OFFSHORE PLATFORM JACKETS AND PILES

FROM THE REPUBLIC OF KOREA AND JAPAN

Determination of the Commission In

Investigation No. 701-TA-248
(Prellmlnary) Under the Tariff Act of
1930, Together With the Information '
Obtained In the Investigation

Determinations of the Commission In

Investigations Nos. 731-TA:.259 and
USITC PUBLICATION
. 1708
.
260 (Prellmlnary) Under the Tariff Act
of 1930, Together With the
Information Obtained In the
JUNE 1985
Investigations

United Statea lntematloMI Trede Commlulon I W•hlngton, DC 20431

UNITED STATES INTERNATIONAL TRADE COMMISSION

COMMISSIONERS

Paula Stern, Chairwoman

Susan W. Llebeler, Vice Chairman .
Alfred E. Eckes
Seeley G. Lodwick
David B. Rohr

Staff Assigned:

Tedford Briggs, Office of Investigations

Marvin Claywell, Office of Investigations
Terry Planton, Off ice of Economics
Dennis Rapkins, Office of Industries
Patricia Ray, Office of the General Counsel

Robert Carpent~r, Supervisory Investigator

Address all communications to

Kenneth R. Mason, Secretary to the Commission
UQited S~ates International Trade Commission
Washington, D.C 20436
 C0 NTE NT S

Page

Determinations of the Commission-----~------------------------------------ 1

Views of the Commission--------------------------------------------------- 3
Information obtained in the investigations:
Introduction---------------------------------------------------------- A-1
The product:
Description and uses---------------------------------------------- A-2
Manufacturing process--------------------------------------------- A-4
U.S. tariff treatment--------------------------------------------- A-6
The nature and extent of alleged saies at LTFV and alleged subsidies:
Alleged sales at LTFV:
Japan--~------------------------------------------------------ A-6
Korea--------------------------------------------------------- A-8
Alleged subsidies------------------------------------------------- A-9
The U.S. market------------------------------------------------------- A-9
U.S. producers---------------------------------------------------- A-12
.U.S. importers---------------------------------------------------- A-13
Channels of distribution------------------------------------------ A-13
Consideration of material injury to an industry in the
United States:
U.S. production, capacity, and capacity utilization--------------- A-15
U.S. producers' shipments-------------------------------------~-- A-17
U.S.· producers' inventories--~----------------------------------- A-19
U.S. employment, wages, and productivity-------------------------- A-19
.Financial performance of U.S. producers--------------------------- A-19
Overall establishment operations------------------------------ A-21
Operations producing offshore jac~ets and piles--------------- A-22
Kaiser Steel Corp.-------------------------------------------- A-24
Investment in productive facilities--------------------------- A-25
Capital expenditures------------------------------------------ A-26
Capital and investment---------------------------------------- A-26
Consideration of threat of material injury to an industry in the
.United States------------------------------------------------------- A-27
Ability of foreign producers to generate exports and
availability of export markets other than the United States----- A-27
Consideration of the causal relationship between the allegedly
subsidized and/or LTFV imports and the alleged injury:
U.S. imports------------------------------------------------------ A-28
U.S. market penetration by imports-------------------------------- A-30
Prices------------------------------------------------------------ A-32
Bid process--------------------------------------------------- A-32
Domestic producers' competitive position---------------------- A-33
Transportation---------------------------------------------------- A-33
Exchange rates--------------------------------------------~------- A-35
Appendix A. Federal Register notices------------------------~--------~- B-1
Appendix B. List of witnesses appearing at the Commission's conference--- B-9

Figures

1. Component parts of an offshore platform------------------------------ A-3

2. Typical fixed offshore platform------------------------~------------- A-5

Tables

1. Offshore platform jackets and piles: West coast consumption, based

on tonnage shipped and tonnage awarded, by sources, 1982-84,
January-March 1984, and January-March 1985------------------------- A-11
 ii

CONTENTS

Tables--Continued

2. Offshore platform jackets and piles: U.S. production, practical

capacity, and. capacity utilization, 1982-84, January-
March 1984, and January-March 1985--------------------------------- A-16
3. Offshore platform jackets and piles: U.S. producers' domestic
shipments and exports, 1982-84, January-March 1984, and
January-March 1985------------------------------------------------- A-18
4. Average number of U.S. producers' employees, total and production
and related workers producing all products and those producing
offshore platform jackets and piles; hours worked by, total
compensation paid to, and average hourly compensation paid to such
workers; output per hour worked; and unit labor cost in producing
offshore platform jackets and piles, 1982-84, January-March 1984,
and·January-March 1985--------------------------------------------- A-20
5. Offshore platform jackets and piles: U.S. producers' redqctions in
force, January 1982-March 1985------------------------------------- A-21
6. Income-and-loss experience of 4 U.S. producers on the overall
operations of their establishments within which offshore platform
· jackets and piles are produced, accounting years 1982-84, and
interim periods ended Mar. 31, 1984, and Mar. 31, 1985------------- A-22
7. Income-and-loss experience of 4 U.S. producers on their operations
producing offshore platform jackets and piles, accounting years
1982-84, and i'nterim periods ended Mar. 31, 1984, and
Mar. 31, 1985----------------------------- ------- ------- A-23
8. Income-and-loss experience of Kaiser Steel Corp. on the overall
operations of its establishments within which offshore platform
jackets and piles are produced, accounting years 1982-84, and
interim periods ended Mar. 31, 1984, ·and Mar~ 31, 1985------------- A-24
9. Income-and-loss experience of Kaiser Steel Corp.on its operations
producing offshore platform jackets and" piles, accounting years
1982-84, and interim periods ended Mar. 31, 1984, and
Mar. 31, 1985-------------------------------~-------- ------- A-25
10. Investment in productive facilities and capital expenditures related
to offshore platform jackets and piles, ·accounting years 1982-84,
and interim periods ended Mar. 31, 1984, and Mar. 31, 1985 - A-26
11. Offshore platform jackets and piles: Korean capacity, production,
and exports, 198.3-84 and projected 1985------------ --------~ A-28
12. Offshore platform jackets and piles: U.S. imports for consumption,
by principal sources, 1982-84, January-March 1984, and
· January-March 1985-------------------------------------- ----- A-30
13. Offshore platform jackets and piles: Sales for importation into
the United States, by principal sources, 1982-84, January-March
1984, and January-March 1985--------------------------------------- A-31
14. Offshore platform jackets and piles: U.S. producers' shipments,
imports for consumption, exports of domestic merchandise, and
apparent consumption, ·1982-84, January-March 1984, and
January-March 1985-----------------------------------·~~~------- A-31
15. Transportation costs, by project------------------------------------- A-34

--------------~--------------------------
Note.--Information which would reveal the confidential operations of
individual concerns may not be published and therefore has been deleted in
this ·report. Such deletions are indicated by asterisks.
 UNITED STATES INTERNATIONAL TRADE COMMISSION
Washington, DC

. Investigation No. 701-TA-248 (Preliminary) and

~nvestigations Nos. 731-TA-259 ~nd 260 (Preliminary)

OFFSHORE PLATFORM JACKETS AND PILES

FROM THE REPUBLIC OF KOREA AND JAPAN

Determinations

On the basis of the record ];_/ developed in the subject investigations,

the Commission determines, J:../ pursuant to .section 703(a) of the Tariff Act of

1930 (19 u~s.c. § 167lb(a)),. that. there is a reasonable indication that an

industry 3._/ in the United States is materially injured by reasdn of imports

from the Repu~lic of Korea (Korea) of offshore platform jackets and piles, !!_/

provided for in item 652.97 of the Tariff Schedules of the United States,

which are alleged to be s.ubsidized by the Government of Korea (investigation

No. 701-TA-248 (Preliminary)). We further determine, !:./ pursuant to section

733(a) of the Tariff Act of 1930 (19 u.s.c. § ·1673b(a)), that there is a

reasonable indication that an industry y in the United States is materially

injured by reason of such imports from Kor~a and Japan, which are alleged to

be sold in the United States at less than fair value (LTFV) (investigations

Nos. 731-TA-259 and 260 (Preliminary)).

Background

On April·l8, 1985, ~/and April 19, 1985, 2./ petitions were filed with

the Commission and, on April 19, 1985, with the Department of Commerce by

1/ The record is defined in sec. 207.2(i) of the Commission's Rules of

·Practice and Procedure (19 CFR § 207.2(i)). .
2/ Chairwoman Stern did not participate in the(se) investigation(s).
J/ Commissioner Eckes finds for the(se) preliminary investigation(s) that
there are two like products and therefore two domestic industries.
4/ Offshore platform jackets, piles, appurtenances thereto, and
suli'assemblies thereof that do not.require removal from a transportation vessel
and further U.S.-onshore assembly are included in these investigations.
5/ Countervailing duty and antidumping petitions with respect to imports of
offshore platform jackets and piles from Korea.
6/ Antidumping petition with respect to imports of offshore platform jackets
and piles from Japan.
 2

counsel on behalf of Kaiser Steel Corporation and the International

Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers and

Helpers, alleging that an industry in the United States is materially injured

or threatened with material injury by reason of subsidized imports of off shore

platform jackets and p~les from Korea and LTFV imports of off shore platform

jackets and piles from Korea and Japan. Accordingly, effective April 18,

1985, the Commission instituted preliminary countervailing duty investigation

No. 701-TA-248 (Preliminary) and preliminary antidumping investigations Nos.

731-TA-259 and 260 (Preliminary).

Notice of the institution of the Commission's investigations and of a

public conference to be held in connection therewith was given by posting

copies of the notice in the Office of the Secretary, U.S. International Trade

Commission, Washington, DC, and by publishing the notice in the Federal

Register of May 1, 1985 (50 F.R. 18582). The. conference was held in

Washington, DC, on May 13, ~985, and all persons who requested the opportunity

were permitted to appear in per~on or by counsel.

 3

VIEWS OF THE COMMISSION

We determine !I that there is a reasonable indication that an industry in

the United States is materially injured by reason of imports of offshore

platform jackets and piles from Korea which allegedly are being subsidized by

the Government of Korea. We further determine that there is a reasonable

indication that an industry in the United States is materially injured by

reason of imports of offshore platform jackets and piles from Korea and Japan

which allegedly are being sold at less than fair value (LTFV). £1

In making these determinations, we define the domestic industry as

encompassing those firms which produce and those which submit bids

(successfully or unsuccessfully) to produce the single domestic like product,

offshore platform jackets and piles. 11 Although the subject imports are
concentrated in the West Coast market, there is a reasonable indication that

the imports affect the nationwide industry producing jackets and piles.

our affirmative determinations are based on indications of material

injury to the domestic industry from data showing decreased sales, employment,

and profitability during the period of investigation. There is evidence that

bids from Korean and Japanese producers have been substantially lower than

domestic industry bids, and domestic sales have been lost on the basis of

price. Also there are indications that the presence of low bids by Japanese

!I Chairwoman Stern did not participate in this investigation.

£1 Material retardation is not an issue in this case and will not be
discussed further.
11 Commissioner Eckes finds in this preliminary investigation that there are
two like products, offshore platform jackets and offshore platform piles.
Therefore he finds two domestic industries.
 4

and Korean producers is acting to discourage domestic bids. These lost sales

appear to be in part responsible for the condition of the domestic industry. !!/

The subject imports

Offshore platform jackets and piles constitute the supporting structures

which permanently affix offshore oil drilling platforms to the ocean floor.

Because of the complexity of construction of this product, there is an

extended time period between a contract for sale and the actual delivery

date. Some of the fot·.::.i.[,n merchandise now under contract is destined for

delivery but is not yet fully constructed or physically delivered to its U.S.

installation site. The fact that this merchandise has not been "imported" for

the purj>ose of a levy of customs duties. 21 does not preclude its inclusion in

the Conunission's evaluation.

The Trade and Tariff Act of 1984 amended the Tariff Act of 1930 to

require that the Conunission determine if there is injury "[b]y reason of sales

(or the likelihood of sales) of that merchandise for importation . . • . " §/

In this investigation, the construction contract. is an actual sale, and

therefore, is to be evaluated by the Conunission as part of its causation

analysis.

!!I Vice Chairman Liebeler's affirmative determination is based on an

examination of specific projects only. She notes that this position is not
inconsistent with her views in Heavy-Walled Rectangular Welded Carbon Steel
Pipes and Tubes from Canada, Inv. No. 731-TA-254 (Preliminary), USITC Pub.
1691 at 7, n.19 (May 1985), which did not involve a bidding process. Unlike
the typical investigation, in the instant case the bidding process makes
possible the tracing of every sale.
21 For the purpose of a levy of customs duties, the merchandise is
considered to be imported at the point in time when it becomes permanently
affixed to the ocean bed. The Outer Continental Shelf Lands Act extends U.S.
law to installations and other devices attached to the seabed. customs law
makes these jackets and piles dutiable importations. 43 U.S.C. S 1331(a);
C.S.D. 79-1, 13 CUst. Bull. 991, 992 (1978).
~I Tariff Act of 1930, § 70l(a), 19 u.s.c. § 1671(a), amended~. Trade and
Tariff Act of 1984, § 602 (to be codified at 19 u.s.c. § 167l(a)).
 5

The like product

As a threshold inquiry in title VII investigations, the Commission must

identify the domestic industry to be examined for the purpose of making an

assessment of material injury and causation. Section 771(4)(A) of the Tariff

Act of 1930 defines the term "industry" as:

[T]he domestic producers as a whole of a like product, or
those producers whose collective output of the like product
constitutes a major proportion of the total domestic
production of that product. 11

The term "like product" is defined as:

[A] product which is like, or in the absence of like, most
similar in characteristics and uses with, the article
subject to an investigation . . • . §/

The imports which are the subject of these investigations are offshore

platform jackets and piles which are permanently affixed support structures

for oil drilling operations. Although each imported structure is specifically

designed for unique support factors, all fixed-leg platform jackets and piles

have the same characteristics and uses~ !/

An oil company initiates construction of an.offshore platform by

designing or commissioning a design for a structure appropriate to the

conditions of the specific location where it will be placed. 10/ The oil

ll 19 U.S.C. § 1677(4)(A).
!I 19 U.S.C. § 1677(10).
!I There is a diversity of other types of offshore drilling support
structure types which provide nonpermanent support. These include guyed
towers, jack-up platforms, semi-submersible drilling rigs, and drilling
·ships. Report of the Commission (Report) at A-2-A-4 and Attachment to
Conference Exhibit No. 2, Testimony of s.c. Jacobson, Kaiser Steel Corporation.
10/ See Report at A-2-A-6. Some of the major environmental factors which
influence the specific design include: "water depth, tides, wind and storm
patterns, salinity, wave height and amplitude, ice thickness and flow pattern
. (in Arctic environments), temperature, variations, sea bottom ·consistency
(e.g., mud, sand, rock) sea bottom slope, seabed geology, and crude oil
deposit location and architecture." Some designs have included a provision
for the requirements of a trans-Pacific tow. Petition of Kaiser Steel
Corporation at 11.
 6

company then invites bids for the fabrication and assembly of the platform by

those construction companies the oil company deems qualified. 11/

There is no essential difference between the domestic and the imported

product. Although respondents have argued that platform jackets should be

categorized on the basis of size, we decline to do so. We do not find

sufficient differences in characteristics and uses associated with the size of

the platforms to warrant finding different like products.

