a one deal show. [00:17:20] Speaker B: Right. [00:17:20] Speaker A: And then you got to, you got to bring it in. You could get it made in Texas, but Texas is a little far away from, from, from the West Coast. [00:17:29] Speaker B: Right. And you know, people in the east especially, they, they feel like that Texas is easily positioned close enough to service the west, but honestly, the freedom, you know, into the center part of the West, I mean, you're 1600 to 2000 miles of freight, the truck freight. So. And even rail freight hasn't been going down at all. You know, there's no deals there either. And obviously we do both, but we avoid the truck freight, especially, you know, from Texas. It's just really not feasible to bring it out of there. [00:18:10] Speaker A: Well, I think that's one part of the reason why we're doing this is just to educate. I mean, to me, this whole thing seems pretty politically fishy, but I think, I mean, just the timing of it. Monday was Labor Day. You had Harris speaking at US Steel or at a labor rally. [00:18:30] Speaker B: Right. [00:18:30] Speaker A: And you know, this is where something we should talk about because again, I sat there and watched Fox News say that Harris, on her comment of not allowing the Nippon U.S. steel. So U.S. steel offered $1.4 billion for U.S. steel. And the media said, oh, here. Harris has taken another page out of Trump's playbook by not allowing that. So. Meaning that Trump too has said, look, he's, he, he won't allow it to Go through. [00:19:12] Speaker B: Right. [00:19:12] Speaker A: But then at the end of the show, they were saying, look, this election comes down to basically, you know, private versus public or, you know, having government bureaucrats intervene. And isn't that not what Trump's doing as well, by saying, look, I'm not going to allow this to go through. [00:19:32] Speaker B: Absolutely. [00:19:33] Speaker A: Which is preposterous. I mean, why wouldn't you want that? I mean, why wouldn't anybody work in a U.S. steel not want that? I mean, U.S. steel, again, I'm not a complete expert on it, but I haven't seen. I mean, I remember I had a friend telling me that, look, U.S. steel, this is years ago, is owned by JP Morgan, and they're never going to post profits because it's not good for them to post profits. [00:19:55] Speaker B: Yeah, but. [00:19:59] Speaker A: I'm just confused with this election as, you know, which way to go. [00:20:07] Speaker B: Right. Well, and here's my take on that real quick. And it's kind of play on words, but according to the news reports that I've heard. So you have President Biden, who's opposed to that merger as well, or that acquisition. [00:20:27] Speaker A: Right. [00:20:28] Speaker B: Harris says she thinks that U.S. steel should remain a U.S. company. Trump's words were different, though. Trump said, I will block it, I will stop it. So in my mind, it's kind of two things. Her take on it's quite a bit softer, in my opinion, than what Trump is projecting as far as allowing that merger to go forward. Another thing that troubles me to some extent is that US Steel has acquired quite a few companies, and over the course of the years, we've seen them mothball quite a few of those companies. And so back to the supply and demand. Currently, the steel industry is touting where they are, percentage of available production. So in other words, when they say that they're running at 80%, which really 80% is about as high as they can go without the nuts and bolts flying off of everything. Right. And so when they say that they're running production somewhere in the neighborhood of 80%, and then you take that same concept and you look at, say, 2018, for example, and the capacity that the US had in 2018 for production, I can't remember the number, but it's about 60,000 tons deficit between 2018 and well now. So even though they're touting 80% in both time frames, the actual tons of production is reduced by 60,000 tons a day. So the point is back to, you know, can, can the domestic suppliers keep up? Can they, can they get what we need, especially with the planned outages that are coming and all those kinds of things, all, all indications point, you know, to that. But U.S. steel, allowing that, I don't know. [00:22:40] Speaker A: Well, so even if, you know, even in my business, again, I could go to a customer and I could apply for an exemption on Section 201 per customer. And the way I would cite is just the customer easily says, Look, I buy 29 gauge Gavilum and it's not readily available in the US which it's not. I mean, again, just this action, if this comes to place, you're going to end up with