“Murky” is the English word Dong Won Lee , who heads POSCO America Corp.’s strategy investment department, uses to describe U.S. tariff policies being levied against his company’s flat-rolled steel imports.
During an interview at his regional headquarters in Johns Creek on the outskirts of Atlanta, he told Global Atlanta that “The environment at the moment is murky. It’s difficult for us to make any important decisions regarding investment.”
“We’re weighing all the options” he said. “We’re not rushing. We’ll wait and see how the negotiations are going.”
He added that POSCO’s customers also want to see the U.S. lift the duties on its steel. One of its clients, a tin can manufacturer, is even considering to change its business to plastic can or paper can manufacturing, rather than continuing to face expensive, disruptive (due to uncontrollable political decisions) steel supply. “It’s very hard for them,” he said.
The regional office of the South Korean steel giant –ranked as one of the largest in the world — is to lay the groundwork for an increase in demand for steel in the Southeast and provide a forward base for POSCO’s exports.
POSCO America also is to provide high-quality customer service in real time, becoming a “total solution provider” for its sales offices in Detroit, Houston and Altamira, Mexico.
The office was moved from New Jersey in December 2016 to serve its clients that are concentrated in the Southeast including Hyundai, Kia, Nissan, Mercedes, Honda and the auto companies’ suppliers.
In the fall of 2010, it opened a $22 million automotive steel cutting plant in McCalla outside of Birmingham, Ala., where large rolls of steel are brought in by rail and truck and then cut to specifications required by the auto companies.
In September 2017, POSCO also opened a $26 million manufacturing plant to the Port of Indiana-Jeffersonville, Ind., to process steel wire for fasteners, nuts and bolts used in the auto industry.
Yet in the face of these promising prospects, POSCO was dubbed in the trade press “the big loser” in the latest rounds of aluminum and steel tariffs imposed by the Trump administration last year on its hot-rolled imports.
The U.S. Commerce Department’s preliminary assessments of the countervailing duty (57.04 percent) and anti-dumping (3.89 percent) aren’t expected until July 9 or so with a final review in September. These dates also can be extended 60 days, a spokesperson for the Commerce Department said.
Meanwhile, POSCO is evaluating its future investment plans.
Mr. Lee explained that unlike others of the world’s largest steel companies, POSCO grew through organic growth since its origins in 1968 when it was founded by Tae Jun Park, whom he called “an amazing guy.”
The original financing, he said, came from funds that Japan paid Korea in the mid-1960s as compensation for 35 years of colonial rule by imperial Japan.
“The American market is growing steadily,” Mr. Lee said, “and it is the biggest economy in the world.” But POSCO’s major markets are in Asia such as China and Japan, not in the West.
It has operations already established in Mexico and Brazil and the company hires about 5,800 workers in the Americas with some 900 in the U.S.
Should the tariffs prove to be an insurmountable barrier to the growth of their U.S. business, he said that they may have to expand in Mexico, which has lower tariffs.
Of particular concern, he said, is that the 50/50 percent partnership that POSCO has with the U.S. Steel Corp. established in 1986. The USS-POSCO joint venture (UPI), which is based in California, hasn’t been able to receive POSCO steel from Korea last year due to the high rate of tariffs and suffered a record operating loss.
This loss is particularly troubling, he said, since it is from a joint venture with one of the U.S.’s premier steel companies.
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