Furniture Makers Feel Hammered by Imports
After more than two decades of making furniture in California, Mark Popel began moving some of his operations overseas two years ago.
The shift started out small. But now, every month, a 40-foot container from China arrives at Popel’s warehouse in South El Monte. It’s usually loaded with 16 bedroom sets -- about 10% of his company’s monthly production.
Popel said he wished he didn’t have to import. But squeezed by foreign competition and escalating business costs, he figures he’ll boost imports from China to 25%. He calls it “a necessary evil.”
“It’s got its big headaches,” said Popel, the owner of Creative Elegance. “But we’re doing everything we can here to stay competitive.”
The trickle of furniture manufactured in China has become a flood in the last two years, so much so that an industry coalition announced plans this week to file an anti-dumping petition seeking protection by the U.S. government.
The 15-member group, called the American Furniture Manufacturers Committee for Legal Trade, said the domestic wood bedroom furniture industry has been badly hurt by unfair pricing of Chinese-made furniture. If the U.S. International Trade Commission agrees, the agency could impose an anti-dumping duty on those imports.
John Sandberg, president of Los Angeles-based Sandberg Furniture Manufacturing, one of two California members of the coalition, estimated that his company had lost about 20% of its business to the influx of foreign products. The 85-year-old company has laid off 75 employees, or about 15% of its workforce, in the last two years.
“I wish I could blame the economy, but I can’t,” Sandberg said. “I look at these numbers and it’s mostly due to imports.”
Like other U.S. furniture makers, Sandberg has tried to beat the competition with faster service and more efficient construction. But he said that was not enough. “You can’t compete against them in price.”
Nationwide, the wood-furniture manufacturing industry has lost 34,700, or 27%, of its jobs since 2000, according to the Bureau of Labor Statistics.
Southern California, a stronghold of furniture making, also has been hard hit. Three years ago, 32,900 people worked in furniture manufacturing in Los Angeles County. Today only 28,600 remain, a 13% drop, said Jack Kyser, chief economist for the Los Angeles County Economic Development Corp. The vast majority of California furniture makers are clustered in South Los Angeles.
“The irony is that you have a renewed interest in furniture and home decorating items coming out of Los Angeles,” Kyser said. “But there is a lot of pressure out there from Asia, because they are very aggressive in developing their economic base.”
In response, the American Furniture Manufacturer’s Assn., another industry trade group, commissioned a Washington law firm to research the effects of foreign trade on domestic manufacturing. “Our study indicated that there is a strong case to be made that China is illegally dumping bedroom furniture into the U.S. market,” said Joe Dorn, an attorney with King & Spalding.
The coalition of furniture makers plans to submit that study with its petition this fall.
Duty orders, though, could apply to U.S. companies -- including those bringing the petition -- that now outsource production or import from China, said Steve Jones, another attorney from King & Spalding. “The companies that are supporting this effort would prefer to manufacture furniture domestically,” Jones said. “They are interested in a level playing field.”
This is the first time wood-furniture manufacturers have lodged an anti-dumping case, Jones said, although last year the trade commission issued an anti-dumping duty on certain metal furniture, including folding tables and chairs. The U.S. currently applies anti-dumping measures against more than 40 Chinese imports, including products such as folding gift boxes and cast iron pipe fittings.
Committee for Legal Trade spokesman John Bassett said efficient U.S. manufacturers can compete with China’s low-cost labor. “But what we are dealing with is a closed economy where the government subsidizes its industry and pegs its currency,” he said. This gives importers with no domestic plants an unfair advantage, Bassett said. “If you were an importer you would love to compete in America, because we just roll over and play dead.”
Popel, the South El Monte manufacturer, estimated that products made in China can sell for as much as 50% below U.S. prices. “Retailers see these prices and they are very alluring,” he said. “It’s kind of like a drug.”
Irwin Allen, president of Lynwood-based furniture manufacturer and coalition member Michels & Co., said the committee’s action is long overdue. Like many, Allen’s company has chosen to supplement its production with resold imports, which now constitute less than 10% of its sales. Allen said he still intends to be a domestic manufacturer. “That is the plan and we are staying the course.”
Other California companies contend that the cost of doing business in California presents its own disadvantage in a domestic industry dominated by Southeastern U.S. manufacturers. Eight of the 15 coalition members are based in the South.
Carson-based Good Cos. moved its manufacturing to Tijuana in 1989 in pursuit of larger facilities and lower labor costs. But in the last two years it has laid off about 800 of nearly 1,400 workers and begun importing nearly 20% of its inventory.
“We have gone from being a bedroom manufacturer to being a bedroom importer,” owner Danny Finegood said. “I’m very much in support of this petition ... but a greater part of the industry has already closed up shop and left.”