Steelscape. And you know, I should be better versed on how many, let's say the steelscape makes 20,000 tons a month. You think that that'd be about right, say 10,000? [00:23:20] Speaker B: Yeah, I would have to, I would have to look it up honestly, to know better. [00:23:24] Speaker A: Well, so let's just say 20,000 tons, 10,000 tons painted, 10,000 tons bear. That's not a lot. If you got a one guy like me that can buy 4,000 tons. Just one guy, right? Then you've already, you know, so yeah, it would be interesting. Maybe next show we'll be able to go through these figures better and precisely look at who makes what and how much. But again, I do know from going over Section 201 and the United States, looking at how much steel we require versus how much I think it is off the top of my head, I think we require. This could be completely wrong, but I think we require 130 million tons. No, no, no, we produce 2. 130 million tons, but we require 230 million. So we got a deficit of 100 million tons. That's a lot of steel. [00:24:21] Speaker B: It is. [00:24:22] Speaker A: And I think a lot of that deficit like we talked about was coming from Canada. And it's usmc, right? Is the new word for nafta, I believe, smc. So, you know, I think the most surprising thing was again, Canada. And it's going to be interesting to see how Canada reacts. And you know, the other thing too about the whole thing is it's interesting to see, like you explained at the beginning of the show, anti dumping. All right, what is that? So I basically had to explain this to my staff today that, you know, they ask, well, what is anti dumping? What does this mean to us? And I just explained to them, look, you're selling your product for a dollar a pound in your country and you turn around and sell it in the United States for 90 cents a pound. That's anti dumping. You can't Sell outside your market at a cheaper price than you are in your own market, essentially. [00:25:21] Speaker B: Right. [00:25:21] Speaker A: So it's hard for me to imagine that a country like Canada has been being, do you know, guilty of doing that. But, and the other thing I was going to say too, I mean, part of our show too, is that, you know, on the surface, so for example, like US Steel, I think obviously in any, any industry, nobody really knows the finite details of the industry. It's almost like putting it in a microscope, you know, doing a political rally saying, look, we're going to keep U.S. steel here. First of all, U.S. steel is a historic steel mill. And it just sounds romantic and it sounds horrible. It sounds horrible on the surface to be selling US Steel to Japan, that doesn't sound good. And especially politically, but again, once you start peeling back the layers and even in this case, I mean, this is why I kind of think this whole thing is politically motivated. It has to be somebody knows somebody to be able to get this stuff through. Right? Because I do know, I mean, this is the way politics work. [00:26:31] Speaker B: Look. [00:26:33] Speaker A: Say I own a steel mill and I call it Steel Dynamics. I'm going to lobby hard for the President of the United States to favor my company. So it's, it's the way it works. I'll pay your campaign, I'll give you money so it, so you win your election and then in return, you helped me get through this stuff. And I'm going to say bluntly, Section 201 is absurd. It's an old Civil War law. And they did the study, they said, look, we need. And I even saw this, you know, again, all this stuff surfaces up on the top with, you know, mainstream media, mainstream talk show hosts who say, of course, we want to keep US Steel American owned. But, you know, you peel back the surface and you start seeing that look, you know, again, these mainstream media people will say, look, we need to make sure that our country can always supply our military with enough steel. [00:27:38] Speaker B: Right. [00:27:38] Speaker A: I believe when they did this study, they found out that the US military only needs like 1% of what we made, right? Make plenty of steel for the US So for lack of a better word, it's a complete sham. Complete sham. You had Wilbur Ross in there, a former steel guy who. You can't tell me. I mean, nobody has the time to pull back the layers and report all the shenanigans that go on with the steel business. But I think, you know, as soon as Trump got elected, I think he was supported by Steel Dynamics to get elected. And as soon as he did get elected, he came through on his promise and put a shady civil war law in there. Section 201. I mean it's ridiculous. And that's why I think companies can go in and get an