Buy America and Fender Panel Systems

What Does Made in the USA Really Mean?

During my twelve years in the marine fender and mooring bollard industry, I have encountered a no more misunderstood and sigh-inducing topic than interpreting Buy America requirements as they pertain to the purchase of marine fender panel systems.  There is a general lack of clarity on what constitutes compliance with Buy America and under what circumstances foreign material can be used.  The lack of clarity has two main causes.  The first is that, while the Buy America requirements are a part of US law, each project leader is left to interpret the law in their own way.  Therefore, almost every project has its own unique set of boundaries.  Secondly, marine fender panel systems generally consist of many different components.  These components have varying levels of availability and cost when sourcing from the USA in comparison to purchasing from overseas.

In this article, it will not be my goal to offer solutions to improve clarity and uniformity in the application of Buy America requirements and the sourcing of fender panel systems under these requirements.  Instead, I wish to illuminate the challenges in making a fender panel system that meets Buy America requirements.  I wish to educate the marine community and combat the possible spread of misinformation by suppliers wishing to avoid, entirely, providing USA sourced material.

The Origin of the “Buy America” Act

The “Buy America” Act comes from section 165 of the Surface Transportation Assistance Act of 1982. This larger bill was a comprehensive transportation funding and policy law that dealt with a large swath of transportation policy.  Section 165 established special preference to the use of domestically produced materials in any project with significant federal funds.  The implementation of the law was left to the Federal Transit Administration (FTA).  According to the FTA website:

FTA’s Buy America requirements prevent FTA from obligating an amount that may be appropriated to carry out its program for a project unless "the steel, iron, and manufactured goods used in the project are produced in the United States" (49 U.S.C. § 5323(j)(1)). FTA’s Buy America requirements apply to third-party procurements by FTA grant recipients. A grantee must include in its bid or request for proposal (RFP) specification for procurement of steel, iron or manufactured goods (including rolling stock) an appropriate notice of the Buy America provision and require, as a condition of responsiveness, that the bidder or offeror submit with the bid or offer a completed Buy America certificate in accordance with 49 CFR §§661.6 or 661.12.

Under limited circumstances, FTA may waive Buy America requirements if the agency finds that:

1. application of Buy America is inconsistent with the public interest
2. the steel, iron, and goods produced in the U.S. are not produced in a sufficient and reasonably available amount or are not of a satisfactory quality; or
3. including domestic material will increase the cost of the overall project by more than 25 percent for rolling stock. (https://www.transit.dot.gov/buyamerica)  

The above mandate that defines the Buy America requirement offers ample room for interpretation.  What is inconsistent with the public interest?  What is reasonable availability or satisfactory quality?  The interpretation of these requirements is left to the discretion of the public entity who has issued the project for public bid.  Below are the factors that must be considered when attempting to interpret the above FTA requirements and exceptions.

Made in America…Partly

Currently, there are no companies that manufacture large, buckling type, rubber fenders (leg, arch, cone or cell) in the USA.  All fenders of these types are made in Asian countries – India, China, Malaysia, Singapore, or Japan.  There are, of course, companies in the USA that can sell you these rubber fenders, but the fenders will not be manufactured in the USA.  This is an unavoidable fact.  The other components of a fender panel system can be manufactured or fabricated in the USA.  However, the challenges of sourcing this material and the pricing relative to foreign material is often misunderstood and underestimated. 

The best example of this is the steel restraint chains.  These chain systems; comprised of chain, shackles, and chain tensioners, are required for most fender panel systems.  On the surface it may seem that chain, a ubiquitous component of the marine industry, would have several USA manufacturers.  On the contrary.  There are only one or two manufacturers of this material in the USA.  These manufactures make chain for the US Navy or other companies who buy in large bulk orders.  To buy chain from these companies, in the relatively small quantities needed for a fender job, would require you to vastly overpay for the material.  You would be paying to meet minimum order size thresholds or to cover extreme mark-ups meant to discourage these kinds of small orders.  These premiums typically reach up to 10 times the cost of the material coming from foreign sources; perhaps more depending on the order size.  The lead times will also be extreme.  The quoted lead times are up to six months with no guarantee of meeting the quoted delivery dates.

The Cost Factor

The shackles and chain tensioners can also be manufactured in the USA from US steel.  However, the cost to have these materials manufactured in the USA from US steel, would be several times more expensive than shackles from a foreign manufacturer.  The lead time for the shackles is not usually a problem, because there are several industries that require shackles to be sourced from US manufacturers for quality reasons.  Therefore, the good demand for domestic shackles results in a good supply that is easily sourced. Conversely, the chain tensioners can be difficult to locate since the style of tensioner used in the fender panel systems is only used for fender systems.  Therefore, these tensioners, known as dog-bone chain tensioners, are made specifically for each project.  This made-to-order production requirement contributes greatly to the premium paid and the scarcity of manufacturers willing to do the work the work of making these tensioners.

The steel frontal panel is the largest component of any fender panel system.  It is also the easiest to manufacture in the USA for both cost and availability.  The lead times are comparable to foreign made options; or sometimes better, if using an experienced fabricator.  The cost for a domestically fabricated steel panel is approximately one and a half to two times the cost of a foreign made panel.  The UHMW-PE plastic facing panels can also be sourced in the USA for two to three times the cost of making the plastic in Asian countries (however the quality of the plastic will be superior to anything made outside of the US and Germany).

Lastly, all mounting hardware can be sourced in the USA.  However, any socket-type hardware will require that the female couplers be machined.  Any machine work done in the USA will be much more expensive (three to five times the cost of machining overseas).  Therefore, if you wish to keep costs low, you should use embedded threaded rods and avoid socketed hardware.

Quality Vs. Efficiency

It should be noted that, while there is certainly a marked premium paid for domestically sourced material in both time and money, there is also a general increase in the quality of the components.  This will result in a better functioning and more durable overall system.  Also, these components, when sourced overseas, are subject to the newly instituted tariffs on foreign made goods known as the Trump tariffs or Chinese tariffs.  Chinese tariffs are a misnomer because these tariffs are applied to any goods coming from overseas with the exception of a small group of countries that are not traditional sources for fender system components.  Therefore, the cost deltas stated above are somewhat offset; either in material costs or operational and maintenance costs associated with downtime.

However, even with the tariffs, it is still much quicker, easier, and less expensive to manufacturer fender systems overseas (see Figure 1 below for a cost and lead time comparison).  In the ultra-competitive marine construction and supply market, where price seems to play a more and more important roll in the buying decision, there will be immense pressure to provide a system that includes as much foreign material as possible.  I hope that this article will arm the industry with enough knowledge to discern the difference between genuine supply or pricing concerns and lazy or dishonest tactics taken by those who wish to avoid supplying US manufactured fender panel systems.   

Figure 1*

* Special thanks to Trelleborg Marine Systems for the above table

** FTA refers to countries that have a free trade agreement with the USA.  These countries are allowed as manufacturers for projects done for the US Navy, Marines, or Coast Guard