U.S. keeps tariff; Henderson jobs protected

Grace Leong

Thursday, July 3, 2003 | 11:33 a.m.

Potential layoffs at the Titanium Metals Corp. plant in Henderson were averted this week after officials and employees successfully urged the Bush administration to maintain an import tariff on a titanium-making raw material.

The administration was considering waiving a 15 percent import tariff on titanium sponge, used to make titanium -- a lightweight metal used in the aerospace and military industry -- and changing trade rules to make it easier for Kazakhstan to export the raw material to the United States.

Had the import tariff been lifted, that would have allowed Kazakhstan, which state officials say doesn't meet U.S. wage or environmental laws, to underbid Denver-based Timet -- the only titanium sponge producer in the United States -- and potentially force the Henderson plant to shut down.

"Operating at 65 percent of capacity, which is where Timet is right now, the unit cost to produce titanium sponge is about 25 percent higher than the costs would be if Timet were operating above 90 percent of capacity," said Sen. Harry Reid in a May 23 letter to U.S. Trade Representative Robert Zoellick.

"If Timet's sponge plant is not able to remain commercially competitive, it may well close and the United States will become dependent on Russia and Kazakhstan for titanium," he said. "Since titanium is a critical military material because of its use in the aerospace, armor and naval applications, the possible closure of Timet's sponge plant would severely undermine the United States' defense industrial base."

Rick Taber, president of the United Steelworkers of America Local 4856, which represents about 250 of the 415 workers in Henderson, described the Bush decision to not waive the import tariff as a "good thing" for Timet and said it "should be good for another three years."

"As long as business is good, that will secure our jobs. If business went down, there are no guarantees," he said.

Bob Musgraves, Timet's chief operating officer, agreed, describing the Bush ruling as "a great result ... (that allowed Timet) to keep (its) foot in the door."

"It was announced today that the petition to ... remove the normal 15 percent duty on titanium sponge imported into the U.S. from ... Russia and Kazakhstan was denied by the president," he said in a July 1 bulletin to Timet employees. "Barring extraordinary circumstances, this issue will not be reconsidered for three years."

"The continuation of these tariffs is critical to Timet's remaining market competitive during this difficult period in the titanium industry," he said.