Illinois-based Zekelman Industries announced last week that it’s shuttering its factory on the Long Beach-Carson border, laying off 145 employees.
The facility at 2001 E. Dominguez St. primarily manufactures a complete line of steel conduit under the Western Tube and Wheatland Tube brand names, according to the announcement. Moving forward, the company said, customers will be served through Zekelman’s Rochelle, Illinois, facility and West Coast distribution centers.
It is not clear when the plant will officially close. The company did not respond to multiple requests for further details or comment.
Built in 1974, the facility is 321,000 square feet and sits on a 12.5-acre property, according to PropertyShark.
Zekelman sold the property to Brookfield in June 2018 for nearly $64 million and then signed a leaseback deal for three years. The deal also included a 7-acre property north of the Western Tube facility. Brookfield Properties states the sites will be redeveloped as a single last-mile logistics facility.
One of the contributing factors to the closure is the surge of steel imports from Mexico and the Biden administration’s inaction, according to the press release. The company cites data from the U.S. Census Bureau that shows the volume of steel conduit imported from Mexico is estimated to increase to 69,641 tons, compared to 11,960 tons in 2017, marking a 480% spike.
Steel product imports from Mexico have been increasing for years. In 2017, the U.S. received just under 570,000 tons of steel products from Mexico, Census Bureau data shows. Last year, by comparison, imports reached over 4.47 million tons.
According to the bureau’s data, there have been just over 3 million tons of total steel product imported from Mexico this year through June, compared to over 1.9 million tons during the same time last year.
In March 2018, the Trump administration determined the quantities of steel being imported to the states threatened national security and imposed a 25% tariff on the product except from Mexico and Canada as part of replacing NAFTA with the USMCA trade agreement.
As part of the agreement, “it was clearly understood that if volumes imported into the U.S. from Mexico significantly exceeded historical norms, the U.S. would have the right to reimpose the 25% tariff or institute some other measures to reduce the surge,” the company’s statement reads.
The Office of the United States Trade Representative worked with Mexican agencies to implement a temporary permit control system in place to reduce volumes from August 2020 through May 2021. After this time, self-regulation was expected.
“This obviously did not happen, as Mexican conduit imports continue to climb unabated and are up six-fold from pre-USMCA levels,” the company stated.
Zekelman also claims that one month after the permit control period was enacted, Mexican steel conduit producers and their importers began misclassifying their products to circumvent the control system. The company submitted three complaints to U.S. Customs and Border Protection in 2020 and 2021.
Wheatland Tube Company filed a lawsuit against the United States in January of this year, claiming CBP acted unlawfully for not taking action against Mexican steel importers Shamrock Building Materials and Liberty Products. In a March 18 opinion, however, Judge Timothy Stanceu determined Wheatland’s interpretation of the law was incorrect and dismissed the case.
Still, Zekelman Industries maintains the Mexican companies are circumventing the trade deal and negatively impacting their business.
“All we ask for is for our trade agreements to be enforced,” Barry Zekelman, chairman and CEO of Zekelman, said in a statement. “Instead, there will now be 145 hardworking UAW members that will be out of work at a company that pays life sustaining wages and benefits for American workers. How does this help promote the American dream?”
Editor’s note: This story has been updated to add more information about the 12.5-acre property.