Chinese producers are undercutting Tonawanda Coke Corp., putting pressure on its 125 jobs, the company says in a federal anti-dumping complaint.
"They're not required to live up to the same environmental and labor standards as we are -- and they're subsidized," said Robert A. Bloom, president of Tonawanda Coke.
The company on River Road makes foundry coke, a fuel used in the production of engine blocks and other cast-iron products. It is one of four U.S. producers seeking federal penalties that would double the price of imported Chinese coke.
The trade complaint, filed with the Commerce Department in September, shows how jobs in the Buffalo area are suffering because of unfair competition from China, said Louis Thomas, district director of the United Steelworkers of America.
The case is the second anti-dumping complaint leveled against China by an area company recently. In June, Buffalo Color Corp. won anti-dumping penalties against blue-jean dye from China.
"There's more (complaints) to come," Thomas said. "Larger operations as well are just not going to be able to compete." The Steelworkers represent workers at Tonawanda Coke and supports the industry's trade complaint.
But importers of Chinese coke call the trade complaint simple protectionism, driven by producers' desire to keep out a lower-cost alternative.
"Personally I think the imports are needed," said Douglas Shook, president of importer Shook Trading Inc. in Atlanta. "The domestic producers have publicly disclosed they're making very large (profit) margins."
In their anti-dumping petition, the four producers reveal average operating profits of 17.5 percent in 1999, down from 21 percent the year before.
Coke is coal that has been heated to burn off impurities. Foundry coke, the type made by the Tonawanda company, comes in smaller pieces than furnace coke, which is used in steel production. There are six domestic producers of foundry coke, four of whom are involved in the trade complaint.
The domestic producers faced virtually no imports until 1997, when China entered the market with prices about half market rates. Last year China captured 15 percent of the U.S. market, according to the anti-dumping complaint.
Chinese producers use child labor and antiquated production methods that spew hazardous chemicals into the atmosphere, according to the trade complaint. By contrast, U.S. coke production is tightly regulated.
"We have already spent millions of dollars to be compliant with the Clean Air Act," Bloom said in testimony last week before the International Trade Commission. "We are facing substantial additional costs between now and 2003 to meet new . . . regulations."
The producers complaint is based partly on an ITC study of China's coke industry released in August. The study found that China had relatively lax environmental standards and low labor costs.
However, the Chinese also benefit from lower cost of coal, a major component of coke prices, the report said. Coal costs $12 to $18 a ton in China, versus $58 to $65 a ton in the U.S.
They also offer a lower-quality coke that is unavailable from U.S. producers, the report said. The lower-quality product can be used in some applications, such as pipe manufacturing.
Environmental standards are on the rise in China, importers said.
"The producers are on a massive campaign to make their coke ovens environmentally compliant," said Charles W. Knapp, president of importer U-Met of Pennsylvania in Harwick, Pa. The crackdown involved shutting down one-third of the nation's production capacity this spring, he said.
Founded in 1917, Tonawanda Coke is a private company linked by ownership to Erie Coke, another of the U.S. producers involved in the complaint.
The others are ABC Coke in Birmingham, Ala., and Citizens Gas & Coke Utility in Indianapolis.