We preliminarily determine that there is a single like product,

"platform jackets and piles," due to the integrated function of the two

items 12/ and due to the commercial reality 13/ that jackets and piles are

most often designed, bid upon, contracted for, and manufactured

together. 14/ 15/

11/ "The qualification process assures the oil company that the prospective
contractor is capable of performing the work from a technological and capacity
standpoint, and that other platform projects will not interfere." Petition of
Kaiser Steel Corporation at 13.
12/ The platform jackets and piles function integrally such that each has no
other use apart from their conjunctive support and attachment of a platform to
the seabed.
13/ The procurement of platform jackets and piles is, in most cases, under
one contract. For example, Chevron U.S.A. will solicit bids for three
, separate components of an oil drilling platform, and one of those components
is "jackets and piles." Transcript of the Conference (Tr.) at 97.
14/ Commissioner Eckes finds on the basis of the evidence in this preliminary
investigation that there are two like products, jackets and piles. The
submission of requests for bids and the awarding of contracts for production
are sometimes separate for these products. Delivery of piles for a project
does not present the problems jacket delivery entails, allowing more
flexibility in sourcing. During the period of investigation, there was one
major project where the jackets and the piles for a platform were supplied by
different firms. Commissioner Eckes will examine the like product question
further in any final investigation.
15/ This accords with our decision to find a single like product for both
photo albums and pages for those albums in Photo Albums and Photo Album Filler
Pages from Hong Kong and the Republic of Korea, Invs. Nos. 731-TA-240 and 241
(Preliminary), USITC Pub. 1660 at 4-5 (Kar. 1985), where one like product was
appropriate in spite of two discrete items under consideration.
 7

The domestic industry

We find the domestic industry to consist of all domestic producers of

platform jackets and piles. 16/ our definition of producer includes all

companies which have produced and which have qualified as bidders to produce

platform jackets and piles. 17/ 18/

In appropriate circumstances for a particular product market, the United

States may be divided into two or more regional markets and the producers

within each market treated as a regional industry. 19/ Establishment of a

regional industry requires a demonstration that (1) there is a concentration

of the subject imports into the regional market, (2) producers located within

the market sell almost all of their production of the like product in the

regional market, and (3) producers outside the market do not supply the demand

in the market to any substantial degree. 20/

Petitioners have asserted that U.S. producers of jackets and piles

comprise two discrete regional industries--one located on the West Coast, the

other located in the Guif Coast. Their argument is that importations by

Korean and Japanese producers are concentrated on the West Coast, and that due

16/ Commissioner Eckes finds two domestic industries. One consists of all
domestic.producers of platform jackets and the other of all domestic producers
of platform piles.
17/ Those companies which wish to supply platform jackets and piles must be
invited to engage in a process of bidding. Procurement of a jacket or pile
constitutes a choice among domestic and foreign bidders. Companies may desire
to produce, but are unable to do so unless they are awarded the bid. In order
to be ·awarded a contract, a bidder must meet an oil company's design
specification,· including being able to supply the platform jackets and piles
in accordance with a tight time schedule. ·
18/ Extension of the definition of domestic producers to include bidders
comports with the statutory requirement that the Commission perform its
analysis according to the facts of each particular case. The significance of
the various factors affecting an industry will depend on the facts of each
. particular case. s. Rep. No. 249, 96th Cong., 1st Sess. 88 (1979).
19/ 19 U.S.C. § 1677(c).
201 Id.
 8

to extensive difficulties with the transport of the oversized platform

jackets, 21/ the other criteria are satisfied: producers located on the West

Coast sell almost all their production in the West Coast market and producers

outside the West Coast market do not supply the demand in that market to any

substantial degree.

There has been only one domestic contract for jackets and piles on the

West Coast. In that instance, the merchandise was procured partly from a

producer on the West Coast and partly from a producer on the Gulf Coast. Gulf

Coast producers frequently bid on contracts for West Coast installations. 22/

On the basis of the limited data available at this preliminary stage, we find

it inappropriate to find a ~egional industry. 23/

If a Gulf Coast producer were to be awarded a contract for a Pacific

platform and then establish assembly facilities on the West Coast,

petitioners• argue that action would transform the firm into a West coast
producer. We do not, however, have. sufficient information at this time to

conclude that assembly is such a significant element of the production process

as to qualify a particular manufacturer as a member of a regional industry.

21/ The enormous size of platform jackets precludes their transport

overland. Assembly is necessarily adjacent to a major body of water. The
possibility of shipment of particularly large jackets from inland sites must
consider whether they can clear bridges; shipment from the Gulf Coast to the
West Coast (or vice versa) is constrained by clearance through the Panama
Canal or, in the alternative, weather hazards of shipping the jackets around
Cape Horn in South America. Consequently, petitioners assert that the
domestic. production of platform jackets and piles for installation on the West
Coast occurs primarily on the West Coast and request the Commission to analyze
the issue of a reasonable indication of material injury on the basis of this
regional market segmentation. Petitioners Post Conference Brief at 6.
22/ The Report identifies the bids submitted for several past West Coast
installations. Id. at A-32-A-33. Gulf Coast producers appear on the lists of
bidders. .
23/ We will investigate the issue of regionality further if there is a final
investigation.
 9

Condition of the domestic industry 24/

In making a material injury determination, the Commission considers,

among other factors, the levels of production, capacity utilization, sales,

market share, employment, ~ages, and profitability of the domestic

industry. 25/

As was stated in Cell Site Transceivers and SUbassemblies Thereof from

Japan, 26/ it is evident that the statute contemplates that most imports, like

most articles of commerce, will be off-the-shelf items sold through ordinary

sales processes rather than made-to-order items sold 'through bidding

processes. The statute however requires the Commission to consider the

particular condition of a ma~ket in making its determination. Thus, the

Commission has considered the unusual characteristics of this market in its

. analysis.

In this investigation, the Commission considered data for the period

covering January 1982-March 1985. 27/ Since production of platforms takes

more than a year and each project is so large, annual data is not·as
'
meaningful as it is in most investigations. 28/ We therefore have analyzed

the data on the basis of specific projects and trends in industry

24/ Vice Chairman Liebeler's determination is based on the examination of

specific projects only, the loss of ~hich she finds to be a .sufficient basis
for her affirmative determination. Therefore, she does not join in this
section of the opinion, although she concurs in the majority's determination
that there is a reasonable indication of material injury.
25/ 19 U.S.C. § 1677(7)(C)(iii).
26/ Inv. No. 731-TA-163 (Final), USITC Pub. 1618 (1984). See also Certain
Amplifier Assemblies and Parts Thereof from Japan, Inv. Ho. 731-TA-48. (Final),
USITC Pub. 1266 (1982).
27/ This data for the national industry is limited because several major
industry producers did not provide it.
28/ For example, annual figures on shipments of jackets and piles show an
irregular pattern. Total domestic shipments of jackets and piles decreased
3.7 percent from 1982 to 1983, then increased 42.8 percent from 1983 to 1984.
Shipments during January-March 1985 were 38.2 percent below the level for the.
previous year. Report at A-18.
 10

performance. The results of our examination show poor performance levels as

indicated by sales, employment, and profitability data. The loss of numerous

sales by the domestic industry is reflected in a decreased market share,

underutilization of domestic capacity, 29/ and decreased employment. 30/ Het

sales and profitability in the industry exhibited a constant downward trend

that continued into 1985. 31/

Injury stemming from lost sales in an industry characterized by such

large, high-priced merchandise is evidenced in several ways. Any one contract

represents ~ major portion of the sales in the industry and affects

dramatically the degree of employment and capacity utilization over several

years. 32/ Each contract for the construction of platform jackets and piles

represents an opportunity to improve productivity and gain technical

expertise. Lost sales represent lost expertise as well as lost income. 33/

These indicia of injury are present, we believe, regardless of whether

the industry is evaluated on a nationwide or a regional basis. 34/ We

29/ Tr. at 41. Capacity utilization of 30.3 percent in 1982 increased to

only 38.0 percent in 1984 and then fell to 19.7 percent during 1985. Report
at A-16.
30/ Employment of workers in this industry declined by 20.7 percent from 1982
to 1983 and another 4.9 percent from 1983 to 1984. Employment in January-
Harch 1985 was 10.9 percent below the corresponding period of 1984. Id. at
A-19.
31/ Id. at A-21-A-25.
32/ For example, Kaiser has equipment which is dedicated solely to platform
jacket and piles production, including skidways and heavy cranes. This
equipment remains idle. Tr. at 57 .
.33/ Certain Amplifier Assemblies and Parts Thereof from Japan, Inv. Ho.
731-TA-48 (Final), USITC Pub. 1266 at 9 (1982). Post Conference Statement of
Chevron U.S.A. at 14.
34/ Injury may also be derived from an evaluation of two domestic industries
based on the two domestic like products of "jackets" and "piles." The
domestic shipments of jackets (in tonnage) increased in 1984 over shipments
for 1982 and 1983. However, shipments of piles have not increased. Report at
A-24, Table 8. In light of an expanding market, these shipment figures
represent a leveling of industry output which is further demonstrated in
31.1 percent capacity utilization for jackets in 1984 and 50.5 percent
capacity utilization for piles in 1984.
 11

therefore conclude that these factors provide a reasonable indication of

material injury to the domestic industry.

Reasonable indication of material injury by reason of the alleged LTFV and

subsidized imports

In making its determination whether there is a reasonable indication of

material injury to the domestic industry "by reason of" allegedly LTFV or

subsidized imports 35/ the Commission must consider, among other factors, the

volume of imports, effect of imi>orts on prices in the United States for the

like product, and the impact of such imports on the relevant domestic

industry. 36/

Having found imports on an individual country basis are causing injury,

in these preliminary investigations we do not find it necessary to cumulate

imports from Japan and Korea. 37/

The volume of imports from Japanese producers in terms of quantity and

dollar value has increased during the period of investigation. Four

construction contracts were awarded to Japanese producers in 1983 and 1984.

The nature of the industry is such that any one contract award is important in

relation to the overall market and represents significant tonnage and dollar

value. Consequently, ·the award of these contracts to Japanese producers

during the period of investigation demonstrates a substantial volume of

imports. 38/

35/ 19 u.s.c. s 1673(b).

36/ 19 u.s.c. § 1677(7).
'Jl_I Commissioner Lodwick cumulates the allegedly LTFV imports from Japan and
Korea in making his affirmative determinations in the preliminary
investigations involving allegedly LTFV imports.
38/ Due to a lengthy period of construction, the physical shipment of the
merchandise, for the most part, has not yet taken place.
 12

The volume of imports from Korean producers also has increased during the

period of investigation. Korean producers were awarded their first contract

for the construction of jackets and piles in 1983. A second contract was

awarded in 1984 and a third in 1985. Although much of this merchandise has
,
not yet been shipped, these three contracts represent millions of dollars in

increased foreign importation. 39/

Since 1982, Japanese and Korean producers have received all awards for

the construction of jackets and piles for offshore platforms off the West

Coast. Respondents argue that nonprice factors preclude the linkage of lost

sales to either the Japanese or Korean producers. For example, respondents

assert that petitioner Kaiser bas engaged in nonresponsive bidding. 40/

. '· -
How~ver, the information ~n the record leads us to conclude that the domestic

industry's bids have been responsive and that domestic producers have been.

serious contenders for contract awards. The bidding process is a risky and

expensive undertaking. The cost of bid preparation can reach $100,000, and

such an expenditure would seem to indicate serious intent. 41/ Domestic

bidders have had to initially qualify on oil company bid lists, 42/ have been
invited by oil companies to participate in second round bidding, 43/ and have
•
qualified on oil company short lists of serious contenders for contracts. 44/

39/ Report at A-30.

40/ Respondents• allegations of nonresponsiveness due to bridge constraints
for large-size jackets and unpreparedness of an alternative site at Tenninal
Island do not establish nonresponsive bidding. Further, respondents have not
addressed the responsiveness of bids submitted by other domestic producers.
See Commuter Airplanes from France and Italy, Invs. Nos. 701-TA-174 and 175
(Preliminary), USITC Pub. 1269 (July 1982) and Cell-Site Transceivers and
SUbassemblies Thereof from Japan, Inv. No. 731-TA-163 (Final), USITC Pub. 1618
(Dec. 1984).
41/ Petition of Kaiser Steel Corporation at 14-16.
42/ Tr. at 97.
43/ Report at A-32.
44/ Memorandum to the Conunission, INV-I-119, dated May 24, 1985.
 13

The bidding information which the Conunission has received shows some

dramatic price d~ff erentials between the bids of domestic and foreign

producers. Whereas there may be some merit to the argument that nonprice

factors are involved in contract awards, consistent and substantial

underpricing by foreign producers suggests that price is a factor in the loss

of these sales.

The petitioner claims the knowledge that Japanese and Korean producers

will be bidding on a project· with unfairly low prices has a depressive effect
-----
eventually discourages domestic producers from bidding. 45/ Although

withholding a bid is not a lost sale in the usual sense, the effect on a

producer's performance is the same. 46/ Therefore, we find a reasonable

indication that the lost sales and lost opportunities caused by the allegedly

unfair imports are causing material injury to the domestic industry.

45/ An example of this is the decision of Kaiser and other domestic producers
to refrain from bidding on platform Julius which was awarded in 1985. Post
Conference Submission of Korean Respondents at 15.
46/ Vice Chairman Liebeler notes that no domestic producer of piles and
jackets has been awarded a contract for a platform off the West Coast since
1982. Accordingly, any injury to the domestic industry must be traced
ultimately to reduced volumes and not to lower prices. Furthermore, there is
no evidence on the record to suggest that bidding by Korean and Japanese
producers has depressed prices in the Gulf Coast.
 A-1

INFORMATION OBTAINED IN THE INVESTIGATIONS

Introduction

On April 18, 1985, 1/ and April 19, 1985, 2/ petitions were filed with
the U.S. International Trade Commission and, on-April 19, 1985, with the U.S.
Department of Commerce by counsel on behalf of Kaiser Steel Corp., Napa, CA,
and the International Brotherhood of Boilermakers, Iron Ship Builders,
Blacksmiths, Forgers and Helpers, Kansas City, KS. The petitions allege that
imports of off shore platform jackets and piles from the Republic of Korea
(Korea) are being subsidized by the Government of Korea and, in addition,
imports of offshore platform jackets and piles from Japan and Korea are being
sold in the United States at less than fair value (LTFV) and that an industry
in the United States is materially injured and threatened with material injury
by reason of such imports. Accordingly, effective April 18, 1985, the
Commission instituted preliminary countervailing duty and antidumping
investigations No. 701-TA-248 (Preliminary) and Nos. 731-TA-259 and 260
(Preliminary) under the applicable provisions of the Tariff Act of 1930 (19
u.s.c. §§ 167lb(a) and 1673b(a)) to determine whether there is a reasonable
indication that an industry in the United States is materially injured, or is
threatened with material injury, or the establishment of an industry in the
United States is materially retarded, by reason of imports of such merchandise
into the United States.

Notice of the institution of the Commission's investigations and of a

conference to be held in connection therewith was given by posting copies of
the notice in the Office of the Secretary, U.S. International Trade
Commission, Washington, DC,. and by publishing the notice in the Federal
Register of May 1, 1985 (50 F.R. 18582). 3/ The conference was held on May
13, 1985, 4/ and the briefing and vote was held on May 29, 1985. The statute
directs that. the Commission make its determinations within 45 days after
receipt of the petitions, or, in these cases, by June 3, 1985.

