Retailers: Too soon to predict price effects
By Clint Engel -- Furniture Today, July 12, 2004
High Point — Some of the biggest U.S. furniture retailers say there are too many variables to predict how the ruling on antidumping will affect retail pricing and sourcing.
Several call the ruling an early victory for stores and their customers, with preliminary duties of 11% or less on the majority of imported Chinese bedroom furniture.
Jeff Seaman, CEO of Seffner, Fla.-based Rooms To Go and a leader in the Furniture Retailers of America group that opposed the antidumping petition, couldn't say for sure yet whether the store will have to raise prices. But he predicted the duties, if they stick, will have little if any "noticeable effect" on the consumer.
"Because so many manufacturers and importers were fearful of the China ruling, a lot of production has been set up in other countries," Seaman said. "Add all this new capacity to the Chinese capacity, and I think the bedroom market is going to remain extremely competitive, whether there are 10% duties or not."
That's one reason he's not sure RTG will have to raise prices even modestly. He added that the company has always been diverse in its sourcing, with less than half of its bedroom furniture coming from China — and none of it from the factories hit with the 198.08% all-China rate.
Clancy Ridley, chairman of Atlanta-based Havertys and another opponent of the petition, said the preliminary ruling is "a first-stage victory for the American furniture retailers and their customers."
He added that Havertys doesn't believe the preliminary duties "will have any material affect on our strategic sourcing plans, our retail price points, our gross margins or our supply chain planning.
"We still have alternative sourcing plans," he added, "but the extent to which we may need to implement them remains under study."
Ridley wouldn't comment on how much business, if any, Havertys is doing with suppliers that received the exorbitant all-China rate, except to say that most of Havertys' Chinese goods come from the seven mandatory respondents that received rates from 4.9% to 24.34%, or the 82 Section A companies facing a 10.92% duty.
Erik Autor, vice president and international trade counsel for the National Retail Federation, believes the ruling has to be a disappointment to the petitioners because the preliminary margins for most Chinese production are much lower than the 150% to 440% range cited in the petition.
"I think the lower margins found here are indicative that there's a lot more going on that's hurting this industry than just imports from China," he said.
But he added that these low rates should not lull opponents of the duties into thinking the fight is over.
"I think (the petitioners) will double their efforts to jack them up for the final determination," Autor said. "I don't think we can kick back and say everything is fine."
Seaman added that he believes the relatively low duties compared to the numbers advanced in the original petition could be "a windfall for the petitioners."
"The duties aren't high enough to choke off production from China, but 10% of a large number is a lot of Byrd money," he said, referring to an amendment to trade law that could funnel all duties to the petitioning domestic producers.
Ten percent of the more than $1 billion in annual Chinese wood bedroom shipments — assuming import levels stay the same — could mean more than $100 million a year in so-called Byrd money.
Some petitioners, meanwhile, have said they're not counting on the money and believe the Byrd rule could be eliminated before they see a penny.
