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Trump's tariffs on foreign steel, aluminum feared costly for some Siouxland manufacturers


SIOUX CITY | A decrease in domestic manufacturing, the price of raw materials skyrocketing, American jobs being cut, foreign retaliation and a trade war.

These are some of the repercussions a Siouxland steel supplier, economists and elected officials predict as a result of President Trump's 25 percent tariff on imported steel and 10 percent tariff on imported aluminum with the exception of imports from Canada and Mexico.

But some local manufacturers, the segment of the economy expected to bear most of the brunt of the tariffs, expressed support for the administration's directive which take effect March 23.

Dave Bernstein, co-owner of State Steel, a Sioux City-based steel wholesaler with six locations in the upper Midwest, has been monitoring the situation closely.

“Our concern is that the tariffs are going to cause a rapid run-up in the price we pay for steel, and therefore what we sell steel for and that will cause a run-up in the cost of those products that are being manufactured,” Bernstein said Tuesday.

State Steel, a family-owned and operated business, has "a couple thousand customers" across the Midwest. The company buys directly from steel mills and sells its products, including metal cut to specific specifications, to manufacturers.

Siouxland is home to a number of manufacturers, with Rock Valley, Iowa, about an hour's drive north of Sioux City, serving as a regional epicenter for the sector.

Rock Valley, population of about 3,400, is home to more than a dozen manufacturers that, reportedly, on a per capita basis, purchase and bring in more raw steel for metal fabrication than any community of its size in the nation.

One of those firms is Valley Machining Co., a 38-year-old employee-owned manufacturer of custom-machined products and assemblies that purchases $5 million to $6 million worth of steel annually.

Ralph Bousema, the purchasing manager for Valley Machining Co., thinks the 25 percent tariff on steel will present a short-term pain for the company and its customers but could lead to a positive outcome in the future.

“It’s going to cause shortages and longer leave times at the mills and, of course, the price is going to go up because of supply-and-demand,” he said. “Personally, I think the mills see it as an opportunity.

“(However), long range, I think it’ll be a good thing. It should have been done years and years ago because our steel capacity in the United States is very low. We’re down to just a handful of mills anymore.”

Dave McArthur also thinks the tariff could pose a long-term good for the country. McArthur is the fourth-generation owner of McArthur Sheet Metal Works in South Sioux City, a custom steel fabrication shop that recently underwent an expansion.

McArthur knows prices will go up for steel and aluminum — something he noted took place when the tariffs were just talk. However, he said if his costs go up he has no choice but to pass them along to his customers.

Still, McArthur is hopeful that the tariffs will be beneficial to the country.

“I think what he is trying to do is probably good for the American people because it probably will create jobs and keep those people from going overseas and trying to send stuff back over here,” he said Tuesday.

Nationwide, metal-consuming sectors employ 4.6 million people, versus just 415,000 people in metal-producing sectors, according to Indeed Hiring Lab, the economic research arm of the career development site.

Although corn, beans and other forms of agriculture typically hog the spotlight in Iowa, the $28 billion a year manufacturing sector is actually the largest contributor to the Hawkeye State’s economy.

“There’s a certain number of jobs in the steel industry in the United States (but) there’s an awful lot more jobs in manufacturing; many times more jobs in manufacturing,” Bernstein said. “Our lifeblood here in Iowa, South Dakota and Nebraska is manufacturing and ag-based manufacturing.”

In Iowa, 6,000-plus manufacturers employ 213,000 people, about a 14 percent of the total workforce, according to the Iowa Economic Development Authority.

Dave Swenson, an economist at Iowa State University in Ames, who specializes in community economics research, said manufacturers could get hit twice as hard should tariffs come into effect.

“Their prices for steel are going to go up not just because of the tariff, which imposes a 25 percent increase on steel, they are going to go up because of the tariff domestic steel producers can charge more for steel so they are going to get hit on both imported steel costs or prices as well as domestic prices,” he said.