Offshore jackets and piles were included in the Commission's

investigation No. 332-181 on the conditions of competition between certain
domestic and imported fabricated structural steel products. 5/ Offshore
jackets and piles have not been the subject of any other investigation
conducted by the Commission.

1/ Countervailing duty and antidumping petitions with respect to imports of

offshore platform jackets and piles from the Republic of Korea.
2/ Antidumping petition with respect to imports of off shore platform jackets
and piles from Japan.
3/ Copies of the Commission's and Commerce's notices are shown in app. A.
4/ A list of witnesses appearing at the conference is presented in app. B•
. S/ U.S. International Trade Commission, Conditions of Competition Between
Certain Domestic and Imported Fabricated Structural Steel Products--
Investigation No. 332-181, USITC Pub. 1601, Nov. 1984, 169 pp.
 A-2

The Product

Description and uses

Offshore platform. jackets, piles, appurtenances thereto, and

subassemblies thereof that do not require removal from a transportation vessel
and further p.s.-onshore assembly are the products under investigation.
Decks, deck modules, and other platform topside facilities, such as drilling
and production equipment, living quarters, and heliports are not included
within the scope of the petitions. Figure 1 is an illustration of component
parts of an offshore platform.

Off shore platform jackets are tubular steel structures permanently

affixed to ocean seabeds by piles driven into the ocean floor. The jackets
support, vertically and horizontally, offshore platforms that are used in the
production of oil and gas. The jackets and piles are for the ~ost part
submerged, and they extend above the ocean surface only enough to allow
addition of the platform deck modules and other topside facilities. A jacket
and set of piles are specifically designed to support a particular platform in
a specific location; therefore, each platform structure is unique, although
generically similar to other platfornis of that type.

Generally, appurtenances to the assembled jackets include the grouting

system, boat landing, conductor pipes and similar attachments, and an anode
system, which is added to provide corrosion protection for the jackets, which
are fabricated with carbon steel.

The term "offshore platforms" is used to describe a number of structures

employed in the exploration, development, and production of crude petroleum
and natural gas deposits located in subsea geological structures. Although
these structures differ in physical characteristics, they all provide a
"platform" on or above the water from which to conduct operations.

In general, the type of structure to be used is determined by a

combination of technological, environmental, and economic factors. One major
type of platform is the conventional fixed platform, parts of which are
subject to these investigations. Conventional fixed platforms are the most
common type of platforms used for offshore drilling and production of oil and
gas. These platforms are permanently affixed to the seabed by piles driven
into it. They have an immobile steel jacket that functions as a template for
drilling operations. The piles are driven through the inside of the corner
members of the frame into the seabed to anchor the jacket base to the ocean
floor. Fixed platforms were first installed in shallow water but now have
been installed in water up to 1,400 feet deep.

Other types of offshore platforms include jack-up drilling rigs, which

are mobile platforms, usually with three legs, which are pinned to the ocean
bottom during operation but retracted through a jacking system during
movement. Jack-up platforms are used in moderate environments, primarily for
exploratory drilling, and in water up to about 300 feet deep. ·in addition,
concrete and steel gravity platforms of varying types are used. The concrete
serves as a weight to moor the platform to the seabed. These platforms are
 A-3

Figure !.--Component parts of an offshore platform.

CRA.N£.

SUPERSTRUCTURE.
COMPO~E~rs

P-ROOUCTION Q~<:.IC.@

I F'ltlO STA.I"®

SUBSTRUCTURE.
COMPONE. ... TS
COt-J DUCTORS
--®

...
JACKE.T
...-.
Source: Kaiser Steel Corp.
 A-4

used in harsh environments and in water up to 1,000 feet deep. Guyed tower
platforms, in contrast, are steel structures pinned to the seabed with bouyant
and articulated columns. These platforms, still in the developmental stage,
are designed for use in moderate environments in water up to 2,000 feet
deep. J;/

Some offshore areas require semi-submersible platforms that are buoyant

and mobile and are partially submerged for stability. These platforms are
moored to the ocean floor by steel ropes or chain systems and are used in
harsh environments in water 200 to 2,000 feet deep. Tension leg platforms,
another type, are buoyant and mobile platforms with extending legs that are
assembled at the site. Tension is placed on the legs to secure the platform
to the seabed. These platforms are also in the developmental stage and are
designed for use in harsh environments and in water 500 to 3,000 feet deep. 1/

Manufacturing process

A certain amount of preparatory work (makeready) is necessary for the

fabrication and assembly of steel-jacket platforms. These operations include:
preparation of the assembly yard, (e.g., installation of underground
utilities, drainage systems, and a skidway for transporting the assembled
jacket), construction of a dock and bulwarks, modification of fabrication
facilities, and provision for additional materials costs (e.g., for anodes,
which are attached to and provide corrosion protection for the submerged part
of the jacket).

The production of the jacket and the piles begins with the rolling and
welding of steel plate into tubular members, which are then welded end to end
into different size sections of stock. In large-tonnage platforms, the plate
used to form the tubular members for the jacket can be up to 6 inches thick;
however, 2-inch thick steel is more commonplace for most of the jacket
components.

Platform jackets are three-dimensional fabrications that can be examined

in planes and stages. The platform jacket shown in figure 2 appears to have
five planes and three stages. Three of the planes are the vertical planes
formed by the two outside and one inside leg and their counterparts directly
behind them (not shown). Two more planes are created by the vertical planes
that would appear if the structure in figure 2 were viewed from the side.
Stages are the three horizontal segments depicted in figure 2. The first
stage extends from the seabed to the first cross piece, the second stage
extends from the first to the second crosspiece, and the third extends from
the second crosspiece to the first deck level.

In assembly, the members of a single plane are laid out and welded
together on the ground. The lengths of members may or may not match up with

I/ Experimental platforms of this type are currently being tested in

relatively shallow water.
 A-5
Figure 2.--Typical fixed offshore platform .

.
HE.UPORT EQUIPMENT
\oc A.no t-.1

ELECTRICAL
BUI LOH.JG

@SUPERSTRUCTURE~~~~~-$!~~~~1~
FlRE PROTEC.TlO~
SUBSTRUCTURE.

@JACKET

LL.L.1..1.U--~--+-+-- c
CO~DUCTOR PIPE

.....
"

TVPICAL TEMPLATE TYPE.

OFFSHORE DRILLl~G. PRODUCTIOJJ PL"lFORV\

Source: Kaiser Steel Corp.

 A-6

the stages; members of a given plane are welded together until the entire·
length of that·plane is assembled. The same process is ca~ried out for the
second plane. The two planes are placed parallel to one another, and the
connecting braces and struts are welded onto both planes. The process
proceeds until the jacket is assembled.

Piles are straight lengths and, therefore, are merely welded together.
Sections are either welded together in the pipe mill and transported to the
assembly yard or are welded together during assembly.

Appurtenances are attached during various stages of assembly. The bottom

legs are placed on skid runners, which are flat-bottomed, laminated wood
cradles that displace weight and furnish a skid for loading. Mud mats
(perforated wooden mats that leave enough leg free to pin the jacket to the
seabed before piles are driven), are attached near the bottom of the jacket.
Other appurtenances, such as the grouting system and the boat l~ndings and
barge bumpers, are attached to the jacket as necessary.

U.S. tariff treatment

Imports of the offshore platform jackets and piles covered by these

investigations are classified under TSUS item 652.97, which includes offshore
oil and natural gas drilling and production platforms and parts thereof. The
column 1 duty rate is 6.7 percent ad valorem and is scheduled to be reduced to
5.7 percent ad valorem effective January 1, 1987. The column 2 rate of duty
is 45 percent ad valor~m and is applicable to imports from those Communist
countries and areas specified in general headnote 3(f) of the TSUS.

The-least-developed-developing-countries duty rate is 5.7 percent ad

valorem. Imports under item 652.97 are not designated as being eligible for
duty-free entry under the Generalized System of Preferences.

The Nature and Extent of Alleged Sales at LTFV

and Alleged Subsidies c
Alleged sales at LTFV

Japan.--In order to establish sales at less than fair value with respect
to Japan, 1/ the petitioner selected a platform scheduled for imminent
delivery. -Platform Hermosa is an offshore oil and gas drilling and production
platform intended for placement on the Pacific continental shelf off the coast·
of California in water approximately 605 feet deep. Chevron U.S.A. Inc.
(Chevron) is.the purchaser. Hermosa has a steel template jacket which is to
be secured to the ocean floor by steel piles. Together, the jacket and piles
weigh approximately 25,000 short tons. ·

17 Antidumping petition, Japan, pp. 24-34.

 A-7

In May 1983, Chevron ad.vertised its request for bids for the production
of Hermosa. In September 1983, Chevron awarded the jacket_and piles contract
to Hitachi, a Japanese producer. ·
The petitioner alleged that, because of the unique nature of the product
and the market, the only realist!~ means of determining foreign market value
is by using the constructed value of the merchandise. Further, the petitioner
stated that each platform is unique·and is custom made to exacting
specifications, and that it would be impossible to compare a company's bid
price on one platform with the price of some other platform.

* * * * * * *
· In its constructed value estimate, the petitioner subdivided the
production·of the platform-into fabrication and assembly stages and provided
com~tructed value estimates for· Hitachi's winiling. bid for platt:orm Hermosa as
follows: ]:_/

Value
(thousands of dollars)
Fabrication:
Piles------------------------------------------ ***
Jacket members and appurtenances--------------- ***
Subtotal---.:...-------~------------------------ ***
Assembly:
Assembly materials and makeready--------------- ***
Anodes--------~---------~---------------------- ***
Assembly labor~-~------------~----------------- ***
Yard and plant overhead-------------~---------- ***
Subtotal-------------------------------------
***
Total production cost-~-------------------------­ ***
Statutory add-ons 21---~-------~----------------­ ***
Construct~d value-----------------------~- ***
Based upon information developed by Kaiser, the estimated bid by Hitachi
for platform Hermosa was $***million. The petitioner's estimated LTFV margin
for this platform ·is as. follows:

Value
(thousands of dollars)

Constructed value------------------------------- ***

, Estimated bid----------------------------------- ***
LTFV margin-~--------------------------------- ***
(percent ·Of estimated bid)

LTFV margin-------------------~----------------- 25.4

1/ Antidumping petition, Japan, table 2.

21 General, selling, and administrative expenses (GS&A), ***percent, and
profit, *** percent.
 A-8

Korea.--In order to establish sales at less than fair value with respect
to Korea, 1/ the petitioner selected a platform that was scheduled for
delivery during May 1985. Platform Harvest is an offshore oil- and
gas-drilling and production platform intended for placement on the Pacific
continental shelf off the coast of California in water approximately 670 feet
deep. Texaco is the purchaser. Harvest has a steel-template jacket, which is
to be secured to the ocean floor by steel piles. Together the jacket and
piles weigh approximately 25,000 short tons.

In May 1983, Texaco advertised its request for bids for the production of
Harvest. In September 1983, Texaco awarded the jacket and piles contract to
Daewoo, a Korean producer.

Again, the petitioner alleged that, because of the unique nature of the
product and the market, the only realistic means of determining foreign-market
value is by using the constructed value of the merchandise. Further, the
petitioner stated that each platform is unique and is custom-made to exacting
specifications and that it would be impossible to compare a company's bid
price on one platform with the price of some other platform.

* * * * * * *
In its constructed value estimates, the petitioner subdivided the
production of the platform into fabrication and assembly stages and provided
two constructed value estimates for Daewoo's winning bid for platform Harvest
as follows: 2/

High value Low value

(thousands of dollars)
Fabrication:
Piles and jacket members----------------- *** ***
Appurtenances---------------------~------ *** ***
Fabrication makeready-------------------- *** ***
Subtotal------------------------------- •tt ***
Assembly:
Assembly materials----------------------- *** ***
Assembly makeready----------------------- *** ***
Anodes----------------------------------- *** ***
Assembly labor--------------------------- *** ***
Miscellaneous costs---------------------- *** ***
Yard and plant overhead------------------ *** ***
Subtotal------------------------------- *** ***

Total production cost---------------------- *** ***

8 ta tutory add-ons ]../----------------------- *** ***
Constructed value----~--------------------- *** ***

17 Antidumping petition, Korea, pp. 24-40.

21 Antidumping petition, Korea, table 2.
"'".J/ General, selling, and administrative expenses (GS&A), ***percent, and
profit, *** percent.
 A-9

Based upon information developed by Kaiser, the estimated bid by Daewoo

for platform Harvest was $*** million. The petitioner's estimated high and
low LTFV margins for this platform are as follows:
High value Low value
(thousands of dollars)

Constructed value----------------------- *** ***

Estimated bid-------•-------------~----- *** ***
LTFV margin--------------------------- *** ***
(percent of estimated bid)

LTFV margin-------------~--------------- 53.4 48.0

Alleged subsidies

The petitioner alleged that the Government of Korea had developed and
implemented a number of programs designed to promote the country's exporting
sector that amounted to subsidies under U.S. countervailing duty laws. l_/

First, the petitioner alleged that Korean shipbuilders Daewoo and Hyundai
had received substantial subsidies in the form of preferential export credits
and other benefits from the Export-Import Bank of Korea (KXM).

Second, the petitioner alleged that Korean producers had received

subsidies for capital investments in facilities and equipment used in platform
jacket and pile construction and in the local purchase or importation of
capital equipment and materials.

* * * * * * *
The petitioner alleged that the Korean firms Hyundai, Daewoo, and Samsung
receive benefits under Korean tax laws that are countervailable subsidies.
Korean law has established a National Investment Fund, allegedly to help
increase exports, including offshore jackets and piles. Also, the petitioner
alleged that Korean laws may allow special and accelerated depreciation for
Korean firms producing offshore structural parts.

The U.S. Market

The petitioner alleged in its petitions that U.S. producers of offshore

platform jackets and piles comprise regional industries. The petitioner
stated that, in the United States, two· separate and distinct regional
industries exist for platform jackets and piles--a regional gulf coast
industry and a regional west coast industry. The gulf coast industry

1/ Countervailing duty petition, pp. 24-50.

 A-10

consists, according to the petitions, of producers supplying products for use

in the Gulf of'Mexico, whereas the west coast supplies products for use in the
waters off the west coast, specifically off California, Oregon, Washington,
and Alaska. The petitions stated that there have been no jacket and piles
import competition from Japan or Korea in the gulf coast market, while import
penetration and import competition have been extreme in the west coast
market. · The petitioner alleged that the critical economic factor
distinguishing the regions and preventing realistic cross competition among
west coast producers and gulf coast producers is the availability of assembly
facilities in the region. Assembly capability along the coast of either
region is said to be essential because of significant transportation barriers
between the two regions.

The petitioner claimed that assembly is a complex phase in the production

process in that· it necessitates the carefully timed and coordinated work of
large numbers of personnel and equipment and requires the precise welding of
the numerous tubular members. Further, components of the jacket and piles,
such as the numerous anodes and the various appurtenances, cannot be installed
until the basic jacket. st~ucture is assembled.
The petitioner claimed that virtually all of the tonnage of jackets sold
in the west coast market since 1982 involved jackets that were physically
incapable of being transported through the Panama canal. The alternative,
towing around South America, is alleged to be economically prohibitive in
terms of transportation costs. As a consequence, bids submitted for west
coast projects by producers generally known as gulf coast contractors most
frequently (according .to the petitions) have been predicated upon west coast
assembly and, had they been successful, these gulf coast producers would have
become west coast producers and part of the regional west coast industry.

