Duties on Chinese goods help other Asian sources
Jay McIntosh -- Furniture Today, November 5, 2010
HIGH POINT - U.S. antidumping duties on Chinese wood bedroom furniture do appear to have helped some furniture factory workers - in Vietnam, Malaysia and Indonesia.
Those nations have taken over much of the bedroom production for the U.S. market, which China had dominated until three years ago. Last year for the first time, Vietnam topped China as the largest source country for imported wood bedroom furniture.
Production might have shifted to Vietnam over time anyway, since that country has lower labor costs than China. But the U.S. duties gave Chinese and Taiwanese manufacturers an added incentive to open bedroom plants and ramp up production in Vietnam and elsewhere in Asia.
China does remain a key player in the category, accounting for nearly 28% of all U.S. wood bedroom imports in 2009, while Vietnam's share was about 30%.
Meanwhile, U.S. wood furniture production has steadily declined in the antidumping era. It's down 48.2% since 2004, the year the first duties were imposed.
While much of the U.S. decline can be blamed on the recession, the domestic market share also has continued to erode. U.S. plants supplied 41% of all wood household furniture sold in the United States in 2004, but by 2009 their share had slipped to just under 32%.
The trend is continuing this year, with domestic wood furniture production down 1.2% in the first quarter and imports rising 7.2% from the same period a year earlier, according to government reports.
It's impossible to know whether the antidumping duties would have helped American manufacturers compete in better times - or whether the duties have kept the U.S. plants from losing even more market share than they did.
Without the recession, more U.S. plants likely would have stayed open. But with the onslaught of imports and then the economic downturn in the past decade, the nation has now lost many of its big, middle-market bedroom furniture producers. Among those that are still in business, many have converted their former factories into warehouses for imports.
Hardwood Review, a Charlotte, N.C.-based trade publication, has tracked reports of U.S. furniture plant closures and layoffs since 2000. Excluding contract furniture producers, 323 plants have closed and the industry has lost nearly 49,000 jobs.
Industry analyst Jerry Epperson of Mann, Armistead & Epperson in Richmond, Va., has studied the production and import numbers for years. He said that if the intention of the antidumping duties on Chinese furniture was to let American manufacturers compete against imports, they haven't worked.
"I don't think the overall impact of Asia as a source for bedroom was affected," he said.
What the duties have done is shifted the U.S. buying to those Chinese factories that have a low duty rate, in some cases as low as zero, and to plants in Vietnam and to a lesser extent Malaysia, Epperson said.
Canada also has been affected by the shift to Asian production, and has faced a double-whammy because of the strength of the Canadian dollar, he added. In recent years China has kept its currency, the renminbi or yuan, pegged to the U.S. dollar, although it recently has allowed the yuan to float to a limited extent. As the Canadian dollar has strengthened against the U.S. greenback, Chinese furniture has gotten that much cheaper in Canada.
One reflection of the currency situation, and the decline in Canadian manufacturing, is that U.S. imports of Canadian wood bedroom furniture fell 75% between 2004 and 2009.
Among U.S. and Canadian bedroom resources that have shifted all or significant portions of their bedroom sourcing from China to Vietnam are Magnussen Home, Aspenhome, SLF and Klaussner Home Furnishings. Others including Largo International, TM International and HomElegance also have moved significant portions of their bedroom purchases from China to Vietnam and Malaysia to avoid antidumping duties.
When it started a youth bedroom line in 2007, case goods resource Ligo Products immediately looked to Vietnam. Today it sources youth bedroom and some casual dining from five factories there.
"We hooked up with a designer who had done some work in Vietnam," said Dan Angus, senior vice president of sales and marketing at Ligo. "Vietnam is using competitively priced woods, their labor is priced competitively and we are getting continuity in delivery ... and are pleased with our product."
Case goods resource Hekman also has shifted much of its bedroom sourcing, said company President Dan Masters.
"Over the last two years, the bulk of our bedroom business has moved to Vietnam," he said. "It is primarily duty-related.
We are always chasing lower costs."
Associate editor Thomas Russell contributed to this report.
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