Washington, June 28 (Bloomberg) -- Honda Motor Co. is prepared to airlift 2,000 tons of carbon sheet steel to its U.S. and Canadian factories next month if the automaker can't secure adequate supplies from U.S. steel producers, the company said.
The Japanese automaker's plans were prompted by steel-import tariffs of as much as 30 percent that President George W. Bush imposed in March to protect companies such as U.S. Steel Corp. and Bethlehem Steel Corp. As a result of the tariffs, steelmakers are renegotiating contracts, and Honda may face a shortfall.
Honda's U.S. factories get more than 90 percent of the steel they use from domestic suppliers. Airlifting that much Japanese- made steel is a costly solution to what the company says it hopes will be a temporary problem.
``It's not cheap,'' said Ron Lietzke, a spokesman for Honda in the U.S. ``It's worth it for us to do this for a short time in order to maintain production at our plants in North America.''
Non-U.S. steelmakers, including Arcelor SA, the world's largest, the U.K.'s Corus Group Plc, and their U.S. customers are trying to avoid the tariffs by seeking a total of 2,000 exemptions for more than 1,300 different steel products.
Trying to ship that much steel ``would outdo the Berlin airlift,'' said Alan Wolff, counsel to domestic steel producers such as U.S. Steel, Bethlehem Steel and National Steel.
Hardest Hit
Japanese automakers are among the steel consumers hardest hit by the duties since they are struggling to keep up with U.S. demand. Japanese auto shipments to the U.S. rose 34 percent to 131,171 vehicles last month, according to the Japan Automobile Manufacturers Association.
The U.S. tariffs have prompted threats of retaliation from U.S. trading partners and complaints to the World Trade Organization by the European Union, China, Japan, South Korea, Norway and Switzerland.
The Japanese government has threatened to impose duties totaling $4.88 million on steel from the U.S. in retaliation for the U.S. tariffs, which would cost Japanese companies as much as $123 million a year.
Andy Boyd, another Honda spokesman, said that while the variety of steel in question accounts for only a small portion of the company's overall purchases, the metal has limited availability in the U.S.
`Don't Want to Pay'
U.S. steel producers say they can meet the needs without airlifts.
``There are no physical limitations on this market in getting steel,'' Wolff said. ``It is generally a question of price -- when anybody comes in and says there's a problem with availability, it's usually that they don't want to pay more.''
Bush set the duties to protect a domestic industry that has had 19 bankruptcies since 1998, with companies blaming low-priced foreign competition and the high costs of retirement benefits.
The U.S. Commerce Department will make its final decision next week on which exemptions to grant foreign steelmakers and their U.S. customers.
U.S. steel producers have accused some U.S. companies of tweaking the specifications for steel products to claim they can't be manufactured domestically, making them eligible for the exemptions. The consumers maintain that domestic steel is either too slow or too dirty to meet their needs.
Lead times for domestic steel shipments run between three and four months, making it more difficult for steel consumers to calculate how much they'll need to order, said Lewis Leibowitz, counsel for the Consuming Industries Trade Action Coalition.
``The scarcity is too great,'' Leibowitz said. ``The gap is increasing and U.S. manufacturers are at a competitive disadvantage as a result of these tariffs.''