However, McDermott International did secure the award for the piles
contract f~r Shell Oil's platform Eureka and shipped the piles from the gulf
coast through the Panama Canal to the installation site off the California
coast. The petitioner claimed that this single instance was unique because it
involved an unusual bid-award strategy contrary to the general purchaser
practice of awarding the jacket and piles to the same contractor. Statements
by oil company representatives at the Commission's conference indicated
decisions on the scope of a bid are made on a project by project basis and
are, therefor~, subject to variation.

In summation, the petitioner submitted that Kaiser alone constitutes a

distinct regional industry. First, as the sole domestic producer in the
region, Kaiser supplies 100 percent of its output to the west coast region.
Second, according to the petitioner, demand in the west coast market is not
supplied to any meaningful degree by producers located outside of the region.
·Finally, Kaiser stated that 100 percent of the imported Japanese and Korean
platform jackets and piles are sold in the west coast region.

Ta.ble 1 shows consumption, based on shipment and contract-award data, for

offshore platform jackets and piles in the west coast region for the period.
January 1982-March 1985.
 A-11

Table 1.--0ffshore platform jackets and piles: West coast consumption, based
on tonnage shipped and tonnage awarded, by sources, 1982~84, January-March
1984, and Janua~y-March 1985
 A-12

U.S. producers

There are six major and seven smaller U.S. producers of offshore platform
jackets and piles. Most of the major producers are located near the gulf
coast or west coast markets (i.e., Louisiana, Texas, and California).
Producer's questionnaires were sent to the eight U.S. producers who were
believed to account for the major portion of total U.S. production of offshore
jackets and pilings. Responses were received from seven producers.

* * * * * * *
Kaiser Steel Corp., the petitioner, has (or had) fabrication facilities
in Fontana, CA, and Napa, CA; and assembly yards at Oakland, CA, Terminal
Island, CA, and Vallejo, CA. The Oakland assembly yard and Fontana plate
fabricating plant were closed in 1983. A limited amount of development work
has been done at the Terminal Island assembly'yard and no jacket assembly
project has been done there. At the Commission's conference and in their
postconference briefs, the oil companies in general (and Texaco in particular)
have had serious reservations about Kaiser's abiiity to produce a jacket at
that site within the.oil company's time schedules. Kaiser has a joint venture
with Bouygues Off shore, a French firm, which has an assembly yard in Ensenada,
Mexico. * * *·

* * * * * * *
Domestic assembly capacity. to produce off shore jackets and piles in 1984
and the names and locations of the producers are presented in the following
tabulation, compiled from questionnaire data:

Annual capacity
Producer of-- Location (short tons)
Offshore platform jackets:
***------------------------- *** ***
***------------------------- *** ***
*** ***
***------------------------- *** ***
***------------------------- *** ***
*** ***
*** ***
***------------------------- *** ***
***------------------------- *** ***
***------------------------- *** ***
Total jackets------------- 263,212
 A-13

Annual capacity
Producer of-- Location (short tons)
Offshore platform piles:
***------------------------- *** ***
***------------------------- *** ***
***------------------------- *** ***
***------------------------- *** ***
***------------------------- *** ***
***------------------------- *** ***
***------------------------- *** ***
Total piles--------------- 147,150

Off shore platform jackets

and piles:
***------------------------- *** ***
***------------------------- *** ***
*** ***
. ***------------------------- *** ***
***------------------------- *** ***
*** ***
*** ***
*** ***
***------------------------- *** ***
***------------------------- *** ***
***---------------------~--- *** ***
Total jackets and piles--- 410,362

U.S. importers

For the most part, U.S. importers are the purchasers of the jackets and
pilings for specific offshore platforms. In a few instances, however, the
importer of record has been a contractor for the purchaser. The major
purchasers and importers are, therefore, the oil companies that have offshore
platform projects. Purchaser's questionnaires were sent to all oil companies
listed in the petitions as having off shore platform projects of a design that
use jackets and piles in the western region, which was defined to be Alaska,
California, Oregon, and Washington.

* * * * * * *
Channels of distribution

The channels of distribution for offshore jackets are possibly unique

because of the physical size and cost of these products. Major considerations
in the purchase a platform jacket include the onshore assembly of the jacket,
loading of the jacket from the assembly yard onto the transport barge,
transport of the jacket from the assembly site to the offshore location,
launch of the jacket from the transport barge, positioning of the jacket in
the predetermined location on the ocean floor, and install·ation of the pilings
 A-14

that anchor the jacket in place. Upon completion of the installation of the
jacket and pilings, placement of the platform deck modules.and other topside
facilities can comnience.-

According to the petitions, there are perhaps as few as five launch

barges in the world capable of conveying very large platform jackets, and the
oil company or contractor must schedule a launch barge long in advance of
completion of assembly. Kaiser recently purchased a launch barge and is
currently transpotting Texaco's platform Harvest from Korea to the
installation site off the shore of California.

Upon completion of a jacket assembly, a launch barge is docked at the

assembly site and the jacket is pulled by winches or pushed by a hydraulic
jack system along a skidway onto the barge. The jacket is secured to the
barge, and then the barge is towed to the installation site by two to three
tug boats. At the installation site, the ties that secure the jacket to the
barge are cut, and the jacket slides from the launch barge, top side first,
into the ocean. When first assembled and launched the jacket is buoyant.
Upon launch, the jacket is-positioned while it floats. The lower sections are
flooded, and the jacket settles, base down, until it rests on its legs which,
sit on mud mats on the ocean floor. ·

Installation is generally performed by contractors who specialize in that

type of operation. The first step in the process of installation is the
affixation of the jacket permanently to the seabed. This is done by driving
the platform piles into the seabed, usually 200 to 300 feet, through the
jacket legs, skirt pil.e sleeves, or both.

After the piles are driven, a grouting material such as concrete, is

pumped through the grouting system into the bottom of the legs or skirt-pile
sleeves. The grout fills the interstices between the piles and the
surrounding legs or sleeves. Then conductor tubes are driven through slots in
the jacket about 100 feet into the seabed. The conductor tubes serve as
guides for drilling operations and provide a seal against blowouts and back
pressure. Decks, living quarters, and other modules are also attached to the
jacket. Equipment, such as cranes and drilling equipment, must also be
transported and installed before drilling and production operations may
commence.

Because of the magnitude of the platform projects, it is not unusual to

have contractors that competed for various segments of the project to be
working with their competitors who obtained the award for a different segment
of the same project. Chevron, for example, does not solicit foreign bids on
its deck modules, and Kaiser is producing deck modules for one or more of the
Chevron platforms for which the jackets and piles were awarded to Japanese
·contractors.

One of the issues presented by respondents in these proceedings, as a

reason for not awarding contracts to Kaiser, is that shipment of some of the
large jackets awarded during the period of investigation, January 1982-March
1985, would have been impeded by clearances of the San Francisco Bay bridges.
In its postconference submission, ·chevron provided the following data:
 A-15

Platform jacket Estimated jacket height

Eureka----~~-----------------­ 184 feet

Hermosa----------------------- 213 feet, 10 inches
Hidalgo----------------------- 189 feet, 10 inches
Gail------------~------------- 210 feet, 1 inch
Hondo B (two sections)-------- 213 feet; 8 inches
227 feet, 9 inches
Pescado (two sections)-------- 290 feet, 9 inches
206 feet, 7 inches

Bridge name Heights at mean low tide

Richmond-San Rafae1----------- 190 feet and 10 inches

0akland~San Francisco--------- 226 feet
Golden Gate--------------~---- 232 feet

Chevron concl~ded that, of the named jackets, oOly Eureka could pass
under the Richmond-San RSfael bridge and that the mere one foot clearance for
Hidalgo would likely present risks unacceptable to Chevron. Jackets produced
at Kaiser's Vallejo assembly yard must pass under the Richmond-San Rafael
bridge before entering the Pacific Ocean. As a counter to this argument, the
petitioner submitted (in table 1 of its postconference submission) the
assembly loc~tions that it proposed for the various platform jackets. For
example, the petitioner proposed to assemble Hermosa at Oakland or Terminal
Island; Hidalgo at vailejo, Oakland, or Terminal Island; Gail at Terminal
Island; Hondo B at Terminal Island, and Pescado at Terminal Island.

Consideration of Material Injury

to .an Industry in the United States

U.S. production, capacity, and capacity utilization

U.S. production, in short tons, of offshore platform jackets and piles

increased 6.0 percent from 1982 to 1983 and 17.4 percent from 1983 to 1984
(table 2). Production, 'iri short tons, dropped 47.7 percent during
January-March 1985 compared with January-March 1984. On the basis of units,
domestic production of jackets was virtually constant during 1982-84.
Production of units of piles (one set of piles for one platform) was erratic
during 1982-84.

Total fabrication capacity, the capacity to form tubular structures from

steel plate, was about the same as assembly capacity during 1982-March 1985.
Capacity to produce jackets was _roughly two-thirds of total capacity and the
capacity to produce piles one-third of total capacity during this period.
Total capacity utilization rates increased from 30.3 percent in 1982 to 38.0
percent in 1984. However, total capacity utilization fell to 19.7 percent
 A-16

Table 2.--0ffshore platform jackets and piles: U.S. production, practical

capacity, and capacity utilization, 1982-84, January-March 1984, and
January-March 1985

January-March
Item 1982 1983 1984
... 1984 1985

Production:
Jackets--------short tons--: 60,266 65,075 81,932 16,508 8,227
Piles----------------do----: 65,239 67,987 74,243 20,896 11,349
Total--------------do---~:-=-1~2~5~,5~0~5..---=-1T3T3~,o-6-2..---......1~5~6~,1~7r.5..--~T3-7~,4-o-4.--~--=-19r,~5"7-6
Production:
Jackets----------units 1/--: 72.7 73.8 72.l 22.1 20.0
Piles----------------do=---: 78.0 71.0 85.0 28.0 19.0
Practical fabrication
capacity: 2/
Jackets-----=--short tons--: 250,776 245,776 241,776 60,444 61,94~
Piles----------------do----: 152,890 147,890 144,890 36,472 37,472
Total--------------do----:.....,..4~03~,~6~6~6~~3~9~3~,-6-6~6~-3~8~6·,~66~6,,--~~96~,~9~1-6.-----9~9~,~4~16
Practical assembly
capacity: 2/
Jackets-~---=--short tons--: 254,926 269,321 263,312 66,154 62,313
Piles----------------do----: 158,834 154,286 147,150 37,724 36,924
Total--------------do----:.....,..4~13~,~7~6~0---4~2~3~,-8-0~7---4~1-o·,4~6~2..----.,,.l~03~,~8~7~8.-----9~9~,~2~37
Ratio of production to
assembly capacity:
Jackets-----------percent--: 23.6 : 24.1 31.1 27.3 13.2
Piles----------------do----: 41.1 44.1 50.5 55.9 30.7
Total--------------do----:----.3~0~.~3----__,,.31~.~4.------..3~8-.0~----3-6~.-o------~19-.-=7

1/ One unit is one platform jacket and one set of piles for one platform.
2/ Practical capacity was defined as the greatest level of output a plant
can achieve within the framework of a realistic work pattern. Producers were
asked to consider, among other factors, a normal product mix and an expansion
of operations that could be reasonably attained in their industry and locality
in setting capacity in terms of the number of shifts and hours of plant
operations.

Source: Compiled from data submitted in response to questionnaires of the

U.S. International Trade Commission.

during January-March 1985 from 36.0 percent during the corresponding period of
the previous year. On the basis of responses to the Commission's
questionnaires, domestic capacity (in short tons) to assemble offshore
platform jackets and piles in 1984, by company, was as follows: * * *·
 A-17

Kaiser claims that it represents 100 percent of domestic capacity in the

western region because all other domestic producers are located in the gulf
coast region and do not have west coast assembly yards. Respondents argue
that gulf coast producers bid on west coast projects and for that reason,
among others, constitute part of a national industry.

* * * * * *
Kaiser stated in its questionnaire response that on the basis of
anticipated large requirements for west coast platforms and the company's
prove·n ability to be competitive by securing the contract for Shell's platform
Eureka, Kaiser increased operations starting in mid-1982. The Napa
fabricating facility completed an expansion program in 1983. This expansion
added *** square feet under cover to the fabricating bays, thereby increasing
its size by *** percent. Kaiser's capacity utilization, on a tonnage basis,
was *** percent in 1982, *** percent in 1983, *** percent in 1984, and ***
during January-March 1985 compared with *** percent during the corresponding
period of 1984. ·

* * * * * * *

U.S. producers' shipments

Total shipments of offshore jackets and piles, in short tons, decreased

3.7 percent from 1982 to 1983, then increased 42.8 percent from 1983 to 1984
(table 3). Shipments during January-March 1985 were 38.2 percent below the
level. in the corresponding period of the previ.ous year. Likewise, the number
of jackets shipped decreased from 70 in 1982 to 66 in 1983, then increased to
. 78 in 1984. Shipments of jackets during January-March 1985 were about the
same in number as in the corresponding period of 1984, 19 and 18, respectively.

There is, however, a substantial difference between the jacket and piles
shipped to the western region in 1984 compared with the average jacket and
piles shipped in other regions (primarily the gulf coast). For example, the
weight of the western region jacket was *** short tons and the. piles, ***
short tons; whereas the average jacket weight shipped in other regions in 1984
was *** short tons, and the average weight of a set of piles was *** short
tons. Further, the value of the jacket shipped in the western region in 1984
was $*** million and that of the piles, $*** million; whereas the average
jacket value in other regions was $*** million in 1984, and the average value
of a set of piles was $*** million.

Thus, there was little similarity between the average size, complexity,
and cost of. offshore platform jackets and piles contracted for in the western
region during January 1982-March 1985 and the jackets and piles shipped in the
gulf coast region.
 A-18

Table 3.--0ffshore platform jackets and piles: U.S. producers' domestic

shipments arid exports, 1982-84, January-March 1984, and January-March 1985

January-March--
Item 1982 1983 1984
1984 1985

Quantity (short tons)

Domestic shipments:
Western region:
Jackets 1/---------------: 0 O *** O 0
Piles 2/=-------------~--: 0 0 *** 0 0
Total western region---:------_,,.O---------o...-------*~*~*----------...0----------=-o
Other regions: ·
Jackets---------------~--: 58,246 52,183 *** *** ***
Piles-----------------~--: 66,139 67,609 *** *** ***
....,,..,,....~..,,..,,,.--...,,..,,_.~,,..,,..------_,....,-----,,...,-~~----!:"":'"-=-:::"":"
Total other regions----:__1_2_4_,_38_5____1_1_9~,_7_9_2_______*_*_*_____3_1_,_6_90______1_9_,_5_7_6
Grand total,
domestic-------~---: 124,385
-----------------
119,792
........
*** 31,690 19,576
-------,-,.-.-----~--.,.----------~
Export shipments 3/----------===========0============0==========*=*=*============o=============so=
Grand total, domestic
and export------------: 124,385 119,792 171,027 31,690 19,576
------------------------'--------~----------"---
Quantity (units)
Domestic shipments:
Western region: .
Jackets 1/---------------: .0 0 l 0 0
Piles 2/-----------------: 0 0 1 0 0
Other regions:
Jackets------------------: 70 66 78 18 19
Piles--------------------: 79 69 83 27 19
0 0 l 0 0
Export shipments 1,/----------=------------------------------------------------
Value (1,000 dollars)
Domestic shipments:
Western region:
Jackets 1/--------~------: ***
Piles 2r=~---------------: ***
Total western region---: ***
Other regions:
Jackets------------------: 91,947 58,930 *** *** ***
Piles--------------------: 53,713 40,119 *** *** ***
Total other region-----: 145,660 99,049 *** 20,615 11,544
Grand total,
domestic-----------: 145,660 99,049 *** 20,615 11,544
Export shipments 3/---------~: ***·:
Grand total, domestic
and export-------------: 145,660 99,049 189,579 20,615 11,544
----------------------------------------------------
1/ Shipment of jacket for project Eureka by Kaiser.
21 Shipment, via Panama Canal, of piles for project Eureka by McDermott.
3/ Export shipment of ***-ton jacket and a ***-ton pile unit by ***·
Source: Compiled from data submitted in response to questionnaires of the
U.S. 'International Trade Commission.
 A-19

U.S. producers' inventories

Offshore jackets and piles are large and expensive products, built to
exacting specifications and delivered directly to the purchaser upon
completion. Inventories of these products are not maintained.