exemption on Section 201 because they can prove that, look, this particular product that my company uses and buys is not readily available in the United States or in some cases the United States doesn't even buy it or, excuse me, produce it. [00:28:35] Speaker B: Right. Well, we say that we see the same thing, that the faster industry is a perfect example of that. The faster industry is by and large almost completely supplied by four entities, China being the largest by far. You know, that is a fact anymore. I mean you have a hard time finding screws, nuts and bolts, any kind of fastener that is here. So with that in mind, you know, here we are, we're looking at, you know, what is the future of what's going on here realistically? US Steel selling out to a foreign entity. There's a lot of pros and cons. In my mind, the pros, I mean they're going to put some money into U.S. steel. They're going to build that company up. They're going to build up his abilities, they're going to repair it and they're going to. And they've already discussed some of the things that they're going to do with it. Whereas U.S. steel is just kind of, I feel like they've just kind of ran the thing and milked everything that it was had to offer and closed down the portions of it that weren't profitable or whatever the case may be and kind of done whatever they can to make it look like, you know, the company is viable. But the reality is that the company is shrinking. In the end, the only reason that they've done so well over the last few years is that they were able to buy Big River Steel. Without that, I don't think the US Steel would be in a very great position even with the great economy that we've had. [00:30:23] Speaker A: Right. And I think, you know, again that. [00:30:26] Speaker B: It. [00:30:30] Speaker A: Foreign companies are in a large part, what, what's the word I'm looking for? They look like the villain. Villainized. [00:30:41] Speaker B: Right. [00:30:43] Speaker A: And again, on the surface it makes perfect sense. I guess it's why we're doing this show, just to give some people education. I mean, you don't know what you don't know. But you know, if you could sit down with politician and explain to him, look, we can't rail stuff in this country. It's cheaper to put it on a truck and have them go down high five or whatever than it is to put on rail, which is in itself ridiculous. [00:31:10] Speaker B: Right. [00:31:10] Speaker A: Why is that? Because you don't have any competition in the, I mean, you know, you could probably name 10 rail companies if that, but there's no competition, there's no infrastructure. You don't even have the infrastructure at the ports to put it on. And rail, which at the end of the day, what's the point? The point is to make the most efficient product, the most efficient producer should win. So if you're able to buy from Vietnam, bring it on a boat to the port of Vancouver, put it on a rail and move it to, say, Utah at a cheaper cost. That, that sounds horrible when you say the word Vietnam, but at the end of the day, you're, you're going to sell a lot more buildings, you're going to, you're going to end up employing a lot more people there. At the end of the day, it's just basic econ 101. It ends up benefiting. And that's. And you know, again, I don't. That's the surprising thing that it. And that is, I mean, I'll just say it bluntly. I mean, that's what I have a problem with Trump about is that. [00:32:21] Speaker B: I. [00:32:22] Speaker A: Just don't think that a lot of his policies are free market. They're not free market policies. Now I get you're. In a large sense he's having to fight fire with fire in sense that. [00:32:34] Speaker B: Right. [00:32:35] Speaker A: He's having to put up tariffs because these countries have subsidies. But you know, at the end of the day, it just ends up being a mess. I mean, we have anti dumping on fasteners on China. But I can tell you right now, if you wanted some fasteners, you can get it from China and they'll figure out a way to doctor their paperwork or doctor the commercial invoice and make it, you know, get around it. [00:33:01] Speaker B: Right. [00:33:02] Speaker A: So it's a mess. [00:33:06] Speaker B: Yeah, it kind of is. You know, and so to some degree with Trump's policies on this, I, I agree with you to some degree. However, I'm trying to keep in mind that the whole big picture of things and I don't feel like Trump's opposition, you know, if say, Harris gets elected, for example, I think that their viewpoint based on past performance, I think the government would really like to get their hands on some of these big