Posted on 12/14/2003 5:00:01 PM PST by ask
Furniture retailers strike back against tariff supporters
HIGH POINT -- The gloves are coming off in the furniture industry's internal battle over cheap Chinese products and the preservation of American manufacturing jobs.
In the past week, two retail chains stopped buying goods from American furniture makers who are supporting a so-called "anti-dumping petition" that could impose steep tariffs on Chinese products, thus dramatically raising import costs.
"This is just the opening volley," said Jerry Epperson, a furniture industry analyst and director of the Mann Armistead & Epperson Ltd. investment banking firm in Richmond, Va. "It's getting nasty."
American Furniture Warehouse Co. Inc., based in Englewood, Colo., which has nine stores across Colorado, and Columbus, Ohio,-based Value City Furniture, which has 80 stores across the East Coast and Midwest, are no longer buying bedroom sets from companies whose executives signed a petition charging China with illegally dumping cheap furniture in the United States.
The moves directly impact manufacturers such as Vaughan-Bassett Furniture Co., Hooker Furniture Corp. and La-Z-Boy Inc., major Triad players whose executives are leading the anti-dumping petition. Those executives argue that tariffs are justified and can help stem the loss of domestic furniture manufacturing jobs.
"We've decided that these are companies we don't want to do business with," said Andrew Zuppa, vice president of marketing for American Furniture. "It's just protectionism. It's an archaic concept, especially in today's global marketplace."
The impact is immediate for Vaughan-Bassett, which has a plant in Elkin. American Furniture was spending more than $1 million a year with Vaughan-Bassett. Not any more.
"We're disappointed that they dropped us," said Doug Bassett, a vice president at Vaughan-Bassett. "And I'll leave it at that. It's their decision."
American Furniture has decided instead to buy more furniture from Chinese companies and other American manufacturers who do not sign the anti-dumping petition. Zuppa said that his company's best-selling bedroom furniture suites come from American-based companies, in particular Broyhill, Lane and Thomasville Furniture brands, which he pointed out are mostly made in the Triad.
Broyhill, Land and Thomasville are all subsidiaries of Furniture Brands International, whose chief executive, Mickey Holliman, has said his company will continue to move production, and jobs, from the United States to China to cut costs. He also criticized the anti-dumping petition as short-sighted. Behind the petition For the American furniture making executives who signed the petition, the argument is simple.
China has fixed its currency at about 40 percent of the value of the U.S. dollar, thereby insuring what they deem as persistently unfair pricing advantages over U.S. products. In addition, the petition supporters argue that the Chinese government subsidizes the building of furniture plants in that country and is not abiding by World Trade Organization standards to protect worker safety and the environment to further keep costs down.
"The only way tariffs are imposed is if we prove that China is illegally dumping," Bassett said. "We have a duty to our workers and our shareholders to do this."
Bassett pointed out that executives from several small furniture store chains joined his group recently in Washington, D.C. for testimony in the anti-dumping matter.
"It's not an issue of protectionism," Bassett said. "It's about supporting fair trade."
On Oct. 31, a preliminary hearing was held before the U.S. Department of Commerce and the International Trade Commission. On Jan. 2, a preliminary decision from both of those agencies will decide whether initial tariffs of up to 250 percent of the price of an imported Chinese product should be imposed.
"I think you're going to see the world change on Jan. 2," Bassett said.
Other retailers are also joining the fray and choosing sides.
For example, Wickes Furniture, a 40-store chain in the Midwest, has also stopped buying from Vaughan-Bassett. Wickes was spending as much as $1 million a year with the company, but has gradually cut back and shifted to buying from China manufacturers after Seffner, Fla.,-based retail giant Rooms To Go Inc. bought half of the company.
Impact on consumers Jeff Seaman, chief executive of Rooms To Go, said he isn't boycotting any American manufacturer company that signed the anti-dumping petition. But Seaman said he prefers to buy from furniture makers that are not backing the petition. xecutives with Rooms To Go, Rhodes, Havertys and J.C. Penney -- which are among the largest furniture retailers in North Carolina -- have all testified against the anti-dumping petition.
"I'm against the petition because it's going to raise prices for consumers," Seaman said. "Anything that's anti-consumer is bad for larger retailers."
If on Jan. 2, the International Trade Commission finds that the Chinese government is unfairly helping its furniture companies sell goods into the United States at below market prices, then tariffs will be imposed no later than May 2 on the importer of those goods.
Most times the importer of Chinese furniture is an American-based retail chain, and the threat of those tariffs is starting to frighten retailers.
"When this petition started we didn't think it had legs, we didn't think it could stand up. But now it's getting serious," said Seaman at Rooms to Go.
Furniture analyst Epperson said he believes the anti-dumping petition, which at its heart is about preserving manufacturing jobs in politically sensitive industrial states like North Carolina, has enough momentum that it will be successful.
"What our industry has gone through is very provable and documentable," Epperson said.
Just in the wood bedroom furniture segment, the United States has lost 106,000 jobs in the past four years -- including more than 16,000 factory jobs in North Carolina -- according to the U.S. Department of Labor.