Ernie Goss, the director of the Institute for Economic Inquiry and professor of economics at the Heider College of Business at Creighton University in Omaha, vehemently opposes the tariffs. 

“I hope like crazy that this is a negotiation strategy and he doesn’t intend to follow through,” he said the day before Trump signed the proclamation.

Goss noted that, while Trump is the author of “The Art of the Deal,” he hopes the commander-in-chief is just posturing with his tariff talks to bring other nations to the negotiating table.

However, he said the resignation of Gary Cohn, Trump’s former top economic adviser, was a sign the president intended to go forward with tariffs, something that could lead to America’s first trade war since 1930.

“There are very few positive outcomes in my view,” Goss said. “The negatives — the chief negative — is retaliation. They retaliate, we retaliate and then we're are in a full-fledged trade war.”

The topic of tariffs has also been a hot-button issue among politicians with a number of politicians in Trump’s own party siding against him in this situation, including all five Republican members of Iowa’s congressional delegation.

Republican Sens. Chuck Grassley and Joni Ernst and Republican Reps. Steve King, David Young and Rod Blum, jointly penned a letter with Rep. Dave Loebsack, Iowa’s lone congressional Democrat, to the president urging him to reconsider his proposal for fear of retaliation that would negatively impact their home state.

“Iowa is comprised of diverse industries which play a vital role in supporting not only Iowa’s economy, but the entire U.S. economy. Iowa is the second largest agricultural export state, and shipped $10 billion of exports abroad in 2015 alone. Strong, fair trade favors American families and businesses and allows them to export their goods, which is critical for the farmers, manufacturers, and insurers in our state," the letter said.

Since Trump verbalized his thoughts on the tariffs, the stock price of America's largest steel producers has gone up something likely to continue now that those are official.

Coincidently, Bernstein said people have approached him thinking that he would be all for tariffs since he's in the steel business. But he remains firm in his opposition. 

"It's concerning for us because we want to make sure that there is ample supply of steel for manufacturers in this part of the world so they can continue to do what they do and that they are not penalized by retaliatory moves from aboard," he said.

Local leaders decry state of Iowa’s move to reduce tax relief payments

SIOUX CITY -- Cities and counties in Iowa soon may have less money than expected as a result of business tax relief passed by the state five years ago.

The results could include layoffs, reduced services or tax increases, local leaders say.

State lawmakers five years ago lowered property taxes for commercial and industrial businesses. The plan called for the state to make annual payments to local governments that would lose revenue as a result.

Now, with the state budget undergoing midyear cuts for a second consecutive year, state lawmakers will consider reducing or eliminating the payments.

Leaders across the state said they are disappointed the state appears to be breaking its promise, and expressed concern about the impact to their budgets.

“We are extremely concerned with this (proposal) because it is a lot of money for the city of Sioux City,” said Donna Forker, the city's finance director. “It was a promise made in previous years that this money would be there for us, to compensate us for actions taken by the state.”

The state makes just more than $150 million in annual payments to local governments to help them cover the money forfeited by the commercial and industrial property tax rollback.

Republicans in the majority in the Iowa House have proposed capping the payments at $100 million for the coming budget year, then gradually reducing the payments until it reached $25 million in the state budget year that starts July 1, 2021.

Associated Press 


Republicans in the majority in the Iowa Senate have proposed reducing that figure by one third in each of the next two budget years and eliminating the payment by the budget year that starts July 1, 2020.

“I believe they should be on the table for the next few years,” said Republican Jack Whitver, Senate president, during a recent episode of Iowa Public Television’s “Iowa Press.” “Ultimately that's $150 million that we're paying to the cities and counties that we'd like to phase out — I'd like to phase out.”

If the payments are reduced or eliminated, local governments — and local residents — will feel the impact, local leaders said.

