Small Firm in L.A. Triggers Lug Nut Probe : Trade: In response to its complaint, the Commerce Department will look into charges that Taiwan and China are ‘dumping’ their fasteners at below cost.

Mr. Lugnut is putting the screws to his foreign competitors.

In response to a petition filed by the small Los Angeles firm that makes the “Mr. Lugnut” brand of chrome-plated fasteners, the U.S. government has decided to investigate charges that firms in Taiwan and China have dumped lug nuts onto the U.S. market at prices below the cost of making them.

“We are being destroyed by dumped imports, like a lot of industries in the United States,” said Mark Plummer, president of Consolidated International Automotive, which makes the Mr. Lugnut fasteners sold in automotive parts stores.

Plummer says the prices of imported lug nuts would have to rise 70% to 160% before they could be considered fair. “There is no way you can compete and stay in business,” when imported products are priced below the cost of the materials used to make them, he said Wednesday.

Imports have taken a heavy toll on the U.S. firms that make nuts, bolts and screws. Hundreds of nut and bolt plants have closed since 1970, eliminating the jobs of more than 30,000 workers, according to the Industrial Fasteners Institute, a trade group based in Cleveland.

U.S. manufacturers blame competitors in the Far East, said C. G. Scofield, managing director of the institute. While Japan was the first to take market share and the South Koreans continue to raise the Americans’ hackles, it is the Taiwanese and Chinese whose practices now are greeted with the most suspicion, Scofield explained.

“Taiwan is in great part totally irresponsible (in) its quality and business ethics,” he said Wednesday. “The Chinese, the PRC, are endeavoring to intrude this marketplace, and they’re finding specialties, like lug nuts. . . . We hold them in great suspect as to their quality. We’re examining some of their products.”

In response to numerous problems linked to defective fasteners, Congress tightened controls on the industry with the Fastener Quality Improvement Act of 1990, which President Bush signed into law Nov. 16.

The law, which will go into effect next year, requires, among other things, that products in critical applications be tested against safety standards and be traceable to their manufacturer. The law also includes fines and jail sentences for violations.

“I’ll be damned if I want to drive next to you on the 405 (freeway) at 70 miles an hour if you have a faulty lug nut,” said Scofield.

Plummer got into the fastener business nearly 20 years ago at the suggestion of a business associate who developed a chrome-plated lug nut--the nut that secures the wheels to a vehicle. The idea was to capitalize on the popularity of shiny mag wheels.

“It’s difficult to put on a beautiful set of wheels with some rusty looking nuts,” Plummer said.

Business was so good that Plummer dropped his other products to produce only the chrome-plated nuts. A low-cost production method helped Consolidated remain competitive against the imports and stay in business--despite having to freeze prices for the past seven years.

But the last few rounds of price cuts by the Taiwanese and Chinese have finally begun to take a toll on Consolidated. During the past two years, Plummer has watched his employees dwindle from 70 to 26 and sales fall 40%, to about $10 million annually.

That was enough to motivate Plummer--one of only six U.S. lug nut makers--to spend upward of $200,000 on an investigation into the pricing of imported products. “You go along so far until you realize that you are not going to be around until you do something,” the businessman explained.

After reviewing Plummer’s information, the U.S. International Trade Commission last week said there was a “reasonable indication that an industry in the United States is materially injured by reason of the subject imports that are allegedly sold at less than fair market value.”

The case will now be taken up by the Commerce Department, which is expected to issue preliminary findings by April. If it finds evidence of dumping, government officials will decide if special duties should be imposed on lug nuts imported from Taiwan and China.

Plummer says he has no qualms about investing so much in an effort that may not pay off. With the fate of his business riding on the outcome, he says, “I have no choice at this point.”

Loosening Grip America’s troubled nut and bolt industry Source: Industrial Fasteners Institute