For A Kansas City Company Known For Its Metal Art And Architecture, Tariffs Add Complexities
Back in March, President Donald Trump announced tariffs, or import taxes, on steel and aluminum from countries around the globe: 25 percent for steel and 10 percent for aluminum.
These tariffs have had an impact on agriculture, and consumers, but they've also affected creative industries, including A. Zahner Company, a Kansas City-based architecture and design firm that deals mostly in metals.
Inside Zahner's headquarters at 9th and Paseo, on the factory floor, shiny sheets of metal are stacked and ready. Some have edged cut-outs, others are pristine.
Sean Kelley, who works in art business development at Zahner, says the company has changed its focus over more than a century — from tin roofs to intricate metalwork in and on buildings around the world.
"What's interesting is the evolution of a 120-year-old company," Kelley says. "You're seeing all the machines, some of them going back that far, and then the archaeology of the mechanics of what Zahner can do."
The sheet metal fabricators work in tandem with these machines, like a turret punch or a high-pressure water jet, programmed to manipulate, cut, bend and break the metal.
"It's a constant ballet of movement," Kelley says.
But since about June 2017, the company has been on the alert for potential steel and aluminum tariffs. Angela Orscheln, director of supply chain and contracts, says they worked to get clients locked in and to secure materials.
In March, the tariffs went into effect: 25 percent on steel and 10 percent on aluminum.
"Right now the market, especially for aluminum, it's just, it's very, very tight now, as far as available supplies in the marketplace," Orscheln says.
There are only a handful of aluminum smelters left in the U.S. and aluminum mills just don't have the capacity to meet the demand for a range of products from fighter jets to beer cans.
The U.S. imports 90 percent of primary aluminum from other countries, according to the Commerce Department. And additional duties levied against Chinese aluminum limited the domestic supply.
Zahner keeps stock at all times. But when Canada — the largest exporter of steel and aluminum to the U.S. — was hit with tariffs in June, it added more complexity for Zahner.
"One of the (aluminum) mills I work with based in Canada shared with me that they're booked for 2019, it's already full. I know the supply is just so short," Orscheln says.
Director of marketing Gary Davis, who practiced architecture in British Columbia, Canada, before joining Zahner, says Zahner's clients look to them for unique metal facades and surfaces.
"Our niche market," he says, "is to do a surface that inspires the client and challenges people that walk by to inquire and wonder: 'What's going on in this building?'"
But some clients are just learning about the new complications. Davis says, these days, if someone requests aluminum for a project, the staff makes sure they know about the tariffs, and also offers an alternate, and possibly more affordable, material.
"Could the aesthetic be achieved by stainless, by copper, by bronze?" asks Davis.
If a client's answer is stainless steel, the steel tariffs haven't been as much of an issue as aluminum.
The largest steel suppliers to the U.S. are Brazil, Canada, Germany, Mexico, and South Korea. But Orscheln says historically, Zahner has been able to source their weathering steel in the U.S.
"It's readily available here domestically," says Orscheln. "So there just really hasn't been a reason for us to go outside of the United States for our steel purchases."
And fortunately for Zahner, says Davis, the company doesn't deal in heavy steel, like the kind used for bridge girders.
"We're doing architectural, which then has a different cost impact," he says. "People look at what we do. And cover up some of the heavy stuff."
Still, Zahner, like many others, was keeping a close eye on the G-20 summit Friday in Buenos Aires, Argentina.
On Friday morning, President Trump, Mexico President Enrique Pena Nieto, Canadian Prime Minister Justin Trudeau signed the United States-Mexico-Canada Agreement (USMCA), to replace the North American Free Trade Agreement (NAFTA). The removal of steel and aluminum tariffs for Canada and Mexico was not part of the pact.
This agreement will need to be ratified by legislative bodies of all three countries, and Congress is not expected to take up the issue until March or April.
As Zahner's Angela Orscheln puts it, they're still hoping for a "course correction."
Laura Spencer is an arts reporter at KCUR 89.3. You can reach her on Twitter at @lauraspencer.
Note: This post has been updated to reflect the signing of the United States-Mexico-Canada agreement.