U.S. employment, wages, and productivity

The average number of U.S. production and related workers producing

_offshqre platform jackets and piles fell by 20-.7 percent from 1982 to 1983 and
another 4.8 percent from 1983 to 1984 (table 4). Employment of these workers
during January-March 1985 was 10.9 perc~nt below the level of the
corresponding period in 1984. Total compen,sation paid to these workers fell
by 22.6 percent from 1982 to 1983 and another 12.2 percent from 1983 to 1984.
Compensation during January-March 198~ was 23.9 percent below compensation
during January-March 1984. Their average hourly compensation was erratic
during January 1982-March 1985, ranging from a low of $12.26 during
January-March 1985 to a high of $14-.80 during January-March 1984. Worker
productivity rose during i982-84, then dropped during January-March 1985.

Kaiser's employment of workers.producing platform jackets and piles

increased from *** employees in 1982 to *** in 1983, then dropped to *** in
1984 and then to *** during January-March 1985.

In the Commission's questionnaire, producers were asked if, during

January 1982-March 1985, they reduced the number of production and related
workers producing off shore platform jackets and piles by at least 5 percent or
50 workers, the date of each reduction, the number of w~rkers affected, the
reason for the reduction,·and the duration of the reduction. Responses to.
these questions are presented in table 5. · It ·should be noted that all of the
reductions, except Kaiser's, occurred in the gulf coast area. Most of the
gulf coast reductions in force can likely be attributed to decreased drilling
activity in that region during the period of this investigation.

Workers at Kaiser and *** are represented by The International

Brotherhood .of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers and
Helpers. Workers of other domestic producers are not represented by a union.

Financial performance of U.S. producers

Three gulf coast region producers, *** , ***, and ***, and one western
region producer, Kaiser Steel, supplied income-and-loss data concerning both
their overall establishment operations and their operations producing offshore
·platform jackets an~ piles. ];./

1 * * *·
 A-20

Table 4.--Average number of U.S. producers' employees, total and production

and related workers producing all products and those producing offshore
platform jackets and piles; hours worked by, total compensation paid to, and
average hourly compensation paid to such workers; output per hour worked;
and unit labor cost in producing offshore platform jackets and piles,
1982-84, January-March 1984, and January-March 1985

:
January-March-
Item 1982 1983 1984
1984 1985

Average employment:
All persons----------------: 8,865 5,002 4,552 4,713 4,677
Production and related
workers producing--
All products-------------: 7,932 4,358 4,007 4,156 4,203
Off shore platform
jackets and piles------: 3,228 2,560 2,434 2,447 2,181
Hours worked by production
and related workers
producing--
All products--1,000 hours--: 16,116 8,803 : 8,144 1,983 1,940
Off shore platform
jackets and piles--do---: 8,053 5,406 4,911 1,123 1,032
Total compensation paid to
production and related
workers producing-- .. .
All products
1,000 dollars--: 226,591 127,795 117,691 30,473 25,327
Off shore platform
jackets and piles--do---: 99,926 77,390 67,926 16,618 12,653
Average hourly compensation
paid to production
and related workers
producing--
All products---------------: $14.06 $14.51 $14.45 $15.37 $13.06
Off shore platform
jackets and piles--------: $12.41 $14.32 $13.83 $14.80 $12.26
Output of off shore platform
jackets and piles per ...
hour worked----short tons--: 15.6 24.6 31.8 30.0 19.0
Unit labor cost of producing :
off shore platform jackets
and piles---per short ton--: $796.19 $581.61 $434.93 $444.28 $646.55

Source: Compiled from data submitted in response to questionnaires of the

U.S. International Trade Commission.
 A-21

Table 5.--0ffshore platform jackets and piles: ·u.s. producers'

reductions in force, January 1982-March 1985

Firm Date Number of Reason for Duration of

workers reduction reduction

*** *** *** *** ***

*** *** *** ***
*** *** *** *** ***
*** *** *** ***
*** *** *** *** ***
*** *** *** ***
*** *** *** *** ***
*** *** *** ***
*** *** *** *** ***
*** *** *** ***
*** *** *** ***
*** *** *** *** ***
*** *** *** ***
*** *** *** ***
*** *** *** ***
*** *** *** *** ***
*** *** *** ***
*** *** *** ***
*** *** *** ***
Source: Compiled from data submitted in response to questionnaires of the
U.S. International Trade Commission.

Overall establishment operations.--The income-and-loss experience of the

four U.S. producers on their overall establishment operations is shown in
table 6. Net sales were $*** million in 1984, down *** percent from the $***
million level achieved in 1983, and down *** percent from the $*** million
level achieved in 1982. Net sales continued their downward trend during
interim 1985, dropping *** percent to $*** million, compared with net sales of
$*** million during the corresponding period of 1984. The four reporting
firms earned an operating income of $*** million, or *** percent of net sales,
from their overall establishment operations in 1982. These firms sustained
aggregate operating losses in each of the other reporting periods, ranging
upward from *** percent of net sales in 1983, to *** percent in 1984 and then
to *** percent during the 1985 interim period. Two firms sustained operating
losses in 1982; three firms sustained such a loss in 1983; and in 1984, four.
Three firms sustained operating losses during interim 1985, compared with four
firms during the corresponding period of 1984.
 A-22

Table 6.~Income-and-loss experience of 4 U.S. producers on the overall

operations of their establishments within which off shore_ platform jackets
and piles are produced, accounting years 1982-84, 1/ and interim periods
ended Mar. 31, 1984, and Mar. 31, 1985 ]:_/

Interim period
ended Mar. 31--
Item 1982 1983 1984
1984 1985 3/

Net sales-----1,000 dollars--: *** *** *** *** ***

Cost of goods sold-----do----: *** *** *** *** ***
Gross income or (loss)-do----=------..~.~.----~~~*~*~*,_.-~~~~.~.~•.--~~--..~.~•.--~~--.*~*,......*
General, selling, and
administrative
expenses-------------do-•--: *** : - *** *** : .
--~~~~~~~~~~~~~~~~~~~~~~~---
*** ***
0 perat i ng income or
(loss)---------------do----: *** *** *** *** ***
Depreciation and
amortization---------do..:...--: *** *** ***
--~~~~~~~~~~~~~~~~~~~~~~~---
*** ***
Cash flow from opera-
tions 4/-------------do----: *** *** *** *** ***
Ratio to net sales of--
Gross income or (loss)
percent--: *** *** *** *** ***
Operating income or
(loss)-----------~-do----: *** *** *** *** ***
Cost of goods sold---do----: *'Ir* *** *** *** ***
General, selling, and
administrative
expenses-----------do----: *** *** *** *** ***
Number of firms reporting:
Gross losses---------------: *** ***: *** ***: ***
Operating losses-----------: *** ***: *** ***: ***
1/ The accounting year for each producer ended Dec. 31.
2./ The 4 firms are ***, ***, ***, and Kaiser Steel Corp.
3/ * * *·
4/ Defined as net operating profit or loss plus depreciation expense.
Source: Compiled from data submitted in response to questionnaires of the
U.S. International Trade Commission.

Operations producing offshore jackets and piles.--The income-and-loss

experience of four U.S. producers on their operations producing offshore
jackets and piles are presented in table 7. Net sales of offshore platform
jackets and piles plunged from $*** million to $*** million, or by ***
percent, during 1982-84. Net sales continued to decline during interim 1985,
dropping *** percent to $*** million, compared with net sales of $*** million
during the corresponding period of 1984. * * *· ·
 A-23

Table 7.--Income-and-loss experience of 4 U.S. producers on their operations

producing offshore platforni' jackets and piles, accounting years 1982-84, !/
and interim periods ended Mar. ·31, 1984, and Mar. 31, 1985 !:._/
Interim period
1984 ended Mar. 31--
Item 1982 1983
1984 1985 3/

Net sales-----1,000 dollars--: *** *** : *** *** ***

Cost of goods sold-----do----: *** *** ·: *** *** ***
Gross income or (loss)-do----:~----.*~*~*,--.------.*~*~*,__.______,*~*~*.----__,__,*~*~*--__,__,__,~*~*~*
General, selling, and
administrative
expenses-------------do-~-:
Operating income or .
*** ***
. *** *** ***
~----__,--__,__,__,__,__,__,__,__,__,__,__,__,__,__,__,__,__,__,__,~

(loss)--------------~o----: *** *** *** ***

Depreciation and
amortization---------do~-: *** *** *** *** ***
Cash flow from opera- ~~----------------------------__,__,__,__,__,______~

tions 4/------------~o----: *** *** *** *** ***

Ratio to-net sales of--
Gross income or loss
percent--: *** *** *** *** ***
Operating income or
(loss)-------------do----: *** *** *** *** ***
Cost of goods sold-~-do----: *** *** *** *** ***
General, selling, and
administrative
expenses-----------do----: *** *** *** ***
Number of firms reporting:
Gross losses---------------: *** *** *** *** ***
Operating losses-----------: *** *** *** *** ***

1/ The accounting year for each producer ended Dec. 31.

21 The 4 firms are ***, ***, ***, ~nd Kaiser Steel Corp.
"'!/ * * *·
4/ Defined as net operating profit or loss plus depreciation expense.
Source: Compiled from data submitted in response to questionnaires of the
U.S. International Trade Commission.

The four reporting firms earned an aggregate operating income of $***

million, or *** percent of net sales, in 1982, but sustained operating losses
of $*** million, or *** percent of net sales, and $*** million, or *** percent
of net sales in 1983 and 1984, respectively. * * *· One firm sustained an
operating loss in 1982, three firms sustained such a loss in 1983, as did four
firms in 1984. · * * *·
 A-24

Kaiser Steel Corp.--The income-and-loss experience of Kaiser Steel Corp.

on the overall operations of its establishments within which offshore platform
jackets· and piles are produced is shown in table 8 for 1982-84, interim 1984,
and interim 1985. Net sales declined annually from $*** million to $***
million, or by *** percent, during 1982-84. Net sales were $*** million
during the 3-month interim period ended March 31, 1985, compared with net
sales of $***million during the corresponding period of 1984. Kaiser's
establishment operation earned operating incomes equal to *** percent of net
sales and *** percent of net sales in 1982 and 1983, respectively, but
sustained operating losses in the other reporting periods. The 1984 operating
loss was equal to *** percent of net sales, and the interim 1985 operating
loss was equal to *** percent of net sales.

Table 8.--Income-a~d-loss experience of Kaiser Steel Corp. on the overall

operations of its establishments within which off shore platform jackets and
piles are produced, accounting years 1982-84, 1/ and interim periods ended
Mar. 31, 1984, and Mar. 31, 1985 :!:_/

Interim period
Item ... 1982 1983 1984 ended Mar. 31--
1984 1985

Net sales-----1,000 dollars--: ***

Cost of goods sold-----do----:____,__,...,....,
***
*** ***
***________***
________,__, ***
,......,________***
,...,....__________--
***
***
Gross income or (loss)-do----: *** *** *** *** ***
General, selling, and
administrative
expenses-------------do----: *** *** *** *** ***
0per at ing income or --------------------------------------------------
(loss)---------------do----: *** *** **,* *** ***
Depreciation and
amortization---------do----:
Cash flow from opera-
*** ***
... ***
--------------------------------------------------
*** ***

tions 3/-------------do----: *** *** *** *** ***

Ratio to-net sales of--
Gross income or (loss)
percent--: *** *** *** *** ***
Operating income or
(loss)-------------do----: *** *** *** *** ***
Cost of goods sold---do----: *** *** *** *** ***
General, selling, and
administrative
expenses-----------do----: *** *** *** *** ***

1/ Accounting year ended Dec. 31.

2/ * * *
"'J/ Defined as net operating profit or loss plus depreciation expense.
Source: Compiled from data submitted in response to questionnaires of the
U.S. International Trade Commission.
 A-25

The income experience of Kaiser Steel Corp. on its operations producing

offshore platform jackets and piles is shown in table 9 for 1982-84. Net
sales rose from $*** million in 1982 to $*** million in 1983 but then plunged
to $*** million in 1984. Kaiser's offshore platform jackets and piles
operation earned operating incomes of $***, or *** percent of net sales, and
$*** million, or *** percent of net sales, in 1982 and 1983, respectively.
Kaiser sustained an operating loss of $*** million, or *** percent of net
sales, in 1984. * * *·

Table 9.--Income-and-loss experience of Kaiser Steel Corp. on its operations

producing offshore platform jackets and piles, accounting years 1982-84, }:./
and interim periods ended Mar. 31, 1984, and Mar. 31, 1985

Interim period
ended Har. 31--
Item 1982 1983 1984
1984 1985 y
Net sales-----1,000 dollars--: *** *** *** *** ***
Cost of goods sold-----do----=--~--,*~*~*~~----.*~*~*,......~----.*~*~*,......--~,......*~*~*=--------~*~*=-=-*
Gross income or (loss)-do----: *** *** *** *** ***
General, selling, and
administrative
expenses-------------do----: *** *** *** *** ***
~--~~--~~--~--~----------------~~--~~~
Operating income or
(loss)---------------do----: *** *** *** *** ***
Depreciation and .. :
amortization---------do----: *** *** *** *** ***
--~~~~------~--~------------------~------~
Cash flow from opera-
tions 3/-------------do----: *** *** *** *** ***
Ratio to-net sales of--
Gross income------percent--: *** *** *** *** ***
Operating income-----do----: *** *** *** *** ***
Cost of goods sold---do----: *** *** *** *** ***
General, selling, and
administrative
expenses-----------do----: *** *** *** *** ***
1/ Accounting year ended Dec. 31.
2./ * * *·
J/ Defined as net operating profit or loss plus depreciation expense.
Source: Compiled from data submitted in response to questionnaires of the
U.S. International Trade Commission.

Investment in productive facilities.--u.s. producers' investment in

productive facilities employed in the production of offshore platform jackets
and piles, valued at cost, ranged from a· high of $*** million as of the end of
1982 to a low of $***million as of March 31, 1985 (table 10). The book value
of such assets ranged from a high of $*** million as of the end of 1982 to a
low of $*** million as of March 31, 1985.
 A-26

Table 10.--Investment in productive facilities and capital expenditures related

to offshore platform jackets and piles, accounting years 1982-84, and
interim periods ended.Mar. 31, 1984, and Mar. 31, 1985 !7

(In thousands of dollars)

Interim period
ended Mar. 31--
Item 1982 1983 1984
1984 1985

Investment in productive
facilities:
All products:
Original cost-------------: *** *** *** *** ***
Book value----------------: *** *** *** *** ***
Offshore platform jackets
and piles:
Original cost-------------: *** *** *** *** ***
Book value----------------: *** *** *** *** ***
Capital expenditures:
All products:
Land----------------------: *** *** *** *** ***
Buildings-----------------: *** *** *** *** ***
Machinery and equipment---: *** *** *** *** : . ***
Total-------------------: *** *** . *** *** ***
Off shore platform jackets
and piles:
Land-------------~--------: *** *** *** *** ***
Buildings-----------------: *** *** *** *** ***
Machinery and equipment---: *** *** *** *** ***
Total-------------------: *** . "*** *** *** ***
1/ Data for 1982-84 are for 4 firms. Data for interim period ended
Mar. 31, 1985, are for 2 firms.

