Steel Tariffs Affect Repacking Costs, but Tower Crew Demand Bigger Factor
White House tariffs on steel are beginning to increase prices for companies involved in the post-incentive auction repacking, but the tariffs aren’t pushing up costs as much as competition for crews and resources is, said antenna and tower industry officials in interviews. “The main thing increasing the costs are the crew prices,” said Electronics Research Inc. Vice President-Marketing Bill Harland. “It’s an impact,” said FDH Infrastructure Business Development Manager Don Doty of the tariffs. “But the repack itself -- the demand -- is raising prices higher.”
Sign up for a free preview to unlock the rest of this article
Communications Daily is required reading for senior executives at top telecom corporations, law firms, lobbying organizations, associations and government agencies (including the FCC). Join them today!
The tariffs on steel put in place by the White House earlier this year increase the price of steel from many countries by 25 percent. Since the tariffs raise the prices of much of the cheaper steel available in the market, they also cause the prices of domestic steel to rise, affecting manufacturers even when they source domestic raw materials, a trade attorney said. The higher prices have started to hit only the tower and antenna businesses, said Doty, who has been on committees for the National Association of Tower Erectors. It’s not clear how long the tariffs will be in place, said Wiley Rein international trade and telecom attorney Timothy Brightbill. While the Commerce Department has granted product-specific exclusions from the tariffs and allowed some flexibility for individual countries, challenges to the tariffs are ongoing at the World Trade Organization and in the U.S. Court of International Trade, Brightbill said.
Higher steel prices have a bigger impact on companies building towers than those building antennas, because towers use much more steel, said Dielectric sales executive Christine Zuba. Guy wires, the cables used to add stability to towers, are one of the items most affected by the increased steel prices, Doty said. Steel tariffs are “one of a number of factors outside of our control that could impact the outcome of the repack,” an NAB spokesperson said. Though the FCC wouldn’t comment specifically on the steel tariffs' effect on the repacking, an agency spokesperson said rising steel prices pushing up prices compared with those in the cost catalog shouldn’t have an undue effect on reimbursement. ”The cost catalog is merely for guidance,” the spokesperson said. “We will evaluate each station's actual cost to determine reimbursement.” The FCC has a finite amount of money for reimbursement, so anything that increases the repacking cost could cause those funds not to stretch as far, Doty said.
Though steel prices will remain a factor in repacking costs for many companies, Harland said, ERI was able to stock up on raw materials before the repacking and should be able to avoid having to buy at the current higher prices. “We had a good idea how big the repack was going to be,” Harland said.
Repack prices are much more affected by the dearth of qualified tower crews, said Harland. Though the future of the tariffs is difficult to know, most industry officials expect the crew and resource crunch to worsen as the repack -- still in phase one -- continues. Delays in one phase are expected to snowball in later ones, as crews held up on one job take longer to start their subsequent assignments, broadcast officials said. Prices for equipment that needs to be delivered by a certain time are rising rapidly, Doty said. “We expect that backlog to increase,” he said. The extreme amount of rain experienced throughout the U.S. in 2018 also has caused delays, Doty said. Metal towers become slippery and shrouded in fog in the rain, making repack work too dangerous. “Safety is the first goal,” Doty said.