producers of commodities. You know, call me conspiracy theorist, but all indicates all the indicators kind of point to, you know, the government Wanting to get involved in the food production and government is always involved in energy and all these kinds of things. The steel industry does not need the government owning, regulating, managing the steel industry. I think that's a disaster waiting to happen. And so I don't think that Trump is about to allow that to happen. Whereas I don't have a lot of faith on the other side of the aisle that they wouldn't put in more opportunities to control that. [00:34:29] Speaker A: Right. I'm just looking up some of these. You and I were texting little while ago and I had sent you some stuff, I even found it interesting, some of these articles, but basically what it was saying amid all these, well, section 201 actually ended up costing, for every job that it made, it cost the US taxpayer $650,000 a person. So again, on the surface, I guess kind of the theme for the show is saying, look, on the surface it looks good. It looks good. Hey, let's put a steel tariff on all these foreign countries, right. That are bringing their steel in here and they're taking away US Manufacturers jobs. Your jobs have all been shift, you know, shipped over to Vietnam. Yeah, we shouldn't make, I mean, look, we're all red blooded Americans. I'm a red blooded American. I want my steel made in the US but at the end of the day, I don't want to have to pay $30 for a pair of vice grips. [00:35:43] Speaker B: Right. [00:35:45] Speaker A: And the customers selling me the vice grips want to sell their vice grips. So if I walk into the store and I mean, look at Harbor Freight. I mean, you can't tell me no one's going into Harbor Freight and buying them. [00:36:05] Speaker B: Sure, yeah. Harbor Freight has made a huge dent in the market. There's no question about that. [00:36:13] Speaker A: So it gets, it gets convoluted a little bit in the sense that it just, look, if everybody played the game fair, it should work. And I know people on the surface, again, it doesn't sound that romantic, but it actually ends up being better by having, if a guy in Vietnam can make gavaloo at a better price and he's obeying the market, he's doing every single thing, obeying the rules. I mean, that's the other thing that people will quickly sit there and say, well, you know, the guy in Vietnam can just dump his, his waste into the river, for example, they don't have the environmental rules that we have here for. [00:37:04] Speaker B: Right. And I was, I was going to bring some of that up. [00:37:07] Speaker A: Yeah, well, talk to me, I mean a little bit about that because I Mean, I, I mean that's again, if you start peeling back the layers. [00:37:14] Speaker B: Yeah. [00:37:15] Speaker A: Well, a lot of the problem, a lot of the cost that would make your product be more is let's say osha. Okay. They don't have OSHA in Vietnam. [00:37:26] Speaker B: Right. So let's explore that for just a second here. Because you look back as far as 2000 to 2004, for example, that's when some of these countries really got good at producing the goods that we're talking about and importing those and so on. So why did they get good at it? Well, one of the things was they were able to put in new state of the art mills that the US felt like they could not afford. Now I'm not the numbers guy at the mill. The truth of the matter is they chose not to keep up bottom line. So the domestic suppliers chose not to do the implementations and the repairs and the upkeep and the upgrading that was required to get a good quality product. And I know this is going to make some people mad, but the bottom line is that these countries we're talking about, a lot of them have state of the art equipment and they are making top of the line material stuff that you could run from tip to tail and you can count on the footage without a bunch of scrap and that kind of thing. So here's these foreign countries and they're able to put these state of the art mills in. Here in the United States we have all these EPA regulations and all of these sort of dams in the irrigation ditch, if you will, that have prevented the, those kind of implementations and that growth up until this point. The regulations are still there, but it's just that the mills have finally made enough money with this last cycle that they feel like they can afford to put these other things into play and be competitive on the quality and the volume side of things. So quite frankly, I don't know what we would have done without these 4 mills producing, you know, these sheets. Would the United