W&WP September 2003

Fighting Back: This Is Just the First Salvo!

By Tom Dossenbach

While attending a big powwow called by organizers of the furniture antidumping petition in Greensboro, NC, last month, I was reminded of the movie "Network," in which Peter Finch utters the famous line, "I'm mad as hell, and I'm not going to take it anymore."

That pretty much sums up the mood of the Aug. 12 meeting attended by 450 fed-up executives and salespeople representing 354 companies that supply products and services to the furniture industry. There were representatives from almost every imaginable sector of the supply chain, from lumber producers to trucking companies. They're "mad as hell" because so much of their business has slipped away as more and more domestic furniture production has shifted overseas.

The meeting, hosted by the American Furniture Manufacturers Committee for Legal Trade, was an opportunity for industry suppliers to learn more firsthand about the antidumping petition that the committee intends to file against Chinese wood bedroom furniture manufacturers this fall. The committee, which now numbers 32 North American furniture firms, alleges that China-made wood bedroom products are illegally being sold here below manufacturing costs.

I must say that I have never seen anything like this in my 39 years in the industry. But as John Bassett III, president and CEO of Vaughan-Bassett Furniture Co., put it, there is more at stake than penalizing importers with duties, "It is about (preserving) jobs!"

What Is Dumping?

Bassett and other spokesmen for the Committee for Legal Trade stated that the definition of dumping is selling a product below cost in another country with the intent of causing injury to a domestic industry, such as the U.S. wood bedroom sector. Such trade activities are deemed illegal and are condemned by the World Trade Organization and its 147 member nations; the United States and China are among its members. It was pointed out that both the United States and China impose antidumping duties against illegally-priced products.

Proving that prices are set below manufacturing costs is difficult to do, especially in China. It was stressed no less than four times during the meeting that because China floats its currency to the U.S. dollar, it is a non-market economy (NME). It was further stated that the United States, the WTO, and China recognize this. As a result, the committee noted that in the case of an NME like China, actual costs and prices are not used in determining whether dumping is occurring. Instead, the use of surrogate countries such as India and the Philippines are used for comparison.

Plea for Support

The theme for the meeting was not one promoting protectionism, but rather asking for the U.S. Commerce Department to enforce antidumping laws that will help create fair trade. With China expected to produce more than 50 percent of all wood bedroom furniture imported into the United States this year, and with the closing of dozens of furniture plants and loss of tens of thousands of jobs in recent years, this issue was clearly close to the hearts of all in attendance.

In addition to explaining the antidumping petition, the committee asked suppliers to support its position and to help pay for the cost of the estimated $1.5 million legal battle to come.

The standing room only crowd interrupted the meeting several times with roaring applause whenever anything patriotic and upbeat was mentioned. The committee's message, that there remains a positive future for the domestic furniture industry, was one that suppliers in the audience obviously wanted to hear.

Bassett received a stirring round of applause when he forcefully quoted the infamous words of President John F. Kennedy, "Ask not what your country can do for you, but what you can do for your country!" Judging by the crowd's reaction, it would seem that the committee could count on a lot of support - financially and otherwise - from the supply community.

What Next?

Joe Dorn of King & Spalding LLP of Washington, DC, the legal counsel for the committee, indicated that more than 51 separate industries have been successful in past antidumping decisions. He said he believes the wood bedroom furniture industry has a better than 50-50 chance of winning its case. He added that temporary duties could be in place as soon as next spring.

Dorn also noted that The Byrd amendment to the antidumping law requires that all collected duties be dispersed to those companies participating in the antidumping petition. Ironically, because many of the 32 furniture firms participating in the petition import products from China, some could be subject to paying duties if the petition effort is successful.

While the committee's petition only concerns wood bedroom furniture, including sub-assemblies and parts from China, it was pointed out that other sectors within the furniture industry could adopt a similar strategy.

Paul Broyhill, former president and CEO of Broyhill Furniture Co. and a committee spokesman, told those attending the meeting that as soon as this petition is underway in the bedroom category, "We must get friends together and start the same thing in dining room and then very shortly thereafter upholstery. This is just the start, we must get momentum and broaden our efforts to include the entire industry."

Bassett said that if the petition is successful, it will go a long way toward leveling the international playing field. In the meantime, he said, American companies should concentrate on investing in the following three key areas to improve their overall competitiveness:

* Equipment and technology

* People, and

* Superior service, including timely (quick) delivery.

I asked many attendees what they thought about the meeting. One supplier of veneer to the industry, who said his company just laid-off 50 percent of its workforce, termed the meeting "a ray of hope." Without exception, the meeting's mood was upbeat and unapologetically patriotic.

It is my great hope that the three points made by Bassett are not lost in the midst of the antidumping hype and that these words will find their way into the corporate boardrooms and CEO offices throughout this industry - including the thousands of supplier companies.

Dumping is wrong and if proven to exist in this case, should be corrected for trade to not only be free, but fair. I agree with Bassett that investments in equipment, people and custom service are the essential ingredients for a vibrant industry that is capable of not only surviving, but also competing globally.

It's good to see the U.S. furniture industry beginning to fight back, but this is just the first salvo in the battle. The three investment strategies mentioned above must be the heavy ammo that brings final victory for you and your company - no matter what woodworking industry sector you represent!

Postscript

If you read this column regularly, you know my feelings about the need to eliminate bottlenecks throughout our plants. There is not much time left. The battle has begun and whether or not you join this petition, you must begin to fight imports with the tools of positive change within your organization - or else.

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