Protectionism won't work, isn't needed
By Furniture Today Staff -- Furniture Today, October 6, 2003
A longer version of this letter appears on the Furniture/Today Web site, www.furnituretoday.com
Every attempt at protectionism the U.S. has made since the end of World War I has failed miserably. All business has become globalized today. When the American automobile industry was confronted with imports, it managed to survive. Sure, it had to get meaner and leaner and had to invest heavily to compete, but it survived....
One reason U.S. furniture manufacturers are behind is that they never took importing seriously enough, soon enough. They never invested money in technology designed to modernize their factories or tried to change outdated labor laws in order to be more productive and competitive.
For years I tried to reform the 1938 Fair Labor Standards Act. My reforms would have allowed piece workers to be exempt from the overtime provisions imposed by the Depression-era wage laws....
I have found over and over again, if an employee is on piecework they are twice as productive, plus the company's labor costs are fixed in a way that allows it to survive recessions.
American manufacturing can still be competitive with imports by spending money and reforming our antiquated wage laws. I have had my own upholstery factory, Loren Mitchell, for over 30 years. I've survived five recessions and it's still doing well and making money.
Furniture factories moved from Michigan to North Carolina because of cheaper labor and no unions, and lately they have been moving to Mississippi for the same reasons. Most Mississippi factories are doing well, expanding and building new factories with state-of-the-art equipment.
I first started going to Taiwan and Hong Kong in the late '70s when we were having price wars with Kmart and other importers on the octagonal "stop-sign" dinettes.
I always felt that I should be able to sell furniture as cheaply or cheaper than anybody, and in order to do this I had to find the cheapest source.
As those areas ran out of land and wages started getting too high, the manufacturing business started going to Malaysia, Indonesia, Singapore and other areas building furniture cheaper.
(In recent years, China's leaders) decided to open up a free enterprise zone across from Hong Kong.... The newly created zone in Shenzhen boomed and looked like a mini Hong Kong. Chinese businessmen from Taiwan and Hong Kong started opening factories in China.
It was about this time that I started buying rolltop desks from a factory called Tech Lane in Shenzhen.... The quality was excellent and the price was a third of what we had been paying from Mexico. We made rolltop desks affordable to our Colorado customers and have bought between 70 to 100 containers of rolltop desk every year....
With the success of Shenzhen, (China) started opening other free enterprise areas throughout China, in Xiamen, Shanghai, Beijing, Tianjin, etc. They started closing the communist-run factories, as they mostly lost money unless the government subsidized them.
Today, when we are driving through China, we go past miles and miles of closed communist factories....
The reality of imported furniture is that "the horse is ALREADY out of the barn." Should we put 50% duties on occasional tables, dining room, beds, dinettes, accessories, etc.?
My company buys "American made" whenever we can. Our 18 top-selling bedrooms sets are still made in America, which proves that domestic manufacturers can still be competitive if we really want to. And what about Mexico, Canada and Italy? Our next 15 best-selling bedrooms are coming from Mexico. Ashley built a $20 million plant in Brazil and we're selling that product very well....
I've been going to Asia every year since the late '70 s and I now go twice a year. The Chinese are not dumping bedroom furniture on us. I've personally seen these factories grow from small upstarts to huge modern facilities.
And believe me, they didn't get there by selling below cost — they're making plenty of money on us.
Remember, China has little or no welfare, Social Security, workers' compensation or unemployment insurance. (In Asian culture the family takes care of you if you are unemployed, sick, old, etc.)
Also, no regulatory agencies like OSHA, EPA and EEOC, and very few environmentalists and attorneys suing for sexual harassment, unjust firing and on and on. Most factories have a long line of prospective employees standing outside wanting for a job....
Where do we go from here?
I believe ... China is being falsely accused of "dumping" on the United States, and the Chinese businessmen I've talked to are mad. We should remember that the Chinese are businesspeople and a lot of these same businessmen have factories and business in other Asia countries.
I don't think it's very smart to slap these businessmen in the face with an 82-year-old trade law.... We need to maintain our friendship with China because they're not going away, and it has been a long road getting us to this point....
The bottom line ... (is that) consumers set prices. If they feel imported product is a value, that's where their money goes. If you are not already importing, you're out of business ... period!
Today, there are hundreds (if not thousands) of companies importing furniture to the United States. The 31 companies filing the antidumping petition represent the minority, not the majority thinking on this issue.
Wake up, North Carolina factories, and move into the 21st century of the furniture business....
Reasonable prices, good quality, a wide variety of goods and modern designs explain why Chinese-made furniture has sold like hotcakes in the global market ... not illegal trade practices like dumping!
As for America and the American worker ... they will be just fine. What has always made this country great, and what still makes it great today, is the ability to evolve and lead — first from the farm to the factory, then to service and technology, and now to whatever comes next.
Sure, it's more popular to stand on a soapbox in front of factory workers and tell them what they want to hear. But I would like to remind everyone that many of the same people now screaming "let's protect American jobs" actually started making plans to begin importing or moving their production to China many years ago.
Jake Jabs, American Furniture Warehouse, Englewood, Colo.
