By Jennifer Doherty

Law360 (May 25, 2021, 8:34 PM EDT) -- COVID-19 stay-at-home orders that led tire plants to halt operations in spring 2020 — and not lower-priced imports — caused U.S. manufacturers to lose market share last year, Asia-based producers told the U.S. International Trade Commission on Tuesday.

The virtual hearing came one day after the U.S. Department of Commerce issued its final determination setting anti-dumping margins up to 101.84% on car and small truck tires from South Korea, Taiwan, Thailand and Vietnam.

Duty orders will follow in July if a majority of the ITC's five commissioners find that those imports have harmed U.S. producers, who lost 5.3% of the domestic market share last year.

"If you talk to the largest dealers in the country, they'll tell you their fill rates from the domestic producers [were] horrible going past August," Richard Smallwood, president and CEO of the Japan-based Sumitomo Rubber North America Inc., told the commissioners. "They simply could not get enough tires."

The company owns 69 overseas subsidiaries, according to its website, including tire manufacturing firms in the U.S. and Thailand.

"Being that I have a plant in the U.S. also, we could not bring production back up very quickly," Smallwood continued. "We didn't have enough workers who were healthy and safe to be able to produce at normal capacity."

Tire shipments that were already en route when the pandemic hit were able to cover some of the demand that U.S. producers couldn't meet, representatives for the foreign producers said.

Commissioner Rhonda K. Schmidtlein was surprised at the importers' focus on COVID-19 during oral arguments. Their brief had focused more on factory closures — including Goodyear Tire and Rubber Co.'s decision to shutter its 91-year-old Gadsden, Alabama, facility — as the driving force behind domestic producers' shrinking share of the market. 

For the U.S. industry groups aiming to convince the commission that imported tires are indeed hurting the industry on this side of the Pacific, that factory shutdown was directly traceable to encroachment from imports.

"We was close [to shutting down] before the China rule was put in," Mickey Ray Williams, president of United Steelworkers Local 12L of Gadsden, told the commission, referencing the government's 2015 duty orders on Chinese tires, which were reaffirmed this year. "And then we made a comeback. We started back hiring, and we grew. Our ticket went up. But then as the Vietnam and the Thailand tires started trickling into the U.S., we went right back down. But the capacity was there. They shut our plant down."

According to Williams, the factory could produce up to 26,000 tires a day by the end of 2019, including most types of Goodyear, Kelly Springfield and Dunlop tires.

The Gadsden plant, once the world's largest tire factory, was perhaps best known for employing Lilly Ledbetter, the petitioner in a 2007 U.S. Supreme Court case over gender pay discrimination. It employed 4,000 people in its heyday but was operating at a fraction of its capacity by the time it closed, with a workforce of just over 400.

Andrew Szamosszegi of Capital Trade Inc., who appeared on behalf of Sumitomo, argued that Williams and another labor organizer made comments to the press earlier this year citing outsourcing to Mexico — not Asia — as the source of workers' losses.

The factory's closing was a long time coming, the foreign producers argued. The same was true of recent investments in domestic tire production, they said, dismissing the other side's claim that preliminary duties are already working.

The importers also put forward assertions that U.S. manufacturers' focus on larger SUV tires meant that demand for smaller tires was hard to fill domestically under the best of circumstances.

Roger B. Schagrin, counsel for the labor union that petitioned Commerce to investigate tire imports from East Asia, urged the commissioners to reject the foreign producers' claims to fill various needs in the market.

"They were needed much less when demand plummets by 40 million tires from 320 million to 280 million and 5,000 workers lost their jobs," Schagrin said in his closing remarks. "So who took the brunt? In fact, all of the injury in the marketplace in 2020 [was in] the U.S. workforce."

The petitioner, United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO, CLC, is represented by Roger B. Schagrin, Elizabeth J. Drake and Nicholas J. Birch of Schagrin Associates.

The foreign producers and importers are represented by attorneys from Grunfeld Desiderio Lebowitz Silverman & Klestadt LLP, Doyle Barlow & Mazard PLLC, Wilmer Cutler Pickering Hale & Dorr LLP, White & Case LLP, Arent Fox LLP and Akin Gump Strauss Hauer & Feld LLP.

The case is Passenger Vehicle and Light Truck Tires from Korea, Taiwan, Thailand, and Vietnam, investigation numbers 701-TA-647 and 731-TA-1517-1520, in the U.S. International Trade Commission.

--Editing by Steven Edelstone.

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