Duties often reinvested
Some antidumpers won't comment
By Heath E. Combs -- Furniture Today, April 23, 2007
High Point — Antidumping petitioners mostly report reinvesting monies paid to them via the U.S. government last year back into their companies in the form of capital expenditures.
In 2006, 22 companies received payments ranging from $5.4 million to $36,899. None of the companies contacted by Furniture/Today reported any net gain in jobs.
Stanley Furniture, the largest recipient of disbursements, received $5.4 million, or about 25% of the total distributed. The company listed a net of $4.4 million in income from the duties in its 2006 annual report.
"We view the receipt of CDSOA (Continued Dumping and Subsidy Offset Act) funds the same as any other cash flows that come into the business," said Stanley CEO Jeff Scheffer in a statement released to Furniture/Today. "We first look to reinvest in our people, processes and four manufacturing facilities, allowing us to improve our value proposition and keep it compelling, relevant and increasingly different than our competition and to grow our business."
Those reinvestments include $60 million in capital expenditures during the past 10 years, he said, adding that excess cash flow is typically returned to shareholders in the form of share repurchases and to a lesser extent in cash dividends.
According to the company's 2006 annual report, Stanley has recorded about $13.1 million in capital expenditures since 2002, with about $4.2 million in capital expenditures in 2006. The report also said the company increased the amount of furniture it imported last year to 34% from 32% in 2005.
Of the 11 petitioners asked to comment for this story, three of the top five recipients of duty money responded. Only one, Vaughan-Bassett, granted a personal interview to Furniture/Today, discussing in detail how the money is being spent.
The other two highest disbursement recipients, Bassett and American of Martinsville, did not respond to interview requests. Among other petitioners contacted, Stickley and Vermont Quality Wood Products/Vermont Tubbs also did not respond.
At Vaughan-Bassett, which received $3.8 million, those monies are going into capital expenditures, according to Doug Bassett, executive vice president of sales and marketing.
"Over the past 10 years, we've always spent about three times the furniture industry average on capital improvements and capital expenditures. We'll continue to do that in the future," Bassett said.
Last year, the company spent $5 million on expanding its quick-delivery program, Bassett said. Bassett said spending also takes the form of plant or warehouse expansions, expanding lumber yards and adding new computerized routers or other equipment. Bassett said he strongly believes the reason Vaughan-Bassett has survived is that it has spent "tens of millions of dollars on the finest equipment in the world."
The company currently has over 1,000 employees, he said, but has lost about 500 employees since 2004. During that time, it closed its Sumter, S.C., facility and Atkins, Va., facilities that supported the Virginia House and V-B Williams brands.
But under the Vaughan-Bassett wooden bedroom division, he said, the company employs as many or more workers than it did five years ago in Galax and Elkin, Va.
Bassett also denied claims the company imports up to 50% of its line and that it is "just really an importer who's benefiting from the duties." When the antidumping issue emerged in 2002, he said, Vaughan-Bassett imported almost 10% of its line. By last year, that figure had decreased to 4%, he said.
"We cut the percentage of imports in half over the last four years and became even more committed to our domestic programs," Bassett said.
He believes the company's advantage is in taking a less traveled road. Whereas most U.S. sources now are importers that bring in containers, Vaughan-Bassett's domestic facilities allow it to ship U.S.-made product quickly.
"Given how much turmoil there is in the industry, the fact that we're a company in good shape is helping us marry up with even more dealers who are looking for a strong domestic resource," he said. "The dealer base is beginning to realize Vaughan-Bassett is not going anywhere and has a bright future."
Vaughan-Bassett had an "excellent market" in High Point last month, Bassett added, "and we're seeing our orders beginning to outpace orders from the same month a year ago. We think that is very encouraging given the extremely difficult retail environment right now."
The company also continues to pay incentives to workers that allow them to earn up to an extra day's pay during the work week through bonus programs. The company piloted a production bonus program at one of its facilities late last year. Its attendance bonus program has been around for several years, Bassett said, adding that both programs increase efficiency.
"Factories only work if you've got extremely low absenteeism. We need 99% of our people here every day," Bassett said. "It's a great way to get the employees really behind what you're trying to do."
Two La-Z-Boy case goods companies were among the largest dumping money recipients. Kincaid was paid $1.5 million, and Lea received about $903,000. The amounts were the fourth- and eighth-largest distributions to petitioners.
Kathy Liebman, director of investor relations and corporate communications for La-Z-Boy, said the dumping monies are "earmarked for general corporate purposes." Beyond that, Liebman said the company had no further comment on how the money is being spent.
In a statement about its fiscal 2007 third-quarter results, La-Z-Boy said the $3.4 million it received in antidumping duties offset a net loss of $7.8 million for the quarter.
La-Z-Boy, which sold American of Martinsville in July 2006, did not clarify how that company's $1.4 million duty disbursement was used.
La-Z-Boy's plant in North Wilkesboro, N.C., continues to produce bedroom furniture, but the bulk of its case goods lines are now sourced offshore.
Bassett Furniture reported its duty disbursement, $1.54 million, as a part of 2006 earnings. Sales at Bassett continue to lean more on imported product and the company continues to close domestic plants.
Last year, in its annual report, Bassett reported 44% of wholesale sales as coming from imports, compared to 34% in 2005.
Bassett's most recent closure announcement on March 5 for its 323,000-square-foot facility in Bassett, Va., eliminates 280 employees or 15% of its current workforce. The company plans to source the majority of product that was made there from overseas suppliers.
Bassett has said it will continue to produce certain custom bedroom products domestically. The closing leaves Bassett with about 1,500 employees and one domestic wood furniture plant, one upholstery plant and one supply plant.
