Feature, V1I2

Nail Dumping

Roelif Loveland, the president of Maze Nails, one of a handful of domestic nail and fastener manufacturers, says as much as 75 percent of the nails used in America are made in China, which has once again this year been cited by the Department of Commerce for “dumping“ nails in the United States.

Dumping is the practice of selling products in foreign markets at prices lower than the cost to produce them domestically. The practice is used to drive competitors out of the market.

“The dumping of foreign nails into the U.S.—costing us American jobs and tax revenue—is simply not fair,” Loveland says. “So we certainly understand the need for these tariffs.”

On March 31, the Commerce Department issued an Administrative Review for “Certain Steel Nails from the People’s Republic of China: Final Results of Antidumping Duty“ that assessed a list of 22 Chinese made steel nail makers—including Stanley’s Chinese affiliate—with tariffs averaging 16.62 percent.

When asked whether dumping would make it more difficult for Maze Nail to sell to shed builders, Loveland responded:

“The question in my mind is not really whether suppliers want to sell to shed builders—but rather will they survive the onslaught of imports and be in business so they can sell to shed builders. That’s why supporting Made in USA products is so important.”

Maze Nails provides vast quantities of hot-dip galvanized nails in both hand-driven and gun-driven to the shed industry, “so we value this important business,” Loveland says.

He declined to specify how many nails Maze makes, or what percentage of the nails shed builders purchase.

“I believe that there is not a single American manufacturer of hardware that is not being affected by the surge of import goods into this country,” he says. “While there are often tariffs being applied in the nail industry—we have to concentrate on satisfying customers so they want to come back to our U.S.-made nails order after order.”

The bigger issue for nails sold in the United States is not low-cost Asian competitors and whether they are dumping them at below production costs, but rather the inability of most U.S. nail makers to produce a quality steel nail at competitive prices, says Dave Often, general manager of Apple Fasteners in Camp Hill, Pennsylvania. Nail sales, he says, make up just 5 percent of his business revenues.

“Since my business is mainly based on selling imported hardware, we currently purchase nails from Asia,” Often says. Specifically Taiwan. Several years ago the U.S. government put a very high tariff o protect manufactured nails in the USA. There are very few of these manufacturers actually left here in the States at this time. The anti-dumping applied to several mills in Korea as well as many of these Chinese factories were coloading nails across to Korea and branding them as Korean. Now that cannot happen. We currently supply all of our nails from a factory that we have used for quite some time in Taiwan. The product is excellent and the lead times are good.”

Often says the biggest advantage Chinese manufacturers had was lower labor costs, an advantage slipping away since labor costs in China are on the rise. He says what is driving higher U.S. tariffs are large corporations in the United States with very high overhead that must charge a premium price for nails made in the USA to remain profitable. “Also, in my opinion the nails made here by some of these companies are equal or of lesser quality than some factories producing nails in Asia right now,” Often says.

“I am all about certain protections, but if another country can make it, ship it 8,000 miles, and still be competitive with a domestic nail, then we need to look at the business practices of certain manufacturers here in the USA. I myself would be more than happy to offer nails made in the USA if I could get good product, good lead times, and competitive pricing. Right now that is still not a valid option. This may change in the near future. We will see.”

Tariffs or not, the steel nail market, like most products sold domestically, is price sensitive, says Lee Hogan, vice president of Supply Chain at National Nail in Grand Rapids, Michigan.

“We buy from China, even with the tariffs,” Hogan says. “It’s sometimes the best cost option. Other countries that sell steel nails domestically are Taiwan, Vietnam, Korea, and India. We also get them from Eastern Europe. Transportation costs can be a factor depending on where the load is going. Even with this extra cost factor for transportation, foreign nails can be the most competitive way for builders to buy.”

What National Nail sells are quality products at competitive prices, Hogan says. As long as the steel nails comply with the American Society for Testing and Materials standards, National Nail will buy them. He says quality standards are not really an issue since National Nail and its competitors buy from the same overseas mills.

“It’s unusual to find significant differences in product quality if they are going by ASTM specifications,” Hogan says.

Tariffs on Chinese-made nails will drive up prices somewhat, making U.S.-made nails more price competitive, leveling the playing field somewhat.

So for U.S. manufacturers like Maze Nails, the best way to compete with lower cost foreign suppliers is to produce a superior product, Loveland says.

“Honestly, the most straightforward and effective strategy for Maze Nails to compete with import nails is to always sell the top-quality and longevity of our fasteners,” Loveland says. “Just as shed builders push certain strategic advantages of their buildings or customer service to their customers – we do the same thing with our products.”

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