Source: Compiled from data submitted in response to questionnaires of the

u.s. International Trade Commission.

Capital expenditures.--u.s. producers made capital expenditures of $***

million in 1982 for facilities used in the production of off shore platform
jackets and piles; capital expenditures in 1983 were $*** million, and those
in 1984 were $*** million. Capital expenditures were $*** million during
interim 1985, compared with $*** million in the corresponding period of 1984 •.

Capital and investment.--U.S. producers were asked to describe any actual

or potential negative effects of imports of offshore platform jackets and
piles from Japan and Korea on their firms' growth, investment, and ability to
raise capital. Below are excerpts from their replies:

* * * * * *
 A-27

Consideration of Threat of Material Injury

to an Industry in the United States _

In its examination of the question of threat of material injury to an

industry in the United States, the Commission may take into consideration such
factors as the rate of increase of allegedly subsidized and/or LTFV imports,
the capacity of producers in the exporting countries to generate exports, the
availability of export markets other than the United States, and other
factors, such as U.S. importers' inventories.

The rate of increase of imports of off shore platform jackets and piles
from Japan and Korea is discussed in the "U.S. imports" section of this
report. Because each platform jacket and set of piles is unique and built to
customer specifications, importers do not maintain inventories of this product.

Ability of foreign producers to generate exports and availability of export

markets other than the United States

Counsels for Korean and Japanese producers of off shore jackets and piles
were requested to provide data on capacity, production, domestic consumption,
exports to the United States, and exports to other countries.

Counsel for Korean producers prefaced its submission with explanatory

remarks regarding problems associated with determining capacity in an industry
in which capacity may be established upon the award of one off shore platform
jacket and piles contract and then appear to disappear or become dormant at
the end of the project. An analogy was drawn between the heavy construction
industry that has a certain capability to perform large projects that are
awarded on a bid basis. If a firm in this type of industry is awarded a
particular contract, then resources are mobilized to perform that contract.
If unsuccessful in securing a contract, the firm must guard its resources and
pursue other available business. The data included in table 11 were provided
within this context. * * *·

The data show that all Korean exports of off shore platform jackets and
piles were to countries other than the United States prior to 1985, primarily
***, ***, and *** * * * Currently, the jacket and piles for Texaco's
platform Harvest are in route from Korea to offshore California.

A similar presentation with respect to the difficulty in measuring

capacity in this industry was presented by counsel on behalf of the Japanese
producer Nippon Kokan K.K. (NKK). * * *·
 A-28

Table 11.--0ffshore platform jackets and piles: Korean capacity, production,

and exports, 1983-84 and projected 1985 !/

Item 1983 1984 1985

Capacity--------------short tons--: *** *** 2/ ***

Production------------------do----: *** *** 21 ***
Capacity utilization-----percent--: *** *** 2/ ***
Exports to--
United States-------short tons--: 0 0 3/
***-----------------------do----: *** *** 'SI
***-----------------------do~---: *** *** 31
***-----------------------do----: *** *** 31
All other-----------------do----: *** *** 31
Total-------------------do----:~---------.~.~.----~--~--..~.~.--__,-------3~/----

Percent of production that is

exported------------------------: !!_/ *** *** 3/
Percent of total exports to--
United States-------------------: .o .o 3/
All other--------------~--------: 100.0 100.0 3/
Total-------------------------=--------=-1~0~0-.0,.-----------=-1~0~0-.o,,__________3~/----

1/ Data for 1982 are not available.

2./ Projected.
3/ Not available.
4/ Includes tonnage recorded as output in prior years, but exported in the
current year.

Source: Counsel for Korean producers of offshore platform jackets and piles.

Counsel for Hitachi Zosen said that it is difficult for the firm to
isolate data for offshore platform jackets and piles from the firm's overall
operations. Hitachi Zosen and other Japanese firms have built a large number
of offshore facilities in numerous areas of the world and, in some respects,
its production of jackets and piles for the U.S. west coast market is a small
part of Japan's international market for offshore projects.

General information regarding Japan's industry building offshore

structures and vessels is contained in Volume II of the antidumping petition.

Consideration of the Causal Relationship Between the Allegedly

Subsidized and/or LTFV Imports and the Alleged Injury

U.S. imports

The petitioner submitted in its statements at the Commission's conference

that injury to the domestic industry occurs upon award of a contract to a
foreign producer to manufacture jackets and piles for a particular offshore
platform project· rather than upon actual importation of the product. To
support this contention, the petitioner argues as follows: ·
 A-29

First, during the period of investigation there have been seven offshore
platform projects in the west coast region on which contracts have been
awarded by U.S. purchasers. The first, and the largest in terms of tonnage,
involved the Eureka offshore platform of Shell Oil Co. Construction of the
***-ton Eureka jacket was awarded to Kaiser in May 1982; construction of the
***-ton piles for this platform was awarded to McDermott. Since that time,
the domestic industry has not won an award or, in other words, has not had a
sale in the west coast region.

While activity in the gulf coast has been below historic levels, the
volume of sales in the west coast region has increased since 1982 and, in
1985, is expected to reach the highest level of the period of investigation.
After Eureka, the next western· region sales occurred in September 1983, when
the jackets and piles for platform Hermosa were awarded to Hitachi Zosen, a
Japanese producer, and the jackets and piles for platform Harvest were awarded
to Daewoo, a Korean producer. These two projects accounted for all sales in
the west coast region during 1983.

In March 1984, the contract for the jacket and piles for platform Irene
was awarded to Nippuu Steel, a Japanese producer. In August 1984, contracts
for jackets and piles for platforms Gail and Hidalgo were awarded to NKK, a
Japanese producer. Further, in December 1984, the contract for the jacket and
piles for platform Juiius was awarded to Hyundai, a Korean producer. These
sales constituted the entire sales of jackets and piles in the western region
during 1984.

Petitioner states that, in contrast to most products and industries with

which the Commission is concerned in the context of countervailing and
antidumping investigations, offshore platform jackets and piles require a long
period for their production, often 18 to 24 months. Also, according to the
petitioner, the west coast market for jackets and piles is characterized by a
small number of sales made in each year; consequently, each sale is important
in relation to the overall market. The petitioner suggested that the
Commission consider, in its analysis of material injury and threat of material
injury, that injury occurs at the time at which a contract is awarded to a
given producer by each purchaser.

The significance of this issue is illustrated in the following two

tables. The first, table 12, shows actual imports during January 1982-March
1985. This table shows only one importation of offshore platform jackets and
piles from Japan during the entire period and none from Korea. * * *·

In contrast, table 13 shows all sales of imported jackets and piles that
were awarded during January 1982-March 1985. All such sales were awarded to
Japanese or Korean firms, and all are to be installed in west coast waters.
Actual importation as a result of these sales will extend into 1986. Details
of most of these sales are discussed in the section of this report on prices.
 A-30

Table 12.--0ffshore platform jackets and piles: U.S. imports for consumption,
by principal sources, 1982-84, January-March 1984, and January-March 1985

January-March--
Source 1982 1983 1984
1984 1985

Quantity (short tons)

Japan------------------------: 5,603 0 0 0 0
Republic of Korea------------: 0 0 0 0 0
Total--------------------=------~o.----........
5-,6~0~3.--------~o.--------~0.---------......0

Percent of total quantity

Japan------------------------: 100.0
Republic of Korea------------:
------------------------------------------------
Tot al- - --- - - - - - - - - - - - - - - - : 100.0
------------------------------------------------
Value (1,000 dollars)

Japan------------------------: 10,880
Republic of Korea------------:
Total--------------------=------------iro•,~a~a
..
. 0-------------------------------
. .
Source:
.
Compiled from official statistics of the U.S. Department of
.
Commerce.

U.S. market penetration by imports

Table 14 shows the value of U.S. producers' domestic shipments and

exports, imports from Japan, and apparent consumption of offshore platform
jackets and piles during the period covered by the investigation. U.S. market
penetration by imports is also shown in table 14. On the basis of actual
imports, the import to consumption ratio was 9.9 percent in 1983. There were
no imports of offshore .Platform jackets or piles in 1982, 1984, or during
January-March 1985.

However, on the basis of awards, import penetration in the western region

was 100 percent during January 1983-March 1985, because Japanese and Korean
firms have been awarded all of the contracts in that region since 1982. The
total value of contracts awarded for off shore jacket and pile projects in the
western region during January 1983-March 1985 was $131.2 million, of which
$*** million was awarded to Japanese firms and $*** million to Korean firms.
 A-31

Table 13.--0ffshore platform jackets and piles: Sales for importation into
the United States, by principal sources, 1982-84, January-March 1984, and
January-March 1985

January-March--
Source 1982 1983 1984
1984 1985

Quantity (short tons)

Japan------------------------: 0 *** *** 0 0

Republic of Korea------------: 0 *** *** 0 ***
Total--------------------=--------o---------.*-*_*________*_*_*----------0---------*-*,..,...*
------------------------------------------------~
Percent of total quantit~

Japan------------------------: *** *** :

Republic of Korea------------: *** *** 100.0
Total--------------------:~~~~--.--.1~0~0~.~o,,__~~1~0~0~.~o--.--.~--.--.--.~~1~0~0~.~o

Value (1,000 dollars)

Japan------------------------.: *** *** ...

Republic of Korea------------: *** *** •. ::- ***
Total--------------------=----------------.*~*~*------~*~*~*------------------~*~*...,..*

Source: Compiled from data submitted in response to questionnaires of the

U.S. International Trade Commission.

Table 14.--0ffshore platform jackets and piles: U.S. producers' shipments,

imports for consumption, exports of domestic merchandise, and apparent
consumption, 1982-84, January-March 1984, and January-March 1985

U.S. pro-: Imports :U.S. pro-: Appar.ent

Ratio of imports
Period ducers' : from : ducers' : consump-
to consumption
shipments:Japan 1/ : exports : tion
-------------1,000 dollars------------- ----Percent----
---------
1982---------------: 145,660 0 0 145,660 o.o
1983--.-------------: 99,049 10,880 0 109,929 2/ 9.9
1984---------------: 189,579 0 *** *** .o
Jan.-Mar.--
1984-------------: 20,615 0 0 20,615 .o
1985-------------: 11,544 0 0 11,544 .o
1/ There were no imports from Korea, or countries other than Japan, during
this period.
2/ Imports accounted for O.O percent on consumption in the western region ~n
1982 and 100 percent in 1983.

Source: Compiled from information submitted in response to questionnaires

of the U.S. International Trade Commission and from official statistics of the
U.S. Department of Commerce.
 A-32

Prices

The Commission requested information from eight domestic producers of

jackets and piles regarding bids tendered for sales in the western region.
Questionnaires indicated that there were nine large contracts awarded between
January·l981 and April 1985. The total magnitude of these contracts was***
tons with a total value of $*** million.

One of these projects, Shell Oil Co.'s Eureka jacket, has already been
installed and is operating. Three jackets are scheduled for installation
during May-July 1985 and the final five of the contracts awarded stipulate
delivery during May-July 1986.

The Commission also requested information from nine purchasers of

offshore oil platforms. The purchasers are major oil companies who have
developed oil leases off the coast of southern California. Although the
petition defines the western region to include the Alaskan offshore oilfields,
questionnaire responses revealed that no jackets or piles were purchased for
Alaskan oil interests. Six purchasers indicated that they had either
purchased or requested bids on jackets and piles for the western region during
the subject period. All six of these purchasers have their own method of
requesting bids, evaluating responses, and finally awarding contracts.

Bid process.--There are contractual elements that exist for all

purchasers of off shore drilling rigs that utilize the cortventional fixed
platform design. The five components of the total project are engineering
design, fabrication of the jacket, fabrication of the piles, transportation of
the structure, and finally installation. Individual firms have their own
distinct procedures for utilizing in-house personnel, contractors, and
subcontractors to accomplish the,overall task.

* * * * * * *
Fabrication of the jacket and piles are frequently separate items in a
request for quotation (RFQ). This allows the purchasers to evaluate bids for
jackets and piles separately. Occasionally domestic fabrication yards will
only bid on the pile portion of an RFQ. There are a number of reasons for
this. Either the firm will not have the facilities to bid the entire
contract, or there are any number of transportation problems associated with
the location of their facilities. In all but a few instan~es though,
contracts have been awarded, giving both the jacket and pile fabrication to a
single firm.

Transportation and installation are generally contracted for separately

and occasionally will not be selected until after the contract for the
fabrication has already been awarded. The major exception to this procedure
is again ***'s method. * * *·

The following sections summarize four major projects undertaken during

the subject period.

* * * * * * *
 A-33

Domestic producers' competitive position.--Kaiser Steel, the petitioner,

and a number of gulf coast producers have competed for contracts in all of the
projects awarded since 1981. Of the four projects detailed earlier, jacket
fabrication was awarded to domestic producers only once.

* * * * * * *
The piles for the Eureka project were also awarded to a U.S. producer,
McDermott. * * *·

* * * * * *
Transportation

Transportation factors are a very large part of any contract awarded for
jackets and piles. According to industry sources, timely delivery of a jacket
is one of the most important factors for completion of a project, and the
weather plays an important part in the delivery schedule of a project. The
jackets are usually installed in May-July in the west coast waters. These
months have the most favorable weather conditions for putting a platform in
place. If the project is delayed by as little as 30 days, favorable weather
could be missed and the project delayed up to l year.

Another factor affecting transportation is the size of the jacket. The

first constraint that jacket size imposes is the transportation route. Large
jackets that may be fabricated in gulf coast yards face a base dimension size
constraint of 100 feet for the use of the Panama Canal. Jackets with base
dimensions larger than 100 feet must be transported around the tip of South
America, Not only does this route have a disadvantage in terms of distance
traveled, but timing is also a problem. The summer months are the optimal
time for west coast installation, therefore the jacket would pass through the
Straits of Magellen during late spring. Very harsh weather is common for this
area during these months. Risk of losing the structure or placing
extraordinary strain on it make this transportation route undesirable. An
additional problem generated by the structure size is the problem of bridge
lock. A number of existing and potential west coast fabrication yards are
limited by the bridges that span the waterways running from the open sea to
the fabrication yards.

