A protectionist war on imports is creating widespread collateral damage for the wood products industry. Unprecedented duties totaling 45% on Chinese imported hardwood plywood were handed down in a matter of weeks by the Department of Commerce, resulting in price volatility and supply disruption in both imported and domestic hardwood plywood market. Any wood product manufacturers that have experienced these economic ripple effects should ask the handful of domestic companies that spearheaded this government petition if these are the consequences that they intended.
Sadly, all of this is transpiring as many manufacturers are seeing an economic tailwind from the housing boom in recent months.
It began last fall when six domestic companies seeking a competitive leg up in the marketplace petitioned the federal government to investigate alleged unfair trade practices in China. They demanded that tariffs be imposed on Chinese imported hardwood plywood that is widely used in American made furniture, boats, store fixtures, shipping containers and many other products.
In baffling conclusions to two separate investigations, the Department of Commerce found that individually investigated Chinese respondents were neither being unfairly subsidized nor were they engaged in unfair pricing. Nevertheless, based on cloudy methodology, the government still imposed countervailing duties of 22.63% and anti-dumping duties of 22.14% on most hardwood plywood imported from China—a 45% tax slapped overnight on material that is helping revive the manufacturing sector.
In other words, the government has now invested significant resources in pursuing the petitioners’ complaint and found that, in every single instance, the Chinese exporters were not subsidized and did not engage in dumping. Yet, Commerce still applied duties.
So how is this playing in the marketplace? We’ve spoken with multiple company leaders from the cabinet industry to see how these preliminary duties are affecting them:
Bill Weaver, CEO of Canyon Creek Cabinetry (Washington): “This has an immediate impact on my bottom line, as the normal supply of both domestic and imported plywood products has been totally disrupted. Just as the housing market begins to recover and we are adding jobs we are forced to evaluate how much of our manufacturing capacity we will keep in the U.S. To avoid the devastating impact of these tariffs we are looking at moving our secondary wood processing operations to Canada or other foreign countries. There will be a loss of U,S. jobs not because we want to, but because we will have to.”
Robert Sample, Mid America Cabinets (Arkansas): "Because of these duties, and their impact on my ability to find acceptable sources for raw materials-both domestic and imported, we recently had to walk away from eight projects -- $3.5 million budget worth of work. These jobs were instead awarded to RTA (ready to assemble) Chinese kitchen cabinets. Supply lead time is creeping up on the domestic mills, which is affecting our production. The unintended effect of this CVD/AD is forcing companies like us will be taking a hard look at offering Chinese-made cabinets to our customers to avoid losing them totally. Domestic jobs will be lost, as most of the value added will occur in China.”
Stanley Tidwell, President of Woodmont Cabinetry (Texas): “How did these few domestic plywood manufacturers even have a position? They are filing lawsuit against imported products they never intend to manufacture. Their only desire is to corner the market, which places a hardship on ‘their’ own domestic customers who manufacture furniture and cabinets and ultimately the American people! There have been no findings of dumping or Chinese government sponsored subsidies! These domestic plywood manufactures have never planned to manufacture the replacement products nor do they have the capacity.”
These personal stories scratch the surface of this industry disruption. Eliminating high demand Chinese hardwood plywood from the production line will eliminate U.S. jobs.
The Chinese import market may have been the intended target of these petitioners, but the industry aftermath is widespread, including the very customer base of the petitioners. Any employer that shares concerns about the long-term impact that this will have on their business and employees should contact the Department of Commerce and their local U.S. representative and urge them to consider the real world impact that any unreasonable tariffs will have on U.S. jobs. If you are willing to help put a stop to this industry assault, please contact the American Alliance for Hardwood Plywood.
Greg Simon chairs the American Alliance for Hardwood Plywood, an organization of American importers, distributors and manufacturers of hardwood plywood, along with other U.S. companies. Simon also is vice president for Far East American, which specializes in the distribution of imported plywood and wood products from China, Russia, Indonesia and Malaysia.
Have something to say? Share your thoughts with us in the comments below.