Some view effort as war against retailers
By Clint Engel -- Furniture Today, November 10, 2003
Atlanta — Potentially catastrophic, absurd, a war against retailers.
That's the early reaction from two of the big retailers fighting the antidumping petition filed by a group of U.S. furniture manufacturers.
A growing number of retailers who sell imports apparently are ready to fight the petition, galvanized by the size of the duties it seeks on wood bedroom furniture from China — starting at 158%. One retailer contended such a move would lead to chaos, bankruptcies and many more lost jobs at retail than would be saved at U.S. factories.
"Our phones have been ringing off the hook with retailers extremely unhappy with the duties being sought," said Jeff Seaman, president and chief executive officer of Rooms To Go and one of the organizers of a retail group that first met in High Point last month to discuss the issue.
"It's absurd," said Seaman, whose company is a big direct importer.
Keith Koenig, another organizer and president of City Furniture, said the steep duties would be catastrophic to retailers and would have "an annihilating effect on all importers."
The retail group has formed a steering committee that met all day last Wednesday with its legal counsel in Atlanta to develop a formal response to the petition filed by the American Furniture Manufacturers Committee for Legal Trade.
In addition to the retail group's early organizers — which include The Bombay Company and Rhodes — Seaman said others, including Havertys, Crate & Barrel and JCPenney, have joined as steering committee members. The National Retail Federation also is backing the group.
In a memo to retailers dated Oct. 30 — the day before the petition was filed — the group outlined its next steps and asked for contributions to cover expenses. Rooms To Go, City, Bombay, Havertys and Rhodes each have kicked in $25,000, the memo said.
Among other things, the retailers are looking to hire a public relations firm; develop a lobbying plan in conjunction with the NRF; establish a "help desk" at the offices of its lawyers, Hunton & Williams, to help retailers respond to U.S. International Trade Commission and Department of Commerce questions; and "select the most appropriate witnesses to testify before the ITC."
Support has been so strong, Seaman said, that "I think we're going to collect more money than Howard Dean."
He declined to speculate on how the duties would affect prices at Rooms To Go, partly because "I don't believe it will go through with these numbers."
But he did say that if the proposed range of duties is enacted, "It's over for China making bedrooms. China will not be competitive anymore. What it will do is drive up the price of bedrooms because it will cut a lot of worldwide capacity."
"The petitioners are really declaring war on the entire retail furniture business," said City Furniture's Keith Koenig. Adding the proposed duties would more than doubles the retail price of furniture, he said.
"It would pretty much render all of those products unsalable and could very well cost City Furniture millions," he said.
Koenig said retailers such as City will have to place orders without knowing how the petition will be decided. He said his company could have $2 million to $3 million in Chinese bedroom furniture in transit at any time, and if any duties are imposed, it would have to put up letters of credit or cash deposits to cover them.
"It would really strain the financial resources of our organization, and probably pretty much every importer there is," he said. "For City Furniture, I'm guessing those duties would be over $10 million in the first three or four months if only the minimum duties were assessed. It would be nothing short of catastrophic."
He said that for every furniture factory job saved, "I'll bet 10 to 20 retail and distribution jobs would be lost."
"What happens is hundreds of retailers would go bankrupt and thousands of jobs would be lost. The industry would be in chaos and we would look like fools to the customers and to the rest of the world," he said.
What's also disconcerting, Koenig said, is that under U.S. trade laws, the duties collected flow to the petitioners. "I'd hate to think that the petitioners are trying to jeopardize the entire industry so that they could gain millions through these duties," he said.
Asked if direct-importing retailers might be looking for alternative sources to China, Koenig and Seaman both said it's too early to make any drastic changes. Koenig said it would take years to replace "our very valuable Chinese factories and the relationships we have with them."
Not all retailers are big importers, and some see the situation differently.
Doug Wolf, president of Bellwood, Pa.-based Wolf Furniture, which hasn't joined the anti-petition effort, said he doesn't import much, partly because Wolf's customers do care where the furniture comes from.
"They still will pay for American goods if presented as a good-quality alternative, and as a retailer, I'm not in favor of anything that lengthens my supply chain and creates a bigger distance between me and customer satisfaction," he said. Imports at the midpriced retailer currently amount to 17% of its product mix, including goods from Canada.
Wolf, an executive committee member of the National Home Furnishings Assn., said NHFA continues to struggle with what position, if any, it should take in the antidumping fight, since its members line up on both sides.
But for Wolf: "Do I think it's right in today's global economy that we invite and support another country (to make and sell furniture) that doesn't have the environmental controls and labor conditions which allow this country to be a major consumer power? No, I don't philosophically support that."
