New York, NY, Mar. 1--Crate & Barrel, J.C. Penney Co. Inc., Rooms to Go and more than 60 other retailers say the proposed furniture duty could double prices and turn off customers.
"All this tax will do is create some incredible short-term disruption in the furniture industry," said Michael Veitenheimer, a lawyer for the Furniture Retailers Group, which opposes the tariff.
Veitenheimer says the tax will send furniture shoppers to discounters like Target or Wal-Mart.
Furniture Brands International Inc. and Haverty Furniture Cos. Inc. also oppose the duty, saying they fear it would hurt their existing relationship with Chinese importers.
But supporters of the tax, mostly smaller manufacturers, say cheap Chinese imports are crushing the U.S. bedroom furniture industry and costing tens of thousands of jobs.
On Nov. 1, an industry group filed a petition with the U.S. government seeking anti-dumping duties of between 150 percent and 450 percent. A preliminary decision by the International Trade Administration is expected on April 28.
TOUGH COMPETITION
Chinese furniture has been flooding into the United States for the past three years, largely due to China's expansion of its economic markets and its burgeoning manufacturing industry.
At the same time, employment at U.S. wooden-furniture factories has fallen by more than 30,000, to about 95,200 jobs, according to the Labor Department.
Morgan Keegan analyst Laura Champine estimates that China now produces 40 percent of all wood furniture sold in the U.S.
Champine said a U.S. plant with 200 workers must spend $8 million per year for 2,000 working hours. For the Chinese plant of the same size, the cost would be $230,000 for 3,600 hours.
"We believe Chinese-produced bedroom furniture is coming to the United States whether or not duties are placed on it," Champine wrote in a research note.
Champine said a Chinese duty would only shift demand to other low-cost countries. If it passes -- and she expects it will -- the tariff would hit consumers hard on the wallet and not save jobs, she said.
With a decision just two months away, tensions are heating up.
On Feb 16, Martinsville, Virginia-based Hooker Furniture pulled out of the petition, saying the issue had grown too intense.
"We had no idea how divisive this issue would become," said Chief Executive CEO Paul Toms.
Ethan Allen Interiors, Inc. is also taking a neutral stance on the issue.
Doug Bassett, a vice president at Galax, Virginia-based Vaughn-Bassett Furniture Co., said retailers and manufacturers are pressuring petition supporters.
Bassett heads up the Committee for Legal Trade, the group that filed the petition. Despite the opposition, he said, backing remains strong, with more than 700 dealers signing letters of support.
"There is a very loud minority of dealers who are opposing what we are doing," Bassett said. "For every one opposing us, there's another 10 on our side."
Price hikes, while unpopular for consumers, would simply bring bedroom furniture prices up to where they were in the late 1990s, before the flow of Chinese imports, he said.
"Yes, the cost of Chinese bedroom sets will go up" if the petition succeeds, Bassett said. "But this is a question of whether China is violating the law."