States have, have stepped up? I don't know. But you don't build one of these kinds of mills overnight. I mean this is a four or five year process to build this type of mill. So here we are, we have these other, these other countries that jumped on board and they were producing again. I know people aren't going to like the sound of this, but they producing a good product at a good price. And that's not my opinion. That's pretty much factual across the, the board. If you ask anybody who's using the product, they'll tell you the same thing. And you know the U.S. it's taken some time for the U.S. to kind of get that corrected. So hopefully they're at that point. Hopefully the US is at that point bringing that online. Same kind of quality and same kind of volume. But you know, the US has not been able to keep up in that. In my opinion. They haven't been able to produce like that. [00:40:31] Speaker A: Well, even I was surprised when Section 201 never in a million years did I think myself and Steelscape would ally on something. But you know, Steelscape was avidly against section 201. Why? Because all their steel comes from either Brazil or Australia. Right. And I think again, I mean that's part of our show is just to educate people that look, that steel that you're rolling, even from Steelscape, like I always say, it's got a 1974 Toyota pickup truck in there somewhere. Right. So you know, there's not a west coast integrated mill. There's not one. [00:41:12] Speaker B: Right. [00:41:13] Speaker A: At least for us too. Especially for us. And we're talking corrosion resistant core material, flat roll and then even csi, I mean CSI runs billets for their slab. So again, I think I can't remember. Well, two things. I just remember one, it's 230. Did I said 230,000 tons? That sounds better than 230 million. So it's 230,000 I believe. And again these are just rough numbers but 230,000 tons is what I remember. And again I'll go back and check. But what I remember, what we require, we the US versus 130,000 of what we currently produce. So again there's a hundred million. Excuse me, I don't want to make the same mistake again. A hundred thousand metric tons deficit on, on what we can do. So yeah, I mean all this stuff again just plays out with these, you know, with the, I mean one good part about today's news is that I think all your inventory will go up in price. Everything is going to go, you know and we should kind of get into that a little bit about. You got two things going here now. One, you got these new anti dumping duties, circumventing duties. [00:42:46] Speaker B: Right. [00:42:47] Speaker A: But at the same time we have an election coming up and maybe we should talk a little bit about that. So the election I had send you some news. I mean my selfish self was just trying to look into, okay, which candidate is going to get rid of these tariffs. Section 232. Yeah. And I was reading that Harris was saying that she, she would not continue what they were calling Trump's tariffs. Now, even though Biden just went ahead and re upped them. Right, but real quick, I mean, in your brain, how do you get rid of, how do you get rid of inflation? [00:43:35] Speaker B: Well, there's got to be some price corrections. And I know kind of where you're going with this when it comes to these tariffs. Obviously these tariffs produced inflation. I don't know how else to say that, but they literally did so with the tariffs in place. And let's back up for just a second here. The American steel mills were basically, they went to Trump to say, hey, we need some help to level the playing field. So foreign steel's coming in low and we are only able to produce X amount. And this is our bottom line price, which is still above what they're trying to sell it for. And so they asked him to, you know, level that playing field. So by what he did is he put that 25% tariff basically worldwide with a few exceptions on incoming steel. And so that raised the foreign steel up above the number of the American made steel. Problem of it is the domestic mills just, they just raised their price too. So really all we did was raise every boat in the pond. Just the water level just rose up. So who's, so who's the beneficiary of that? Well, the steel mills benefit from that. And who pays the price? You and I as a consumer for everything from automobiles to, you know, roofing materials to whatever you, anything made of steel or aluminum. I mean this, this, this goes on to other products as well too. But yeah, realistically, yeah, the tariffs had a, had a hand in, in raising our inflationary problem in the beginning. Biden kept it. I don't