Although Congressman Jim Hansen, R-Utah, gets a lot of the credit for saving Hercules millions of dollars in tariffs on the foreign import of polyacrylonitrile, he didn't get an endorsement from the thankful company.
Hansen was on hand Friday afternoon when Hercules held a press conference to announce that the Department of Defense has withdrawn its objections to the removal of a 10.2 percent tariff on imported polyacrylonitrile, or PAN as it is called.The Defense Department withdrew its objections at the urging of Hansen, with assistance from the rest of Utah's congressional delegation.
After the department withdrew its objection, the Department of Commerce authorized a foreign trade subzone for Hercules to import PAN, removing the 10.2 percent tariff the company has paid on the material in the past.
Hercules imports several million tons of PAN each year, and the removed tariff will save the company millions of dollars. Hercules officials refused to be specific about the savings because "it is very competition sensitive," saidJack DeMann, director of public relations for the aerospace production firm. Thesavings are "in the low millions of dollars," DeMann said.
Company officials gave a warm "thank you" to Hansen, but, when reporters asked if Hercules endorsed Hansen, officials were quick to point out that a "thank you" is not an endorsement.
"I'm the point man on this, but I would be off base if I didn't say Orrin, Jake and Howard worked on this also," Hansen said, referring to Sens. Orrin Hatch and Jake Garn and Rep. Howard Nielson, all Utah Republicans.
Hansen didn't mention Wayne Owens, but Hercules gave a politically prudent nod to the lone Democrat in Utah's delegation. "Everything we asked Congressman Owens to do, he did," DeMann said.
Hansen's seat on the House Armed Services Committee made him instrumental in persuading the Defense Department to drop its objections to the removal of the tariff, DeMann said.
Owens opponent, Richard Snelgrove, even gets a little credit. Snelgrove arranged for U.S. Secretary of Commerce C. William Verity to visit Hercules Oct. 13. Verity also used the visit to endorse Snelgrove.
PAN is a base material used in the production of graphite fiber. Hercules is the largest producer of graphite fiber in the United States.
Because PAN is not produced in the United States, Hercules was importing it from Japan. The Department of Commerce judged the material to be a textile and put a textile tariff on it, a Hercules official said.
Hercules lobbied the federal government hard for the removal of the tariff, claiming it raised the cost of producing graphite fiber, handicapping them in the international market.
Now, instead of a tariff on PAN, Hercules will pay a 5.6 percent duty on graphite fiber the way its foreign competitors must do. The 5.6 percent duty must be paid on graphite fiber Hercules sells in the United States as well as that sold overseas.
The graphite duty is less than half of the PAN duty because it takes 2.2 pounds of PAN to make 1 pound of graphite fiber, DeMann said.
The Defense Department had objected to removing the tariff on PAN because it wanted to see the material produced domestically. PAN is critical to U.S. Defense, and the department worried over the fact that no companies were willing to produce it at home, choosing to import it instead.
The Defense Department's anxieties were eased, however, when Hercules began construction on a PAN production plant in Alabama, DeMann said. The plant will begin producing PAN in early 1990, producing 30 percent of the material used by Hercules. By 1992, the plant will produce half of the PAN Hercules uses.