The business property tax relief has not spurred the economic growth that was its stated goal, so the payments remain crucial to keeping local budgets whole, local leaders said.

Without them, local governments would need to make up the money elsewhere. That would mean laying off government staff, reducing government services, or raising property taxes, local leaders said.

But many local governments cannot raise property taxes to make up the difference because they already tax at the legal limit.

“We would either have to raise the (property tax) levy or cut services, neither of which is attractive to us or our community,” said Scott Naumann, a Bettendorf city council member and president-elect of the Iowa League of Cities. Bettendorf received more than $600,000 from the state backfill last year. “We’re in what we think is a tenuous position.”

That sentiment was echoed by officials across the state.

“I’m all for business investment and restructuring opportunities for our businesses, but we can’t just pull the rug up from under cities,” Waterloo Mayor Quentin Hart said.

Waterloo received more than $1.6 million last year, and Hart said a cut to or elimination could lead to staff layoffs, possibly in areas like public safety.

“Now we’re talking about the ability for us to be able to properly police our streets, the ability to be able to provide the essential services,” Hart said.

“It’s a big concern to us. ... I do believe there (would be) some sort of decrease in service level,” said interim city administrator Kevin Jacobson of Mason City, which received more than $640,000.

Making matters worse, local officials say, is that the proposals would begin with the state budget year that begins July 1. Many local governments have approved their budgets for the coming year, so reductions would mean cuts to planned spending.

“Counties would need to cut services that their citizens depend on in order to absorb that in a budget that’s already been set,” said Lucas Beenken, a public policy specialist with the Iowa State Association of Counties.

The Sioux City Council on Monday gave final approval to its new budget after debating the potential loss of the backfill funds.

If the Senate bill would become law, Sioux City would lose more than $600,000 in state funds, according to a city analysis of the legislation.

Ian Richardson / Provided 


Some council members said they didn't want to increase property taxes as a precaution, as it may appear to the Legislature that the city is resigned to losing the previously pledged state money.

"My vote is we leave (the budget) right where it's at, and if we have a problem this budget cycle, I would be glad to point out why we're having a problem," Mayor Bob Scott said. "I would hope the governor ... does the right thing, and that's to veto any bill that compromises this."

Republican Gov. Kim Reynolds did not include such a reduction in her proposed state budget or her tax reform plan. She has not commented on the state backfill for future years, nor on either the Senate or House proposals.

As officials built the city of Cedar Falls budget, they assumed there would be no payment, knowing lawmakers were considering the changes. Cedar Falls received nearly $580,000 a year ago.

That prevented Cedar Falls from being able to lower its property tax rate, city administrator Ron Gaines said.

“Our city council made the policy decision to go ahead and budget not using backfill dollars,” Gaines said. “But they were hamstrung on what they could do with the (property tax) levy rate.”

“It’s like a lot of the commitments that the state makes,” Gaines added. “Usually at some point they don’t follow through.”

The consensus among local officials was that the state should honor its commitment, but if lawmakers decide to eliminate the payments, local officials want a more gradual phase-out than either of the legislative proposals.

“If it’s a promise, it ought to be honored,” Naumann said. “If for some reason they elect not to stand by their word, we at least need to be a little more compassionate (about phasing out the payments).”

Sioux City bullying incidents more than double last year, says state report

SIOUX CITY | Forty-six instances of bullying were reported by the Sioux City School District in the last academic year, more than double the number the previous year, according to new state data.

Most victims were verbally bullied by fellow students on the basis of their mental abilities, physical attributes or real or perceived sexual activity, according to a Journal analysis of the Iowa Department of Education report. The instances, deemed "founded," to use the state's terminology, occurred in classrooms, playgrounds and hallways.

The department has been compiling detailed bullying data from each district for the last three years, and then posting the results on its website. The reporting is based on instances, rather than the number of students, meaning the data could mean an individual student was bullied more than one time.