think Harris really has, I don't think she has the wherewith or the guts to remove them. Yeah, I think there'd be a, I think that she's, she's got way too many lobbyists pressuring her. So the sad news is I don't think that the tariffs are going away anytime soon. [00:45:56] Speaker A: Yeah, so yeah, I think, you know, we have talked about this before and you know, quickly yesterday I had a conversation with a customer who is a Trump supporter. He actually even took me, I got to go to the, the Republican National Convention to RNC in Cleveland when Trump first ran. But you know, he, you know, so he's obviously a die hard Republican, but he himself just said, look, man, I hope, I hope a Democrat wins, he said because you know, basically he's got money. He, if he wants to Go afford a house. If he wants to buy a house, he'll go pay cash, Right? These interest rates really don't bother him. And he said, you know, to tell you the truth, every time a Democrat has been president, he made more money. And so I just don't know. I think again, it's easy in this election cycle just to say, look, and I'm going to get rid of inflation. And the way I'm going to get rid of inflation is with reducing energy costs. Well, I think you leave out two things there again, and I know that I'm biased, but one, going back to the reason why I brought up this customer is because just the amount of money for, I think. What did he say? He just got a, like, I can't remember, and I won't say over the air here, but let's just say he's gotten a couple million dollars for free, for nothing, for simply being a business. I mean, so the amount of money, I try to explain it really simple. If we're playing Monopoly and we all have an X amount of money on the board, and suddenly we triple the money on the board, well, I can guarantee you Park Avenue just went up in price just because we don't care. We got a couple extra 1500 bucks on our Monopoly table that we can afford to buy, spend more money on Park Avenue. So that's number one. But number two, in regards to the energy, I just tend to believe that. I always tell people that oil and gas, or, excuse me, oil and steel, they're married for sure. And I always tease my kids because they know I'm a steel guy. I always ask them, hey, try to come up with something that you make that doesn't require steel. And my son answered, fishing hooks the other day. That was not a good one. But, you know, the point is, is I, I, I, again, I know I'm biased, but I do, I just believe it's a nucleus. And, and I just don't see how you can really get serious about deflating inflation without getting rid of these tariffs. And, you know, maybe they got to get creative. I mean, this is why I love talking to you, because a lot of our stuff gets into geopolitical stuff, you know, so, for example, you know, we've been, I remember President Abe from Japan, he kept on coming over trying to lobby Trump on getting rid of the, the tariff on Japan, right? That poor guy, you know, he took him golfing. Remember the famous handshake, Right? I don't know if you remember that. Anyway, and interesting enough, he's been assassinated since then that President Abe. But the point is, is that you know, we got this situation with Taiwan and China heating up and you know, do you really want to tick off Japan? I mean Japan is a steel country and it's a big part of their economy. I know that they want to participate in the United States. I know I'm kind of dancing around but just real quick thought, I mean if you look at the evolution in the short time that I've been doing this for 20 years I bought, I remember I bought 4,000 tons from a mill in Japan. [00:49:54] Speaker B: Hike. [00:49:55] Speaker A: Anyway, I forget the name of the mill but anyway then we started buying that stuff from Taiwan a couple years later. Then now you fast forward, you saw the writing on the wall. Sooner or later we'll be buying all from Vietnam. Well here we are, we are buying from Vietnam, right? So now Vietnam's going to get kicked out. Well guess where I'm going to go. I'll go to Indonesia, Malaysia, Cambodia, Laos, you name it, right? And then by the time they come over and they lock those guys out, I'll just turn around and go right back to Vietnam because they've had settled everything and it just around, around ago. But at the end of the day it just ends up costing the US consumer more money. That's more money taken out of the pocket that doesn't end up going in back into the economy and it's right, you know. So again I just wish a politician would listen to, to the end guys and again I love having you on this because again you can't get