Steel tariffs: Some good news for
Florida’s construction industry with plans
for new $240 million Nucor rebar mill
Florida Construction News staff writer
What will the consequences be
from President Donald Trump’s steel
and aluminum tariffs for Florida’s
construction industry?
The answer: It depends, based on
your sector, reliance on steel and
from where the steel is imported, if
at all. In fact, if you are in central
Florida, the protectionist policies
may create business opportunities
for you.
Data indicates that Florida, de-
spite its large and growing construc-
tion industry and steel requirements,
will not be as badly affected as some
other states.
This in part is because Nucor is
building a $240 million rebar micro
mill in Frostproof, Polk County, a proj-
ect the steel maker originally an-
nounced in November 2017, but
confirmed in March when Trump an-
nounced the tariffs.
“Nucor has always focused on
growing our business to better serve
our customers,” John Ferriola, the
company’s president and CEO, said
in a statement. “We are building this
rebar micro mill in a great and grow-
ing market where demand is strong
and there is currently an abundant
supply of scrap, a good portion of
which is handled by our scrap busi-
ness.” “Consistent with our planned
strategy of being a low-cost pro-
ducer, this micro-mill will give us a
cost advantage over our competitors
who are shipping rebar into the re-
gion from long distances.
Nucor expects the mill, which will
employ about 2,500 workers, will
have an annual capacity of 350,000
tons on a 400-acre site on US 27.
“There hasn’t been a project of
this size in many years,” Sean Mal-
ott, executive director of the Central
Florida Development Council, was
quoted as saying in the local news-
10 – SPRING 2018 — Florida Construction News
paper, The Ledger. “This is the
biggest manufacturing property Polk
County has had the chance to com-
pete on.”
The Polk County Commission has
approved property tax and impact
fee breaks worth about $150 million.
Malott said Nucor officials were
looking for a site with more than 300
acres, railroad access, and access
near a major electricity substation
that could provide enough power to
operate the plant.
A Nucor spokesperson declined
to provide information about
how/whether the company is select-
ing design and engineering consult-
ants, or a general
contractor/construction manager,
saying simply: “Unfortunately, we do
not have additional details to share
at this time.”
Data from the Brookings Institu-
tion shows that Florida, despite its
size, does not have a disproportion-
ate share of steel and aluminium im-
ports. The list is topped by Missouri
(which is also getting a new Nucor
rebar mill), Louisiana, Connecticut,
Maryland and Arkansas.
On the other hand, the data indi-
cates that the number of workers di-
rectly employed in steel and
aluminum production in Florida, a
total of 1,803 (before the Nucor hir-
ings, of course) are dwarfed by the
194,655 workers employed in indus-
tries that use the metals.
Nationally, and in other states,
there is real anxiety about the poten-
tial tariff impacts, even though
Canada and Mexico remain exempt
under the North America Free Trade
Agreement (NAFTA). While Trump
has indicated he isn’t happy with the
agreement, recent negotiations indi-
cate the three countries are moving
towards a settlement.
However, Stephen E. Sandherr,
chief executive officer of the Associ-
ated General Contractors of America
(AGCA), says the tariffs will be harm-
ful. “These new tariffs will cause sig-
nificant harm to the nation’s con-
struction industry, put tens of
thousands of high-paying construc-
tion jobs at risk, undermine the presi-
dent’s proposed infrastructure
initiative and potentially dampen de-
mand for new construction projects
for years to come,” he said in a
statement. “That is because the
newly imposed tariffs will lead to in-
creases in what construction firms
are forced to pay for the many steel
and aluminum products that go into
a typical construction project.”
“Firms that are already engaged in
fixed-price contracts may be forced
to absorb these costs, forcing them
to cut back on new investments in
equipment and personnel. Higher
steel and aluminum prices will make
the kind of infrastructure work Presi-
dent Trump supports more expen-
sive, forcing federal, state and local
officials to cut back on projects they
can fund. And the likely trade war
these new tariffs prompt will dimin-
ish demand for private investment in
infrastructure as well as construction
demand for manufacturing, shipping
and distribution facilities.”
“Considering the damages these
new tariffs will inflict on the con-
struction industry, it is easy to under-
stand why recent, independent
studies estimate that nearly 30,000
construction workers will lose their
jobs because of these new tariffs,”
he said.
These fears are manifesting in
other southern states, especially
North Carolina (where Nucor has its
headquarters). There, Carolinas Associated Gen-
eral Contractors (CAGC) president
Dave Simpson said steel price in-
creases will be costly, as the metal is
used everywhere in construction, in-
cluding concrete (as rebar), bridges,
to make the structure of buildings,
for beams, in staircases, interior
walls and hardware.
Most of North Carolina’s steel
comes neither from the NAFTA coun-
tries or China – the state imports
most of its steel from Brazil, reach-
ing $52 million in 2017.
Nucor, based in Charlotte, re-
cently raised its prices by $45 per
ton. Overall, the message from the
American Institute of Steel Construc-
tion (AISC), representing the steel in-
dustry, is that the tariffs won’t really
cause that much hardship, while
other associations have been speak-
ing loudly to say it will harm the con-
struction industry and stall
development. In a statement, AISC says: “As for
the price impact of a tariff on steel
projects, the answer is that it will de-
pend.” “However, a 25 percent tariff on
imports would not mean a 25 per-
cent increase on the overall cost of a
project. First, the cost of material is
just one of several components in
the cost of a steel structure. And
while percentages vary from project
to project, even if the full impact of a
25 percent tariff on material cost
was passed on to a project, it would
likely impact the cost of the steel
package by five to 10 percent, and
the total project cost by less than
two percent.”
However, AISC acknowledges
there could be other consequences
because steel prices don’t operate in
isolation. The association noted for
example, that in the past four years,
the index cost of ready-mixed con-
crete has increased by 17 percent,
while the indexed cost for steel has
declined. “And to the extent a tariff
applies to rebar imports as well as
structural products, it will also affect
overall costs for concrete. So, on any
individual project, the actual impact
of a tariff will need to be evaluated
against overall market factors just
like any other volatility in material
costs.” Meanwhile, the National Associa-
tion of Home Builders (NAHB) said in
a statement that the steel tariffs will
be costly.
“Given that home builders are al-
ready grappling with 20 percent tar-
iffs on Canadian softwood lumber
and that the price of lumber and
other key building materials are near
record highs, this announcement by
the president could not have come at
a worse time,” said NAHB chairman
Randy Noel.
“Tariffs hurt consumers and harm
housing affordability. We hope the
administration will work quickly to re-
solve these trade disputes regarding
lumber and steel so that businesses
and consumers have access to an
adequate supply at a fair market
price,” Noel said.
Florida Construction News — SPRING 2018 – 11