The final size problem associated with transporting the structure is the
availability of adequate launch barges. Occasionally, requests for quotes
stipulate that transportation be arranged by the bidders. Bids must list the
barges that are planned to be used for the transportation of the structure.
This creates a very complex logistics problem for the bidder when the jacket
is very large. There are-only a few barges in existence worldwide that are
capable of handling jackets of the size used in some of the current projects.
If a firm that is bidding on fabrication of a jacket cannot schedule one of
the large launch barges for the anticipated transportation date, it must
either subcontract the transportation or lose the bid. * * *·

The final and most important transportation factor is the enormous costs
involved. Transportation costs can vary widely for jackets and piles depending
on the distance of the tow, weight of the structure, and the size of the launch
barge. Table 15 demonstrates the wide fluctuations of transportation costs.
 A-34

Table 15.--Transportation costs, by project

Percent Cost
Transport of Assembly
Project Item per
cost purchase location
ton
price

***----------------: Jacket---: $*** *** $*** Japan

Piles--: *** *** *** Japan

***--~-------------: Jacket---: *** *** *** Japan

Japan
. Pil,.es-: ***
. *** : ***

*** 1/-------------·• Jacket & *** *** *** Japan

- : Piles. ·

***--~-------------: Jacket---: *** *** *** Japan

: Fil.es---: *** *** : *** : Japan

*** 1/-----------·• Jacket & *** *** : *** Korea

- : Piles.
.
...
***--------------: Jacket--: *** *** *** ***, CA
:
.
Piles-: ***' *** *** ***, LA
:
• Jacket &
*** 1/------------· *** *** *** Japan
- : Piles.

***--------- Jacket---: *** : *** : *** : Korea

Piles---: *** *** *** Korea

***--------------: Jacket---: *** *** *** Korea

Piles--: *** *** *** Korea
1/ Transportation includes both jackets and piles.

Source: Compiled from data submitted in response to questionnaires of the

U.S. International Trade Commission.

Transportation costs for jackets, or jackets and piles, transported from

Korea ranged from $*** to $*** per ton, which represented *** percent of the
purchase price. Piles from Korea ranged from$*** to$*** per ton.to
transport; this equaled *** percent of the purchase price.
 A-35

Transportation costs from Japan seemed to vary the most. One reason for
this is that the Japanese were awarded the most contracts,_ and the size and
transportation factors varied considerably with each project. Transportation
costs for jackets from.Japan ranged from$*** to$*** per ton. Costs of trans-
portation were *** percent of the jackets' total cost. The transportation
cost for piles from Japan was $***-$*** per ton; this equaled *** percent of
the piles' total delivered costs.

Only one contract was awarded to U.S. producers. The transportation costs
were rather high for the jacket--$*** per ton. However, this represented a
relatively small percentage of the purchase price (*** percent).

The only U.S. producer that transported piles for a project was McDermott.
The cost of transporting piles from their gulf coast facility was $*** per ton
and *** percent of the purchase price. * * *·

Exchange rates

The nominal value of 'the Japanese yen in terms of dollars declined by 5

percent from January-March 1982 to October-December 1984 after fluctuating
irregularly throughout the period. When these figures are adjusted for
inflation by producer price indexes, the real value of the yen declined even
further. The real exchange rate declined by 10 percent over the subject
period, because of the relatively low inflation rate in Japan.

The nominal value of the Korean won declined steadily and by 13 percent
in terms of the U.S. dollar from January-March 1982 to October-December 1984.
The real value of the won declined by 15 percent during the same period. The
reason for the larger decline in the real value was a slightly lower inflation
rate in Korea than in the United States, as shown in the following tabulation
(January-March 1982 a 100):

Exchange rate index

Period Dollars eer Japanese zen Dollars eer Korean won
Nominal rate Real rate Nominal rate Real rate

1982:
January-March----: 100 100 100 100
April-June-------: 96 96 98 98
July-September---: 90 91 96 96
October-December-: 90 90 95 96
1983:
January-March----: 99 98 94 95
April-June-------: 98 96 92 92
July-September---: 96 93 90 89
October-December-: 100 95 89 87
1984:
January-March----: 101 96 89 87
April-June-----: 102 96 89 86
July-September---: 96 91 88 86
October-December-: 95 90 87 85

Source: International Financial Statistics, International Monetary Fund,

April 1985.
 B-1

APPENDIX A
FEDERAL REGISTER NOTICES
 8-2

18582 Fedenl ......._ I Vol. IO. No: ..84 I Wednesday, May 1, 1985 I Notices

. (lnvwllptlon No. 701-TA-Ma cPNRn••f)

lincl 11we9t1get1ona·NoL 731-TA-• 8lld · .
2IO (PNllmll• f)l .. .
. . . : . . ..
OHahore Pllltform ....... Md ....
:from theR9publc of xar.·...S·.....
.·aa.-cv: 1nte?nationa1 Tr.de .
·Comminion.
ACTIOll: lilatftution of prelimhlary
countervailingduty and antidumping ·
· · investflations and acheduJms oh
conference to be held in. connection With ·
· the inveatigations. · .. ·
SUllllARY: The Commiaiimi rum,by pves
.notice of the in8titution.of preliminary .
c:Ounteiivailins duty inveitqation.No. · · :,-
101-TA-248 (Pnliminary) under.aec:tion
703(.a).af the Tariff Act of .1930 (19 U.S.C.
tptb(a)) to determine whether there is
a reasonable indicatipn tbat an industry
in t!Je United.States ia materially . . .
· inj'iired. or is threatened with material
, iiljury', OJ:' the establishment.of~
'industry in tha United States is ·
materially retarded. by niuon of .
imports from the Republic of Korea
(Korea) of offshore platform' jackets and
piles, provided for in item 652.97 of the.
·Tariff Schedules of the United States
(TSUS), which are all_eged to be ·
subsidized by the Government of Korea.
As provided in section 703(a), the
Commission must complete preliminary
cauntervailing duty investigations in 45
· ·days, or in this case by June 3, 1985.
· The Commission also pves notice of
the. institution of preliminary .
antidumping investigations Nos. 731-
. TA-259 and 260 (Preliminary) under
-section 733(a) of the-Tariff Act of 1930
· (19 U.S.C. ·1673(a)l to determine. whether
'there is a reasonable indication·that an
indU&try in the United States is ·
materially irijured, or is threatened with
·material injury, or the establishment of
· an industry in the United States is
materially retarded, by reason of
imports from Japan and Korea of .
offshore platform jackets and piles,
provided for in item 652.97 of the TSUS,
 B-3

.Federal Register I Vol. 50. NO: 84-/ Wednesday, May 1. 1985 I Notices 18583

which are allesed to be sold m the Secreta;.y will not a~ it docament for
United States at less than fair value. As · filing without a certificate of service.
provided in section 733{a). the
Commission must complete preliminary Conference
antidumping investigations in 45 days, The·Commi8sion's Director of ·
or in these cases by June 3, 1985. Operations has scheduled a conference
For further information concerning the in connection with these investigations
conduct of these investigations and rules' for 9:30 a.m. on May 13. 1985, at the U;S.
of general application. consult the lntemational Trade Commission·
Commission'1 Rules of Practice and · · Building. 101 E Street NW.:waahington.
Procedure. Part 207. Subparts A and B DC. Parties wishing to participate In the
(19 CFR Part 207). and Part 201, Subparts conference ahoUld contact Tedford
A through E (19 CFR Part 201, as Brias {202-523-4812} not later than May
amended by 49 FR 32569, Aus· 15, 1984). 9. 1•. to manse for their appearance.
Parties In support of the impoaitton of ·
EFl'ICTIYE DAft: April 18, 1985.
countervailing and/or antidmnping .
FOR FURTHER INFORMATION CONTACT: duties in these investigations and .
Tedford Briggs (202-523-4612), Office of parties in opposition to the imposition of
Investigations. U.S. International Traee such duties will each be collectively
Commission, 701 E Street NW.. allocated one hour within which to
Washington. DC 204~. ~e an oral presenlation at the
SUPPLEMENTARY INFORMATION: conference.
Backaround Wdt\eDSuW......
These investigations are being .Any person may submit to the
instituted in response-.to petitions filed· .Commiaaion on or before May 18. 1985, a
on April 18. 1985 (Korea), and April 19, written statement of information
1985 (Japan), by Kaiser Sieel Corp.. pertinent to-the lubject of the
Napa·. CA: and the International 'investigatiom.aa provided in I 207.~5 Of
Brotherhood of Boilermakers, lroJr Ship the Commiaio~a .Wee (19 CFR . ·.
Builders. Blacksmiths. Forsers and. I 207.15).A aiped ort,inal aad foarteen
Helpers, Kansas City, KS. · (14) copies of eacb-•bmink>n mut be ·
filed with the Secretary to lbe '
Participation in the Investigations · Commission ill eccordance with section ·
Persons wishing to participate in these 201.8 of the rules (19 CFR 201.8. as
investigations as parties must file an amended by 49 FR 32589, AUi- 15, 1984).
entry of appearance with the Secret!lry All written submissions except Ior
to the Commissio~. as pi:ovided in · confidential business data will be
§ 2!)1.11 of the Comm.inion's rules (19 available for public inspection durinB
CFR 7X>l.11), not later than seven (7) regular buainess hours (8:45 a.m. to 5:15
days after publication ~f this notice in p.m.) in the Office of the Secretary to the
the Federal Register. Any entry of. Commission. ·
appearance filed after this date will be Any business information for which
referred to the Chairwoman. who will confidential treatment is desired must
determine whether to accept the late be submi.tted separately. The envelope
entry for good cause shown by the · and all pages of such submissions must
person desiring to file the entry. be clearly labeled "Confidential
Business Information." Confidential
Service List submiBSions and requests for ·
Pursuant to § 201.ll(d) of the confidential treatment must conform
Commission's rules (19 CFR § 201.ll{d)), with the requirements of § 201.6 of the
the Secretary will prepare a service list Commission's rules (19 CFR 201.6, as
containing the names and addresses of •amended by 49 FR 32569,.Aug. 15. 1984).
all persons, or their representatives.
who are parties to these investigations
Authority: These investigations arebeing
conducted under authority of the Tariff Act of
upon the expiration of the period for 1930, title VD. This notice is published
filing entries of appearance. In pursuant to I 207.12 of the Commission's
accordance with § 201.lS(c) of the rules rules (19 CFR § 207.12).
(19 CFR 201.16(c), as amended by 49 FR By order of the Commission.
32569. Aug. 15. l9B4), each document
filed by a party to the investigations Issued: April 23, 1985.
must be .served on all other parties to Kenneth R. Mason.·
the investigations (as identified by the Secretal'J'.
service list). and a certificate of service (FR Doc. 85-10602 Filed 4-30-85: 8:45 am)
must accompany the document. The lllWNG CODE 7020-02-M
 B-4

r•nd • .,.._, I Vol. 50. No. 9t f Wlfneeday. May t.s. 1W I Motten

International Trade Admlniatntion

,,.... ....
Oft1' l'f? "ttfoe "'*"'.ct,._
AOINCT: fntemattonal Trade
Adminiatrationflmpor1 Administration.
Commerce.
ACTIOIC Notice.
 B-5

Federal Register I Vol. 50. No. 94 I Wednesday. May 15. 1985 I Notices
SUMllAllY: On the b&11is of a petition minimum or 10 percent for 1eneral material injury. to a United Statea
filed in proper form wlth the United expenses and 8 percent or seneral industry. If its determination is negative
States Department of Commerce. we are expenses and cost for profit. the investigation will terminate:
initiating an antidumping duty Based on the comparison of these otherwise. It will proceed according to
investigation to determine whether estimated values. petitioners alleged a the statutory procedures.
offshore platform jackets and piles from dumping maJ'8in of 25 percent. Alau F. Holmer.
Japan are being. or are likely to be. sold Deput}· Assistant Secretary for Import
Initiation. of Investigation
in the United States at less than fair .-tda1inislratio11.
value. We are notifying the United Under section 73Z(c) of the Act. we (f'R Doc. 115-11738 Filed 6-l+-85: 8:45 am)
States International Trade Commission must detennine, within 20 days after a 9IUMO CODE .,.,.......
(ITC) of this action so that it may petition is med. whether it lets forth the
determine whether imports of these allegations neceHary for the initiation
products are causing material injury, or of an antidumping duty investigation
. I C-580-504 l
threaten material injury. to a United and whether it contains information
States industry. If this investigation reasonably available to the petitioner Initiation of Countervalllng Duty
proceeds normally the ITC will make its supporting the allegations. lnvntlgatton: Offahore Pllltfonn
preliminary determination on or before We examined the petition on offshore .hleketa and POea From IM Republic of
June 3. 1985. and we will make ours on platform jackets and piles and have Korea
or before September 26, 1985. found that it meets the requirements of
section 732(b) of the Act. Therefore. in AGINCY: Import Administration,
IFACTIVI DA'ft: May 15, 1985.
'°" PUllTMIR N'ORMATIOll CONT'ACT:
Francia R. Crowe: Office of
accordance with section 732 of the Act.
we are initiating an antidumping duty
International Trade Ad.minittretion.
Commerce.
lnvesttsation to determine whether ACTIOIC Notice.
lnve1tigation1, lntemetional Trade offshore platform jackets and piles from
Adminlstratfon, U.S. Department of Japan are being. or a:-: likely iu be, sold IUllllAflY: On the baais of a petition
Commerce, 14th Street and Constitution in the United States at leaa than fair filed in proper fonn with the U.S.
Avenue, NW .. Washington. D.C. 20230: value. If our investigation proceed• Department of Commerce, we are
telephone: (202) 377-4087. normally, we will make our preliminary initiating a countervailing duty
IUPPUMINTAllY UIFQMIATION: determination by September 26. 1985. investigation to determine whether
The Petition manufacturers. producers or exporters
Scope of Investigation in the Republic of korea of offshore
On April 19. 1985, we received a The products covered by this platform jackets and piles a11 described
petition in proper fonn filed by Kaiser inve1tigation a.re steel jackets in the "Scope of Investigation" nction
Steel Corpora lion (Kaiser) and the (templates) and piles for offahore below, receive benefitt1 which constitute
lntenaational Brotherhood of platforms. subassemblies thereof that do 11ubsidies within the meaning of the
Boilermakers. Iron Shlp Builders. not require removal from a countervailing duty law. We are
Blacksmiths. Forsera and Helpers filing transportation vessel and further U.S. notifying the U.S. International Trade
on behalf of the U.S. producer(s) and onshore assembly. and appurtenances Commission (ITC) or this action so that
workers producing offshore platform attached to the jackets and piles. These it may determine whether imports of the
jackets and piles for sale in the U.S. pla tfonns are also known as merchandise materially injure. or
West Coast market. In compliance with conventional fixed platfonns and are threaten material injury to, a U.S.
the filing requirements of t 353.36 of the permanently affixed by the piles to be industry. If this investigation proceeds
Commerce Regulations (19 CFR 353.36). seabed. The platforms are not mobile. normally. the ITC will make its
the petition alleged that imports of the These jackets and piles are currentJy preliminary determination f t or before
subject merchandise from Japan are classified in the Tariff Schedules of the June 3, 1985. and we will make ours on
being. or are likely to be, sold in the United States under item 652.9i. or before July 5, 1985.
United Statese al less than fair value IFFICTIYE PATE: May 15. 1985.
within the meaning of section 731 of the Notification of ITC
Tariff Act of 1930, as amended (the Act), FOR FURTHER INPORllloTION CCMCTA~
Section 732(d) of the Act requires us
and that these imports are causing Mary Martin or Rick Hemng, Office of
to notify the ITC of this action and to
material injury. or threaten material Investigations. Import Administration.
provide it with the information we uaed
injury, to a United States induatry. lntemational Trade Adminiatration.
to arrive at this determination. We Will
The petitioners baaed the United United States DepartJnent of Commerce,
notify the ITC and make .available to it
States prfte on an estimate of a 14th Street and Comtitution Avenue.
all nonprivileg_ed and nonconfidential
Japanese producer's bid price for a NW., Washington, D.C. 20230: telephone:
information. We will also allow the ITC
platform scheduled for delivery in May (202) 377-3464 or (202) 377--0187.
access to all privileged and confidential
1985. . information in our files, provided it SU..a.!MENTARY INFORMATION:
Petitioners submit that due to lht confirms that it will not disclose such Petition
unique nature of the product. it would be information either publicly or under an
inappropriate to base foreign markf't administrati\'e protective order without On April 19, 1985, we received o
value on home market or third country the consent of the Deputy Assistant petition from the kaiser Steel
sales. Thus, the petitioners based Secretary for Import Administration. Corporation and the lntemational
foreign market value on an estimated Brotherhood of Boilermakers. Jrenahip
constructed value for the same platform Preliminary Determination by ITC Builders, Blacksmiths, Forgers and
based upon economic research The ITC will determine by June 3, Helpers on behalf of the offshore
conducted in Japan and upon Kaiser's 1985. whether there is a reasonable platform jackets and piles industry. In
cost estimates for its own bid on the indication that imports of offshore compliance with the filing requirements
olatform. To the sum of fabrication and platform jackets and piles from Japan of § 355.26 of the Commerce Regulations
11sembly costs. they added the slututory are causing material injury. or threHlen ( 19 CFR 355.26). the petition alleges th~t
 B-6