any more red blooded American than you or company. And so I, you know, I think that somebody like yourself in your shoes to be able to verify that look this isn't ends up hurting us well. [00:51:10] Speaker B: And that there's definitely truth in that. I, I do want to back up on one little thing though. You know when you're talking about, you know, under a democratic regime, you know they were making more money. When I look back at our company during the Obama years, I mean we practically folded up. We practically closed the doors. [00:51:34] Speaker A: Really? [00:51:35] Speaker B: Yeah, we were a year away from closing the doors. [00:51:37] Speaker A: Really? Why was that? What happened? [00:51:42] Speaker B: So with the taxation and the regulation and all that kind of thing that they put on all of a sudden and the requirements with you know, healthcare and all the added costs that went along with that, that all piled up and at the, at the end of the day, I mean we went two years in a row and we looked at the numbers at the end of the year and we paid all of our bills. We, we kept, we kept. Well, we, we laid a lot of people off during that timeframe. Right. Uh, the economy sank. Our economy went stone cold for a while. Gas prices, gas prices. I mean, we had our sales guys, the guys that are normally answering the phones and talking to people. We had them, those guys out there cutting and welding, trying to make product. And it would, let me tell you, it was a small crew. And everybody that was left was pretty nervous. And our owner at the end of the second bad year of that, looked at it and said, you know what, there's nothing left for any of us. At the end of the day, we paid all the bills, but we basically broke even. And there's absolutely no reason to continue to use because, you know, this equipment will wear out and we will not have the money to, to repair it, replace it, you know, and expand. And so like I said, that was during the Obama administration and if it had continued the way it was, we wouldn't be here. [00:53:13] Speaker A: Right. [00:53:13] Speaker B: So, you know, there's that, I guess, right. That's kind of an opposing point of view from someone else, you know, found. But you know, going forward, I guess I kind of cling a little bit to, you know, energy independence for ourselves. You know, if we can get those kinds of things back in line, then some of these other things start to come back in line as well. I mean, let's face it, the mills overhead is a lot higher and the price of our domestic mills are a lot higher. Why is that? Well, because some of the things that they need, fuel, energy, those energy costs have risen up. And so we all take it, take it hard because of the rise in energy costs. So it's a compounding thing. If we get somebody in there that can help control some of that, then there's a possibility that we can see some softening in the steel industry without breaking the mills. [00:54:31] Speaker A: Right. So remind me when, what were you guys paying when Trump was president? Because I, you know, again, just in my short 20 year history of doing this, I remember when Obama was, was president and I remember gas prices going up and I remember customers complaining about it. I think it was up to $4 and 50 cents or something. These were numbers. I mean, again, when I think, you know, when I was a kid, it was 98 cents, $09. [00:55:08] Speaker B: Yeah. [00:55:08] Speaker A: Then it went to two bucks and then Bush W was in there. He got it back down to a dollar something. [00:55:15] Speaker B: Sure. [00:55:16] Speaker A: These are Idaho prices. And then, yeah, these numbers were $4 were unseen. Remember that? [00:55:25] Speaker B: Oh, yeah, absolutely. It put the hurt on everybody. [00:55:28] Speaker A: Oh, and remember, we had to pay the truckers a 20%. What, what do they call that? The 20% fuel surcharge. Yeah, we never had that before and. [00:55:40] Speaker B: We'Ve never stopped having that ever since. [00:55:42] Speaker A: Right. That's what I was going to say. [00:55:44] Speaker B: I started a ball rolling that's never ended. [00:55:46] Speaker A: That's right. [00:55:47] Speaker B: And you know, that's just a way, that's just a way for them to be flexible with the price of fuel and the price of energy. [00:55:54] Speaker A: But, but when Trump was president, and again, I'm asking because I really don't know, was it around like $3 and 50 cents for fuel? Yeah. [00:56:03] Speaker B: No, we were under 2 bucks. [00:56:05] Speaker A: We were under 2 bucks. Under $2. [00:56:08] Speaker B: So when, when, when Trump was. Or at the end of his, at the end of