The domestic cabinet manufacturing industry could go the way of the U.S. furniture industry if strong steps are not taken to reverse the rising tide of cabinet imports from China.
In a telephone interview shortly after the U.S. Department of Commerce issued final duty determinations on Chinese imports of wooden cabinets and vanities, Stephen Wellborn of Wellborn Cabinets said that he is pleased with the ruling.
The total antidumping and countervailing duties for most Chinese manufacturers will be about 59 percent.
“We feel this is a positive direction, and we look forward to the ITC ruling in March,” he said.
Wellborn is a member of the American Kitchen Cabinet Alliance (AKCA), the group that began its petition against unfairly-traded Chinese imports in March 2019.
The case claims China's "manipulation and unfair trade practices" have resulted in a significant rise of the Chinese cabinetry imports. The scope of the petition covers both face-frame and frameless cabinets, made of solid wood and composite panel construction, RTA cabinetry, and cabinetry components including doors, drawers, as well as desks, shelves, and tables that are attached to or incorporated in the merchandise.
AKCA member companies represent a broad coalition of the cabinet industry, from smaller shops to some of the largest cabinet manufacturers in the United States.
“We are domestic manufacturers trying to make cabinets as we always have,” Wellborn said.
Fighting for a $10 billion market
The U.S. cabinet market is estimated by several sources to be a $10 to $11 billion industry, Wellborn said. U.S. manufacturers employ more than 200,000 people.
Wellborn said many domestic manufacturers saw sales slide during the recession 10 years ago, and have not seen significant gains in the years since then. He believes that the growing share of imports from China is the reason domestic cabinet companies have not grown as much as they should.
“(Imports) have gained about 75 percent (in recent years) so they now have 40 percent of the market,” he said.
How have China cabinets gained such a large share so quickly?
Wellborn said they are selling cabinet components in the U.S. for far less than they cost to produce. And the Chinese government is providing a number of subsidies that lower their operating and manufacturing costs even further. Some Chinese manufacturers are buying domestic wood in the U.S., shipping it across the Pacific, making the components and then shipping those back to the U.S. – all at a far lower price than a stateside manufacturer can deliver.
In Wellborn Cabinet’s case, the company’s overall employment has fallen from 2,200 to 1,400 as the imports have gained ground.
RTA or not?
The petition was fought by the American Coalition of Cabinet Distributors, a group made up of U.S. distributors, dealers, contractors, installers and importers, which claims the proposed duties could significantly impact the RTA option from the U.S. marketplace. They say RTA companies serve a niche demand for RTA cabinets in the U.S. that prioritize limited selection and short lead times over customized products.
Wellborn questioned the position of ACCD that the cabinet importers and distributors are serving a different market – one that the major U.S. cabinet companies do not serve
“They’re after the same market we’re after,” he said. “Many (Wellborn customers) have had to take on China cabinets to compete with other China imports.”
Also, Wellborn pointed out that the only way to import cabinets is by shipping unassembled components. “You can’t assemble a complete cabinet and then ship it,” he said.
He also disagrees that the imports are an RTA product. “They are being assembled before going to the job site (or customer), not really a true RTA product.”
Wellborn customers and other buyers want completed cabinets, they don’t want to buy an unassembled cabinet.
“We’ve been watching China for a long time, and our domestic competition.” Wellborn said. “We buy new equipment, new technology, we try to find out ways to be more efficient.”
Wellborn believes the no level of efficiency could match the import prices.
“They undersell, they don’t make money,” he said.
Wellborn also makes a comparison with the textile and furniture industries. Much of the domestic residential furniture manufacturing closed 15 to 20 years ago, and companies bought directly from Asian sources.
The only difference between furniture and cabinets is in timing, Wellborn said. Observers of the U.S. furniture industry believe they were 10 years too late in reacting to imports. They did win a dumping case, but it came too late to make major changes.
Chinese kitchen cabinets are undercutting cabinet pricing, often charging anything from 20 to 60 percent less for the same product. They can take a loss on their products because they are being subsidized by their government, Wellborn said.
“China will continue to grow and undersell until they have decimated the industry,” Wellborn said.
Commerce determines amount of duties, the ITC will determine injury and severe threat to the industry. A final decision at the ITC is expected late March.
AKCA argued against the idea that there’s a different market the import distributors created. “That’s not true, it’s head-to-head,” Wellborn said.
“All we’re asking is that the field be level. Our company is 60 years old. China comes in so low, it’s not competition. (If nothing is done) we’ll go the way of the domestic textile and furniture industry.”
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