These South Jersey metal makers say unfair imports slow sales, hiring. Would more tariffs help?

After bankruptcy and a shutdown, a modest revival by new operators is underway in parts of the former 55-acre Aluminum Shapes complex in Pennsauken, where 3,000 workers once labored making vehicle and construction parts.

Shapes, founded in 1954 and earlier located in Northeast Philly, initially supplied windows and pools for fast-growing suburbs and then branched out. Its scaffolding was used to repair the Washington Monument and the Statue of Liberty. As U.S. building slowed in 2008, descendants of founder Ben Corson took the company into bankruptcy.

Private-equity owners took over, cut staff, and tried to refocus on specialized, high-profit markets. Under Chinese owners, the company went bankrupt again and closed in 2021.

Over the past two years, Texas-based Western Extrusions and Canada-based Almag Aluminum have relit thousand-degree gas-powered furnaces. Workers heap piles of gleaming scrap into updated melting, ramming and pressing (”extrusion”) machines to make parts their engineers design for manufacturers. The companies recalled dozens of workers laid off by former owners in hopes of reviving sales and benefiting from a pro-manufacturing climate in Washington.

But the companies still face a long road to reach even their own modest goals.

To be sure, reviving U.S. industries to better compete with rival China and cut dependence on inexpensive imports is a goal professed by both Republicans and Democrats in this year’s national elections.

But the challenges facing the aluminum-plant operators in Pennsauken reflect those confronting manufacturers across the U.S.: Industrial investment capital is expensive; factory labor is scarce; and exporters backed by foreign governments offer imports at prices sometimes below production costs, or even below raw material costs — a practice known as “dumping.”

Despite more than a decade of crushing import tariffs designed to keep U.S. aluminum products competitive with foreign-subsidized rivals and Ukraine war restrictions on Russian aluminum imports, manufacturers complain that Chinese-owned and other foreign aluminum parts makers are still flooding the market. They have asked the U.S. government to expand tariffs.

In Pennsauken, Western employs around 75, less than half the number it had hoped to hire by now. Almag has hired around 25 and is also short of its growth projections.

“Our focus is on the big stuff — military, third-rail and electrical manufacturers, trailer manufacturers,” Bennett McEvoy, Western Extrusion’s owner, said in an interview.

A third of the market has gone to foreign suppliers, McEvoy added, citing industry data that show rising imports. ”The numbers will accelerate if we don’t get some [government] relief. If we are successful, we can add 200 to 300 jobs over the next several years.”

Joe Jackman, president of Almag, which makes complex shapes for office, medical, and lighting applications, among other users, said the market is “overwhelmed” with more than a dozen countries “dumping” aluminum parts in the U.S. at below-cost prices.

That’s why big extruders, backed by the United Steelworkers Union, which represents some aluminum workers (though not in Pennsauken), are asking once again for expanded tariffs — effectively a rise in taxes on imports from countries with a proven record of illegal dumping — and rigorous enforcement, so they can afford to make the long-term investments needed to revive plants like the ones at the former Aluminum Shapes.

The new owners and managers in Pennsauken are a welcome change, according to veteran employees at the complex.

“Now you can talk to the CEO, and they are promoting us from within,” said Joe Raspa, who joined Shapes as a press operator under previous owners in 2013 and is now a foreman for Western Extrusions.

“It’s day and night, the difference,” said Raspa’s coworker Ron Oxendine, a 25-year veteran. “They have brought in equipment to get the product out.” The new owners have ended the former chaos, he said.

But Western had hoped to hire more people by now to convert piles of gleaming aluminum scrap into bars and parts for use in building trailers, electrical equipment, and other heavy-duty uses.

“It’s a skeleton crew,” said manager Max Gorman.

The former owners — most recently, companies tied to China-based aluminum billionaire Liu Zhongtian — “left the casting house a mess,” Gorman said. “We cleaned it up, installed tracks, put up a skimmer and this hopper, automated loaders. And air-conditioning in the control booth. We hope we will get a lot of work back. We think we can employ 300 people.”

McEvoy said: “We really need business. A lot of what we do is transportation products — temporary structures for U.S. military field hospitals, casinos, airplane hangars, solar end electrical installations. But we are seeing a surge of imports” from competitors, who Western and other extruders with U.S. operations say are unfairly subsidized by their governments.

McEvoy said a revived industry would be good for the U.S. in many ways.

“Aluminum extrusion is a career you can build from the ground up. I’m really confident we can go places” and attract young people to make careers in metal work, he said. “But we need more trade tariffs to be able to do it.”

Menno Eby, chairman of M.H. Eby in Ephrata, Pa., one of the largest U.S. manufacturers of trailers and a longtime Aluminum Shapes customer before the bankruptcy, said the industry doesn’t like to import materials.

“We like to buy everything U.S.-made,” he said. “We have hundreds of shapes that we need. The foreign manufacturers, I don’t think will ever be able to give you the service you can get from your local mills.”

Yet the interests of parts users like Eby’s company don’t precisely match those of U.S. producers seeking to reduce imports. Aluminum parts, Eby notes, are relatively easy to make, and there are still a lot of small extruders in the U.S.

His company found new North American suppliers after Aluminum Shapes closed. Now its purchasing agents are considering whether to buy from Western in the future. “They do have some very big presses,” Eby noted.

The Pennsauken plant’s role in illegal imports was the subject of a blockbuster federal case. In 2010, the U.S. Commerce Department found that Chinese companies were dumping large amounts of aluminum into the U.S. market at below-market prices. In 2011, the agency imposed tariffs, or import taxes, of 374% on Chinese aluminum extrusions.

But the Chinese found a way around that huge import tax. According to federal prosecutors, companies tied to that country’s leading extruder — Liu Zhongtian’s company, China Zhongwang — purchased the Pennsauken plants and others in California from U.S. private-equity owners in the early 2010s. They used them to warehouse more than 2 million improperly labeled pallets of Chinese aluminum and sell it in products labeled U.S.-made, thus avoiding tariffs.

In 2021 a federal court in California found a group of China Zhongwang-related companies guilty of conspiracy, fraud, and lying to U.S. Customs and ordered them to pay $1.8 billion in restitution.

Since then, McEvoy and other aluminum industry executives say there has been another surge in imports from new companies in more than a dozen countries, mostly in Asia, around the Mediterranean, and Latin America.

Last year a dozen extruders and the Steelworkers filed a complaint in hopes of curbing imports on steel imported from China and also India, Indonesia, Malaysia, South Korea, Taiwan, Thailand, and Vietnam, in East Asia; Italy, Turkey, and the United Arab Emirates in the Europe-Middle East region; and Colombia, Ecuador, and Mexico in Latin America.

Western is among the U.S. companies that complained. Almag, though based in Canada, “supports” the complaint, according to Jackman, its president.

The U.S. makers noted imports from all those nations had grown, and in several cases roughly doubled, from 2020 to 2022. Federal trade agencies investigated. In some cases they found national governments apparently subsidizing exports.

In others, signs suggested local companies, some with Chinese owners, had re-exported China-made aluminum to the U.S. without paying required tariffs, and dumped the metal in the U.S. at illegally low prices subsidized by governments.

Last November, the U.S. International Trade Commission found “reasonable indication of material injury” from those 14 countries that could justify expanded tariffs. In March, the Commerce Department issued a preliminary finding that exporters in four of the countries were getting improper subsidies from foreign governments. In May, it added preliminary findings that all 14 countries were exporting aluminum parts to the U.S. at “less-than-fair” value.

A hearing is scheduled for Oct. 1 with a final decision by the International Trade Commission that could be a basis for boosting tariffs to follow.