The Sioux City district, which has the state's fourth-largest enrollment with 14,500 students, ranked fifth with 46 bullying instances in the 2016-17 school year, behind West Des Moines (71), Davenport (68), Burlington (67) and Iowa City (64).

Sioux City had 21 founded instances of bullying in 2015-16, the state's ninth highest number, and 30 instances in 2014-15, the eighth most statewide. Davenport topped the 2016-16 list with 73 instances, and Waterloo's 56 instances were the most in 2014.

Sioux City Superintendent Paul Gausman's office did not respond to repeated Journal requests to discuss the most recent state report. The release comes as the district received repeatedly criticism in recent weeks from some parents upset with how bullying of their children was handled by the district.

In previous stories, Gausman emphasized that reports of bullying receive a full review from administrators.

"Instances of bullying are always investigated and acted upon immediately when we are made aware of any challenges. Building leaders and the District’s Student Services and Equity Education Department often serve as the first point of contact when concerns are brought forth," Gausman said previously.

The number of found bullying incidents statewide was 1,454 in 2016-17, slightly down from 1,713 in 2015-16. In the first year, 2014-15, there were 1,454 founded instances.

The state's website said the collection of bullying and harassment statistics across Iowa is being done "for use in determining areas of concern in order to focus bullying prevention efforts."

"This will allow us to better target our bullying prevention and intervention programs," the website said.

In one statistic from another entity regarding bullying, a 2012 Iowa Youth Survey showed that 57 percent of Iowa’s school-age children reported having been bullied in the last 30 days.

Three years of statistics

Verbal bullying has been the top reported harassment method for the last three years in the Sioux City public schools.

Breaking down the 2016-17 numbers, the top bullying methods were verbal, with 28 incidents by such means as taunting, name calling, threatening to cause harm or inappropriate sexual comments. Eighteen instances were by physical means, with hitting, kicking, pushing or taking or breaking a student's belongings, and 10 instances were categorized as social bullying, such as embarrassing a pupil in public or spreading rumors about them.

Sixteen instances were reported in a classroom, 15 on a playground, 13 in a hallway, 13 by locker, 10 in the cafeteria and three in a restroom. 

The top locations for 2015-16 bullying in the Sioux City district were classrooms, and in the prior year the top order was in playgrounds, followed by classrooms and hallways.

The 2016-17 data shows the largest number of incidents were made to students in the trait categories of real or perceived sexual activity (11 such reports), physical attributes and mental abilities (eight incidents) and familial status (three incidents). Those categories were also top markers in 2015-16, while other incidents in the last three years were also reported based on the race, religion and political beliefs of bullied students.

The state information does not break down the grade level of bullying incidents.

In one recent example of public airing of a bullying incident, Brandi Boyd in February told the Sioux City School Board her child was bullied at Unity Elementary School. "It is now in elementary schools. It is really scary," Boyd told the board.

The Sioux City district has an online reporting form for discrimination, bullying, harassment and hazing. Those reporting an incident online are asked to fill in the date, school building, name of complainant and target, nature of alleged bullying, name of the person or persons alleged to have committed the act and names of witnesses. There is also a space for people to at length summarize the incident particulars.

Reporting categories

The state department has shared some background on how the information is collected.

The state says some bullying incidents may have involved multiple harassers and multiple victims, and that they may have taken place in multiple locations, so the number of locations listed in statistics may exceed the number of "founded incidents." Also the target student may have been bullied or harassed because of real or perceived membership of multiple protected categories.

The new categories dialed down in terms of the location of bullying incidents, such as a school bus, hallways, locker areas and classrooms,  and method of bullying in schools, including whether they are verbal, social/relational or electronic. The expanded categories placed bullying in relation to 17 traits, including race, age, color, sexual orientation, political belief and socioeconomic status, in order to line up with those listed in the Iowa bullying/harassment law.

Some data had been collected before 2013, but categories of the data changed, so meaningful comparisons can only be made over the last three years.