"This is a big topic in our industry and its distracting people from what is really going on, which is that business is getting a little better," Epperson said.
www.chinaview.cn 2003-12-14 07:51:49
BEIJING, Dec. 14 (Xinhuanet) -- China's furniture manufacturers responded quietly to the US decision to start dumping investigations which they believe unreasonable, saying they have prepared for it.
The US Commerce Department said on Thursday it has accepted a complaint against wooden bedroom furniture imports from China and will launch an investigation that could lead to the imposition of dumping duties.
Chong Quan, the spokesman for the Ministry of Commerce, expressed his deep concern over the case, which involves a total value of US$1 billion, the largest sum the country has ever faced in a dumping case.
He rejected the claim by the US furniture makers that Chinese furniture manufacturing is a non-market economy industry.
"Most of the local furniture makers are privately-owned or foreign-funded. We expect the US authorities will grant them market economy treatment,'' Chong said. The US furniture makers have asked for duties ranging from 158 per cent to 441 per cent on wooden bedroom furniture from China.
Local furniture makers said the US furniture makers move did not surprise them. In recent months, the United States has used its trade protection laws to curb imports of textiles, television sets and other products from China.
Cao Yingchao, an official from the China Furniture Association, said domestic furniture exporters and makers have formed a special committee to deal with the case. They have contributed US$1.6 million in funds to fight the case, Cao said.
Cao insists that the US charge is groundless, given the fact that the exported furniture brings in more profit than furniture sold domestically.
The US furniture makers have accused Chinese furniture makers of selling products at "below-market costs'' which they say has contributed to the closure of dozens of US furniture factories this year.
"We are not dumping.
We export because the products can sell at higher prices than at home,'' said Cao.
The average profit on exports can be as much as 30 per cent, according to Cao. Cao also noted that most of the exporters are private companies that have not been subsidized by the government.
"Chinese exporters can offer lower prices because of the low production costs in China, which is also the reason why so many foreign furniture makers either shift their production bases to China, or have their products made here and sold back home,'' he said.
Many US furniture importers, wholesalers and retailers make their lives on the Chinese furniture trade, which has created a lot of jobs in the United States, Cao said.
Two US furniture retailing chains, American Furniture Warehouse Co Inc, which has nine stores, and Value City Furniture, which has 80 stores, have announced that they have stopped buying bedroom furniture from companies whose executives signed a petition charging China with illegally dumping cheap furniture in the United States.
"We have decided that these are companies we do not want to do business with,'' said Andrew Zuppa, vice-president of marketing for American Furniture, "It is just protectionism.
It is an archaic concept, especially in today's global marketplace.'' China exported US$2.8 billion worth of furniture to the United States last year, exports of wooden bedroom furniture making up half the figure.
I hope that means you're not going to buy from American Furniture Warehouse or Value City.
I disagree. I pretty much never go for the lowest price, because the products that are offered at the lowest price are almost always of the lowest quality. If you take the time to make a graph, with the x axis representing price and the y axis representing quality, you'll find that with most products there are a variety of offerings, ranging from cheapest to most expensive, and from lowest to highest quality.
It has been my experience that there is a breakpoint that happens about 2/3 of the way up the curve, where you will find that rapidly increasing price does not purchase all that much more in the way of quality. I refer to that point as "the knee of the curve", and I usually buy products that end up around that point.
However, if you don't want to do that much work in evaluating potential purchases, I would suggest that you remember the following motto: "Cheap isn't". Simply put, the cheapest products are almost never the most economical way to go, if you place any value whatsoever on quality, relibility or resale value. Caveat emptor.
You get what you pay for (imo). In this case, American furniture manufacturers shouldn't be penalized for requesting an investigation into Chinese dumping. If the allegations are verified then tariffs are justifiied. The rules of free trade require that.
Make maximum use of your own money.
We Americans are being seduced by the short term costs of all these imported items, without considering what their useful life is. I recently bought an old used pickaxe at a garage sale for five dollars, after the imported one I purchased last year broke while I was using it. My rationale was the old pickaxe had proved its greater worth by lasting so long.
I'd say the same thing is true about furniture too.
Consumers are buying Chinese furniture because of the perceived value of it. The case pieces are bigger, bulkier, and more ornate than the plain, smaller-scaled, and much more expensive domestic made case goods.
I don't know why Value City and American Furniture are not buying Hooker or La-Z-Boy? Hooker is a notorious importer of furniture and La-Z-Boy has people overseas setting up its framework for import production.
The only furniture (bedroom set) I've ever sent back (went through H*ll a year ago) was made by Bassett. It was an ugly experience. Every piece of furniture was substandard with major flaws. China couldn't have done a worse job. Still need a new bedroom set -- any suggestions? I still want to buy AMERICAN made furniture.
North Carolina makes some of the best furniture in the USA. Try this link or do a search on North Carolina Furniture.
Glad to see our Senatorial representation has spoken out so much about this and 'encouraged' us all so much. Why just from Liddy's 'encouragement' (read she doesn't know and doesn't give a dern about what affects North Carolinians) next week I'm going down to Wake Tech to start on my biotechnician degree. I have to because I lost my seatbelt checker spot at mile marker 289 on I-40 through redistricting ;)
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