2004/10/18
HIGH POINT, N.C. -- Furniture makers attending the biannual international furniture market are encouraged while retailers are alarmed by the prospect that Washington may soon impose significantly higher import duties on some Chinese furniture.
Some American furniture manufacturers say this would give them needed breathing room from the onslaught of imports and help protect domestic factory jobs. But a coalition of U.S. furniture retailers counters that elevated tariffs will result in supply shortages, delivery problems and higher prices for consumers.
"The ramifications are significant," said Budd Bugatch, an industry analyst with Raymond James and Associates. He was speaking to a meeting of retailers attending the International Home Furnishings Market, which opened its fall session Thursday in High Point.
For the past year, in response to a complaint filed by some American furniture companies, federal officials have been investigating whether Chinese furniture makers are dumping bedroom furniture onto the U.S. market at prices lower than the cost of production. The practice is illegal because it can force competitors out of business.
A coalition of furniture makers led by Vaughan-Bassett Furniture Co., based in Galax, Va., asked for the anti-dumping investigation because it suspected that some Chinese factories were dumping bedroom furniture.
"We as an industry have lost half of our jobs in recent years," said Wyatt Bassett, the company's executive vice president. "So even if the duties won't bring these jobs back, what do we say to the other half of the American workers who continue to lose their jobs? How do we not fight for that other half?"
Earlier this summer, the Commerce Department ruled that dumping was occurring and recommended that Chinese factories begin paying extra import taxes, also called duties. Those preliminary duties averaged about 13 percent. Importers breathed a sigh of relief, saying a tariff that low wouldn't hurt their ability to sell Chinese-made furniture.
In three weeks, the U.S. Commerce Department will issue new duties based on an audit of financial information submitted by the seven largest Chinese bedroom furniture makers, which are being treated as representative of the country's industry.
News that one Chinese company - Tech Lane - failed its audit may mean a higher tariff rate for most wood bedroom furniture imports from China.
"Tech Lane is a serious wild card," Bugatch said. "In almost all scenarios, the (average tariff) rate rises."
By some estimates, the majority of Chinese manufacturers could see their import tariffs double or triple.
Retailers such as Rooms to Go, Crate & Barrel, J.C. Penney and The Bombay Co. say such duties will force consumers to spend more for new furniture and disrupt supply chains as companies shift production from China to other Asian countries such as Malaysia and Vietnam. The ultimate result could be even more competition from overseas manufacturers, furniture sellers said.
"Global competition cannot be addressed with tariffs," said Kenneth Larson, vice president of Minnesota-based Slumberland Inc. "We believe they will have a negative impact on our business and on our industry." |