Federal Rqistar I Vol SO. No. 94 I. Wednesda1:. May 15. 1985 J Nolli:ea
manufacturen. produceJ'll or exporters • Deferred £a.port Loaru from lhe continue according to the etatutol)·
in the Republic of Korea of offshore · National lnvestment Fund. procedures.
platform jackets and piles receive. • Export Credit FinanciQB lrom Uw- Alan F. Holmer.
directly or indirectly. benefits which Koreen Exporl-lmport Bank. Deput.1· AuiUmlt SIK;relaly /w Import
constitute subsidies within the meaning Adn1in1$f.J<a1.J1111.
• Special and Accelerated
of section 701 of the Tariff Act of 1930. Mil)·~1815.
es amended (the Act):Since the Depreciation under Article~ 11 and 25 of
thr "Act Concerning the Regulation of (FR Doc. 8&-11734 Filed 6-lHS: a:'511ml
Republic of Korea is a "country under 81WNG CGlll
. the Asreement" within the meaning of Tax Reduction and Exemption." .,~

section 701 (b) of the Act. Title VII of the • Tax lncentivea for Exporters under
Act •ppliea &o this investigation. and the Article 22. 23 and 24 of the ..Act
Concerning the Regulation of Tax IA-580-ol05 I
ITC is required to determine whether
imports of the subject merchandise from Reduction and Exemption." Off8hoN Platfona Jackets .and PUN
korea materially injure, or threaten ~ Export Guaranteea. From the Republic of Korea
material injury to, a U.S. industry. . • Export Credit lulmllloe.
MaENC\': International Tnu!e
lllitiatiaa el laftllipticm We have 'determined not to Administration/Import Administration/
Under section 702[c) of tht' Act. WP investisate the following 11'Hegation: Commerce. . ·
must determine, within 20 days after a • Petitionen allQBe that the Kerellll ACTION: Notk:e.
petition ia filed. whetlaer .the petition
aets forth the allesations necelWNll')' for
• the initiation of a countervailiJw dult'
platform jackets and pilea producea
receive prefeneptiel fiuncHw for
assembly ymd aeveleJDegt 6om die
~ .....................
file~ iD proper lom db tile Uniled
ilaveatiflation and wbe&her it conlaina Korea Development Bank ('1CDB..J andj a
States Department Coauun:e. t111 are
information reasonably available to the or other gonnunent institutions. ill put initiafins .a ulidumpiq dot,
petitioner s11pportin8 the allegatiaa. We investjsatiom we have fllUDd this investigation to determine whetlaer
have examined thia ~tition and we offshore platform jackets and piles from
alleged piugram not .&o be
have found that the petition meets those the Republic of Xm9a ~are beina.
countervaiiable ~Piao/ Affianative
requiremenlB. Therefore. we are CoU11terv011illll Duty Detsnnirtation:
or are likew te ee.
MW ia Abe United !·
. initiatiftl a countervailing duty States.at less than fair value. We are
Cold-Rolled Carbon Slee] FJ.at-/Wlled notifying the United States International
investiption to determine whether the Products from Korea and Final Neaative
manufacturers. prodacen or exporten Trade Commiuioa (f1Ct of tbil aetimi
Countervailing Drzty Determination: so that it..., ae:temine wbedwr
in the Republic of korea of caffahore
platfonn jackets and pi.lea. u cle8Cribed
Structural Shapes from Korea {49ft importa of dmse ,.,,.._ .llJemuaing
47284)]. Petitioners have preaented no material injW)', • dtratee material ·
in the "Scope of Investigation" section
of this notice, receive beneita which new evidence or al19d changed injury. toa United Slates....,,. If fhiB
constitute nbaidies. ffolD' investi8ation circumstances wt.th respect to lhis investi8atian preceech nertnall)'. the ITC
proceeds normally, we will make our program. will mae its preliminary deternlination
preliminary determination on or before Notificatim ef ITC on or Wore Jae I. Hli. aai we will
July 15. 1985. make ours an er before September I&.
Section 701.{d,) of the Act l'8QUin!5 ua 1985.
Scope of bmtstisation to notify the ITC of these action-. and to UNCTllE~MayU.1•.
The products covered by this provide it with the infomurtion we ued FOR Anl'TlER Uaama,.,_ COlft'aCT:
in•ea\ilation are .teel jedrets to imive .at I.bi& lielenninatU.. We will Francia R. Crowe. Office of
(templates) and piles fercilhhore nollly the rrc amt make 1tVBilable to it lnvestipfuma, lntenmtiona! Trade
platforms: subassembties thereof dust do . all nonprivileged 11nd llenconfideotial Administration. U.S. Department of
not require removal from a information. We will also allow the ITC Commerce. 14th Stn!et and Constitution
transportation vessel and further U.S. access to all privileged and confidential Avenue. NW. Wahington. D.C. ~
onahore usembl.y. and appurtenances infonna ti on 'in our files. PJ'(Mded it telephone: tmzJ "7-4181.
attached to the jackets and piles. These confirms that tt witl not disclose auch SUPPLEllENTARY 8G'OllllATION:
platforms are also known as iDfonnation. either pablidy or tm,der an
conventional fixed platforms and are adminiltratiYe p1otecttve order. without TbeP.._
permanen1ljr affixed by 'die piles to lhe the written eoment of fbe Deputy On April U. 19115. we recelvei il
seabed. nae plattorma are not mobile. Aaailtant SeUi!tary far 1mJlort petition iDprcpr form fi1e4)oo ICder
ntese jacketa and piles are curren.lly Administration. Steel Corporatioll·(IWaer) and the
pro\•ided for in item 652.97 of the 1985 International Brotherhood of
Tariff Schedules of the United Statei; Preliminary Detenninatim it)' ITC Boilerrriakers. Iron Ship Builders.
(TSUS). Blacksmiths. Foqiers and Helpers filing
The IT.C will determine by June 3.
Allegations of Subsidies 1985. whether there is a reasonable on behalf of the U.S. producerls) and
indication that imports of offshore workers producing offshore platform
The petition alleges that jackets and piles for aale in the U.S.
manufactul'ef"I, producers or ex~ platform jackets and pil.ea from .&he
Republic of Korea materiall.Y injure, or West Caul markeL In compliance wtth
in lbe Republic of 'Korea of ofhhore the filing .requiremeDlt ol I 353.38 c4 die
platform jackets and piles Teeekie threaten material in;myto, a U.S.
indumy. lfite dete••n4Jcm nJ1EIRBfive. Commerce Re.gul1tions l18 m. 353.3Bl.
benefits which constitute eubsidies. We the Jte1Hioa allesad that importa of llae
are initiating en mv.estigation on the this inv.ntigaticm will tmmirude:
subject merchandise from Korea are
following a·llegations: otherwise. 'this investigation wit!
being. or are likely to be. sold in the
• Short-term Export Financing under United States at less than Jair \'Blue
the Export Financing RegulHtions. within the meaning of section 731 or 11
 B-7

federal a.pater I Vo1. IO. No... I Wednesday. May 15. 1985 I Notice• .mss
Tartff Act of 18'0. u amead.d (iM ActJ. eeebed. Tbe pletferms ere IMllt IMbde.
end that tbete lmporta art ceu!li"S These jackP.t1 end pnes ere CU1'mltly
material ln)ur)'. or thre1ten matenal clauified in the Tariff Schedules of thr
injur)'. to a United Stites induatn·. United Stales (TSUSJ wider item 652.97.
The petitioners baaed the Unit~d
States price on an .-timate of a korean
nc
fo!Gtific:etiiDD .,
..producer'• bid price for 1 platform Section m[c!) of the At1 requires us
1cheduled for delivery in Ma)' 19tC'>. to notify the rrc or thi~ action and tn
Petitionen &11Ue that due to the pro\·ide it with the Information we used
or
unique nature this product. It would to arrive at thi1 determination. We will
notify the rrc and make available to tt
be Inappropriate to base foreitrn marttet
\•alue on home market or third country all nonprivileged and nonconfidential
aales of jacketl and piles. Thus. the information. We will alao allow the rrc
petitionera ba1ed foreign market Hlue 1cce11 &o all privileged ud confidential
on an e1timated conatn&cted value for information in our &Jee. provided it
the aame platform bued upon kaiser'• confU'lllJ that it will aot diaclose euch
cost eatimatea for tta oWll bid on the information !lit.bar public:ly or wider an
platform adjusted for differences administratively protective order
between U.S. and korean labor coata without &be GODNDt of &be Deputy
and additional X... blllflMmlDt COlta A11l1tant 8ec:NtuJ far Import
allesed to be -.c11 suv ID ..,&N tbe Adminlttratloll.
projecL To Ille RID af fabrication ad .......,Da' ' . . .,IK
Heembly ooN. Ibey added lbe ltatlltor)'
minimum of 10 percent for aeneral The rrc wlD delermlne b)' June 3,
expenae1 and I percent of &eneral 1985. whether there le 1 reuonable
expense• and colt for profit indication thal lmportl of oBehore
Baaed on the computlOn of these pl1tfo11111 jac:kell and plle1 from IC.orea
e1timated n1aea. pe'Htionere allepd are cauaiDa material iDJWJ, or lbrutan
dumping llW'lin• of from ti to 13 material lnJWJ, to a UDited States
lnduab)'. If ill determination 11 saeptive
.
percent.
the invujgation wllJ terminate:
otherwise. It wW proceed •ccordin& to
lnltiatiaa fJl lnftlliptima
the 1tatulo1')' procedurea.
Under aection '3Z(c} of the Act. we AJanr. ..-... .
must determine. within ZO day• after 1 Depllly AMilllallt ~for birport
petition i1 filed. whether II seta forth the Admini•trotion.
allegations necessar]i for the initiation MMyi. tllBS.
of an antidumping duty inveslijation IF'R Doc.. 16-11715 Filed ~1+45; a-t6 •ml
and whether it containl information ~CCllll . . . . .
TeaeonablJ nailable to the petitioner
eupparting the anegationJ.
We examined the petition on offshore
platform t•t1 and pllee and found
that It meetl lhe i:equirementl of 1ection
732(b} of the Act. Therefore. in
accordance with section 732 of the Act.
we are imtiatins an antidumping duty
investigatiOt'I to determine whether
offshore platform jacket& end piles from
Korea are being. or are likely or be. 1old
in the United Stat8s at lea than fair
. value. U our invt:"""6on proceede
normally, we will make our fl"l1iniinerr
determination b)' .,,._,,,. ze. 1985.

Scope of lnv"tigation
The product& CO\'ered b\' thi~
investi~ation are &lee! jadete
pcmµlates) and pile& fur offshore
platforma. 1ubassemblie11 thereof that do
not require removal from a
tranaportation wenel and further U.S.
onshore 1nembly. and appurtenance•
attached to the jacket• end piles. These
platforms are also known es
conventional fixed platforms and are
permanently affixed b)· the pile& to the
 B-9

APPENDIX B
LIST OF WITNESSES APPEARING AT THE COMMISSION'S CONFERENCE
 B-10

CALENDAR OF PUBLIC CONFERENCE

Invest.igation No. 701-TA-248 (Preliminary)

and Investigations Nos. 731-TA-259 and 260 (Preliminary)

OFFSHORE PLATFORM JACKETS AND PILES

FROM THE REPUBLIC OF KOREA AND JAPAN

Those listed below appeared at the United States International Trade

Commission's conference held in connection with the subject investigations on
May 13, 1985, in the Hearing Room of the USITC Building, 701 E Street, NW.,
Washirigton, DC.

In support of the imposition of antidumping

and/or countervailing duties

Collier, Shannon, Rill & Scott--Counsel

Washington, DC
on behalf of--

Kaiser Steel Corp.

Napa, CA

S.C. Jacobson, General Manager, Commercial

International Brotherhood of Boilermakers, Iron Ship Builders,

Blacksmiths, Forgers and Helpers
Kansas City, KS

Page Groton, Assistant to International President

Economic Consulting Services Inc.

Washington, DC
Mark W. Love, Vice President

David A. Hartquist)
Robert L. Meuser )--OF COUNSEL
Kathleen T. Weaver)
 B-11

In opposition to the imposition of antidumping

and/or countervailing duties

Pillsbury, Madison & Sutro--Counsel

Washington, DC
on behalf of--

Chevron U.S.A. Inc.

John T. Cameron, Vice President, Exploration, Land & Production,

Western Region

Jess E. Morgan, Manager, Offshore Engineering & Construction

Western Region

Donald E. deKieffer)
Frank J. Schuchat )--OF COUNSEL
Francis J. Sailer )

Sharretts, Paley, Carter & Blauvelt~-Counsel

Washington, DC
on behalf of--

Union Oil Company of California

Richard Gillen, Regional Off shore Construction Manager

Texaco Inc.

George E. Mott, Manager, Central Offshore Engineering

Peter O. Suchman) __ OF COUNSEL

Gail T. Cummins )

Arnold & Porter--Counsel

Washington, DC
on behalf of--

Cities Service Oil & Gas Corp.

James Quinn, Regional Production Manager

Douglas A. Dworkin) __ 0F COUNSEL

Bob Hertzstein )
 B-12

In opposition to the imposition of antidumping

and/or countervailing duties--Continued

Mudge, Rose, Guthrie, Alexander & Ferdon--Counsel

Washington, DC
on behalf of--

Korea Iron & Steel Association

Daewoo Shipbuilding & Heavy Machinery, Ltd.

Hyundai Heavy Industries Co.

Samsung Co., Ltd.

Donald B. Cameron, Jr.--OF COUNSEL

Paul, Weiss, Rifkind, Warton & Garrison--Counsel

Washington, DC
on behalf of--

Korea Iron & Steel Association

Daewoo Shipbuilding & Heavy Machinery, Ltd.

Hyundai Heavy Industries Co.

Samsung Co., Ltd.

Robert Montgomery )--OF COUNSEL

Terence J. Fortune)

Graham & James--Counsel

Washington, DC
on behalf of--
Hitachi Zosen Corp.

Stuart E. Benson )
Michael A. Hertzberg)--OF COUNSEL
Yoshihiro Saito )

Covington & Burling--Counsel

Washington, DC
on behalf of--

Exxon Company U.S.A.

Harvey M. Applebaum)
Timothy A. Harr )--OF COUNSEL
David R. Grace )