his term, you know, there's a lot of places you could buy gas for around a buck 90. No kidding to two bucks. Yeah. I mean, you can go back and look through history and you can find people who documented it and said, I mean, there's people that literally took pictures of the signs at the gas station when he lost the election and said, remember this day, I kid you not. And I mean, we're, you know, so when, when, when people say, yeah, well, the price of gas came down 20 cents. Yeah, well, it's still up two bucks from where it should be. You know, I mean, if we're going to talk about inflation, there's hardly a place you could find that is more inflationary than the price of fuel and energy. You know, just recently, you know, here in the West, Rocky Mountain Power was proposing quite an increase, the price of natural gas, and they're proposing a substantial increase in the price of natural gas. [00:57:23] Speaker A: You know, doesn't Montana produce enough natural gas to supply the world? [00:57:32] Speaker B: I don't know. You know, I know that there still seems to be a lot available, but, you know, don't forget that our current president, before he had lunch on his first day, he shut down the pipeline. Yeah. The Keystone, you know, and he went through and literally just undid a lot by executive order, a lot of the things that Trump had done with regards to energy. And we instantly, you know, got on, on the, on a roll. And, you know, people want to blame, every president wants to blame the previous president for whatever problems they're in. Right. And I don't, I don't buy that entirely in this case. I certainly don't buy that just because a lot of the things that they, they did in the very Front end of this presidency, you know, has, has led to inflation. It's been a cause of inflation. So. [00:58:42] Speaker A: Well, we only got a minute to go, but what I was going to ask or just tell you Matt, that so we'll find out tonight. The one question I have just so you're, you know, you'd be interested in and I'd be talking to you about this even over the phone that so can a mil be sued? So for example, Cisco, they're already in an anti dumping case. So will Cisco be included in on, on this or not? That's a question for me. Huh. [00:59:09] Speaker B: Because they're already involved in one. [00:59:11] Speaker A: Yeah, yeah. So, you know, so thinking that, okay, Taiwan's completely kicked out, that might not be true. Which it's a, it's an important question for me to. [00:59:22] Speaker B: Yeah. [00:59:22] Speaker A: Answer myself because it's going to be a vacuum. I mean even I'm a little tiny fish. But all my orders are already being sucked up to Korea which seems to be unscathed, but it's going to be a vacuum. I mean I think Vietnam's bringing in 18% right now. [00:59:41] Speaker B: Well, in Korea's not unscathed because don't forget that they, they promised the core. Well, they, they, they promised not to bring more than a certain amount of steel in. [00:59:55] Speaker A: Right. [00:59:56] Speaker B: You know, they negotiated that rather than paying the 25% tariff, they put a limitation on how much steel they're going to put in here. So. [01:00:02] Speaker A: Right. [01:00:03] Speaker B: They're limited. Right. Maybe not financially, but they're limited volume wise. [01:00:08] Speaker A: So yeah, I think, you know, at the end of the day, I think it's real important to be diverse. [01:00:14] Speaker B: Yeah. [01:00:15] Speaker A: Especially in this climate because you can wake up. Go ahead. [01:00:21] Speaker B: From my point of view, so for those who don't know that breaking into the steel industry as far as buying steel, especially from a mill or buying indirect, it's not an overnight process, it's not an easy thing to do. And when you get into these kinds of situations where maybe we're going to cut off these foreign countries, people like yourself that have been buying through these, these foreign entities aren't, aren't going to immediately just have the courtesy of buying steel from a domestic supplier, they're not automatically just going to say, yeah, we'll take care of your needs. That's a real important issue that we will have to see how that happens. We'll have to see if the domestic suppliers will step up. [01:01:10] Speaker A: Right. Naughty. Nice list. Who's been naughty? Who's been nice? [01:01:14] Speaker B: I got over a year supply on hand and learning, and I'm glad for it. [01:01:21] Speaker A: Good job, Matt. Well, I. We. I didn't think we were going to be able to fill up an hour, but we easily did. So, yeah, this would be our first show. Check it off. Many more to come.