Antidumping issue polarizes retailers
Clint Engel -- Furniture Today, November 11, 2010
HIGH POINT - U.S. and Chinese manufacturers of wood bedroom furniture aren't the only ones polarized by the issue of antidumping. Two retailers at Top 100 stores, Jake Jabs and Jim McIngvale, are also on near-opposites ends of the spectrum when it comes to the ultimate effects of the antidumping case.
Jabs, owner of Englewood, Colo.-based American Furniture Warehouse, relishes selling furniture for less than his competitors and making up for low margins with high volume.
He opposes the antidumping duties and says they have done little but hurt consumers and shift production to other countries not yet geared up to produce the kind of quality craftsmanship he was seeing out of China.
McIngvale, owner of Houston-based Gallery Furniture, said he has no opinion on whether the antidumping duties should continue (he said he doesn't know enough about it to comment). But in his own stores, he continues to push for more American-made goods, saying that is what creates jobs. And he endorses anything that raises furniture prices rather than lowers them.
Between the two are varying degrees of opinion. But in general, the bigger the retailer - Top 100 store Gallery is an exception - the more likely it is importing containers of Chinese-made wood bedroom furniture, and thus the more likely it is to be rooting for an end to the duties.
Jabs said the antidumping duties haven't done what some had hoped - bolster American producers and preserve jobs, which have been lost to low-priced overseas competition. He looks no further than AFW's owns bedroom lineup to illustrate that point.
"Before antidumping, we were buying 22 bedroom sets out of China, with nice hand carving, big poster beds - really nice groups," he said.
Today AFW is only buying seven Chinese bedrooms - but it is buying 22 from Vietnam (before it was zero), seven from Malaysia (up from about two) and a couple now out of Indonesia. He hasn't shifted buying to U.S. factories. AFW's domestic bedroom slots have remained relatively unchanged in recent years - fluctuating between 20 and 22 groups - said case goods buyer Fran Coleman, and all of it is on the promotional end of the price spectrum. "The look just wasn't there," he said.
"For these (antidumping duty proponents) to think they can stop globalization - they can't," Jabs said. "It's a global world today. You need to wake up."
He also said the duties have hurt the consumer. Not only are they paying more for Chinese goods, they are only now - more than five years after the government started collecting duties - starting to get the quality and style out of Vietnam and other countries that AFW was accustomed to getting from its Chinese sources.
"We're trying to find nicer goods, and Vietnam is starting to make some of the nicer goods, but it really wasn't as geared up to do all of the hand carving. What we lost is some of the really nice bedroom sets. We still lament that. The American people are the one that got hurt," said Jabs.
McIngvale, meanwhile, said the American people are hurting in a different way because the country is losing manufacturing jobs. For some time now, he has been on a mission to buy and promote domestically produced goods for reasons that are part business, part patriotism. American-made good create jobs, the inventory is easier to turn, and it's a great story, he said. Consumers are interested in what he called artisanal items like hand-crafted goods from U.S. suppliers.
Gallery does sell Asian-made goods, however, and he concedes that the antidumping duties have contributed to shifts in sourcing and flow disruptions. But when asked if it has led to increased furniture prices or if that $599 bedroom is still the same value it was before antidumping, McIngvale is clear on where he's coming from.
"I don't want to be in the $599 bedroom business," he said. "Anything that raises the price, I'm all for it. The problem with the furniture industry is costs go up, up, up, prices are going down, and that's a death spiral.
"We used to sell $8,000 bedrooms all the time," he said. Now the only way Gallery gets $8,000 for a bedroom is when it includes a $4,000 Tempur-Pedic mattress, and he points out that the mattress is made in America.
Oscar Miskelly, a partner in Jackson, Miss.-based Miskelly Furniture, said U.S. consumers have suffered as a result of antidumping. Some of Miskelly's suppliers have received duties as high at 20%.
Add to that the labor issues China is facing and, "We've seen anywhere from 5% to as much as 40% increases from various manufacturers, so it's definitely had an impact," he said. With the largest increases, sales generally will slow down to the point that the goods are no longer productive and are dropped.
Several retailers said the duties and the labor issues have led to supply chain interruptions. Suppliers at times are unsure about whether their Chinese partners will be able to produce the goods competitively and profitably, given the looming possibility of duties, Miskelly said.
Vendors have shifted sourcing to other countries, but there are lags in receiving the goods and sometimes the styles can't be duplicated.
Meanwhile, neither Miskelly nor Jabs believe consumers see any correlation between duties and the pricing and style changes on retail floors.
And the goods that do survive on the floor usually are those least affected. When what used to be a $1,299 bedroom has edged up to $1,399, it's not the kind of thing a customer balks at, Miskelly said, because they're not shopping furniture often enough to notice.
However, at the promotional end, some of the domestic print groups from companies such as Ashley and Standard - which lost some appeal with the rise of Chinese wood bedroom - may be a little more competitive today than they were before antidumping duties kicked in, he said. And an American-made sales pitch can help sway consumers to those groups.
"Sometime it's a tie-breaker if two items are close in price," Miskelly said.
Eric Easter, president and CEO of Indianapolis-based Kittle's, believes antidumping has been an overall negative for the industry, but he doesn't believe retailers have had to downgrade quality in order to hit the same price point - say $599 - that it was selling before duties were enforced.
"I'm sure there's additional cost in there, but if
see Retailers, next page
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Why antidumping duties stand
Jan 7, 2011 -
Duties on Chinese goods help other Asian sources
Nov 5, 2010 -
Antidumping revisited
Oct 4, 2010
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