By Deanna Tolliver
The Trump administration recently announced a 25% tariff on imported steel and 10% on aluminum. Indiana, the RV capital of America, is in the unique position of being both hurt and helped financially by this move.
Almost 90% of the RVs manufactured in the U.S. are made in Indiana. They all use steel and aluminum in their construction. Coincidentally, Indiana is also the number one steel-producing state in the U.S., and has been for more than 30 years.
WHAT DO YOU THINK OF THESE TARIFFS?
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The U.S. doesn’t make nearly the amount of steel it needs. In 2017, steel “consumption” in this country stood at 97 million metric tons (MMTs), but steel production was only 82 MMTs. The U.S. is the largest importer of steel in the world, and the top three countries we buy it from are Canada, Brazil, and South Korea. We import only 2% of our steel from China.
Mills in Indiana produced more than 24 MMTs of steel in 2017, and employed about 20,000 steel workers. Most of the mills are concentrated around the south shore of Lake Michigan, and for good reason: iron ore from mines and pits in Michigan and Minnesota is easily transported by boat to the mills. This type of mill has been steadily declining, however, due to outdated technology and rising costs. Blast furnace technology uses iron ore; the newer technology, electric-arc, uses electricity and turns scrap iron into steel. The latter is much, much less expensive to start up and maintain,
When the steel tariffs were announced, it was good news for some: more than 3,000 steel worker jobs have been restored in Illinois and Ohio. Production is expected to increase in Indiana as well.
And the same is true for the aluminum industry: idled potlines (electrolyzing cells used in smelting) are restarting in Kentucky and Indiana. The top three countries that will be paying the higher U.S. import taxes on aluminum are Canada, Mexico, and the European Union.
THE BAD NEWS FOR RVers is that because the costs of steel and aluminum components in RVs will go up, the cost of making new ones will go up, and so certainly the cost of buying a new RV will go up as well. Only time will tell if this country can make enough steel and aluminum so that imports can be drastically reduced, which may help costs. That is, frankly, unlikely.
But the fact remains that more people are employed in industries that BUY steel to make products, than in steel-making itself.
RV Business quoted Jason Lippert, CEO of Lippert Components, and home to 11,000 employees, as saying “….what that means for our business is immediate increased prices on commodities, which drives the consumer price up, ultimately. It will take several months for it to flow down to the consumer, but everybody’s trying to figure out how to deal with this ….”
Lippert stressed that his views aren’t based on any sort of partisan politics, but on the realities of running a U.S. business generating $2.1 billion in annual revenues that is heavily dependent on the pricing of commodities like steel and aluminum.
If the bubble bursts in the RV industry, it will likely be due to a combination of over-zealous production, lack of qualified workers, and rising costs of components. I believe the future of used RVs is looking very bright indeed.