Saccharin from China - USITC

2007. 41 PMC’s minimal capital expenditures included *** 42 However, we note that PMC had researchand development (“R&D”) expenses each year of the review period and that they increased every yearsince 2005, peaking at $*** in 2008. 43 Its annual R&D expenditures in 2005 through 2008 are greaterthan in any year of the original period of investigation ***. 44Technical expertise. PMC’s new production process would appear to require less expertise thanits older start-to-finish production. As noted above, PMC purchases its primary raw material input forproducing saccharin, ***, from China. PMC ***. 45 PMC then performs ***. 46 Accordingly, PMC’s***.Employment levels. During the review period, the number of PMC’s production and relatedworkers (“PRWs”) decreased irregularly but more substantially than in the original investigation,although PMC has never employed large numbers of workers. During the original investigation,PMC’s PRWs declined from *** workers in 2000 to *** workers in 2002. 47 During the review period,PMC’s workforce declined from *** workers in 2003 to just *** workers in 2008. 48Value Added. Value added represents the conversion costs that PMC used to transform *** intosaccharin. With respect to its “old” Maumee production process, PMC’s value added represented ***percent of total costs in 2006. 49 With respect to its “new” and reengineered Maumee production50 51 52process, PMC’s value added represented *** percent of total costs in 2008.41CR/PR at Table C-1; Original CR/PR at Table VI-4.42OINV Trip Notes, PMC Responses to Plant Trip Questions at 2 (Feb. 3, 2009) (Cynthia Trainor).43CR/PR at Table III-12.44See e.g., CR/PR at Table III-12 and Original CR/PR at Table VI-4. We note that at the hearing, there wastestimony that PMC’s new process was “not extremely capital intensive, [but] did require a large amount of researchand development.” Hearing Tr. at 42 (Kerwin).45CR/PR at Figure I-3.46CR/PR at Figure I-3. The end product is food grade sodium saccharin. CR at III-4; PR at III-2.47CR/PR at Table III-10.48The number of production and related workers dropped from *** in 2003 to *** in 2004 to *** in 2005,increased to *** in 2006, dropped to *** in 2007, and then increased to *** in 2008. CR/PR at Table C-1.According to PMC, as of March 2009, it employs *** full-time and *** part-time workers in the production ofsaccharin. See, e.g., PMC Posthearing Br., Exh. 1 at 22.49Derived from CR/PR at Table III-11.50Derived from CR/PR at Table III-11.51The estimate of PMC’s value added for 2008 is based on comparing PMC's conversion costs (direct labor andother factory costs) to its total cost of goods sold.52Chairman Aranoff, Vice Chairman Pearson, and Commissioner Pinkert do not join in this analysis of valueadded by PMC. They find that, although comparing conversion costs to total cost of goods sold can be anappropriate approach for determining the amount of value added, it is not appropriate given the information of recordin the instant review – PMC’s re-engineered saccharin production process may well involve costs that do not addsignificantly to the value of the raw material inputs. They note in this regard that the raw materials used by PMC inthe re-engineered process generally have a higher value than that indicated by the available prices for saccharin,domestic and imported, over the period of review.***Thus, in Chairman Aranoff, Vice Chairman Pearson, and Commissioner Pinkert’s view, the amount of valueadded by PMC set forth in the text is overstated. Nevertheless, the information of record does not permit acontemporaneous calculation of the difference between the cost of the raw materials used by PMC under the reengineeredprocess and a non-aberrational domestic price for the finished product. Chairman Aranoff, ViceChairman Pearson, and Commissioner Pinkert are therefore unable to rely on the valued-added factor in determining(continued...)8