Govt. review could affect costs

HIGH POINT — Case goods importers are keeping an eye on a U.S. Department of Commerce review of antidumping duties, which could affect the cost of wood bedroom furniture from China.

Importers aren’t planning an exodus from China anytime soon, but are keeping their options open in case duties are raised on their source plants.

“We haven’t made any plans to shift anything,” said Coaster Merchandise Manager Toby Konetzny. “We always have our options — in case we do need to move, we can do it swiftly. We are paying close attention to the matter. … It’s a guessing game and you don’t want to guess wrong.”

Broyhill Furniture President and CEO Harvey Dondero agreed it was too early to make a decision on changes to its sourcing strategy.

“We don’t know what the result is,” he said, adding that antidumping duties “may go down. We have to know more than what we know today.”

But Dondero said the company is poised to switch its sourcing should “the result of the review be a negative for the consumer.” For example, Broyhill has vendor relationships in Vietnam and Malaysia, he said.

By next January, the Department of Commerce is expected to complete its review of the antidumping duties. Duty amounts could be raised, lowered or left the same on individual Chinese companies.

It’s the “raised” possibility that has importers looking at their sourcing. Some have already made changes, partly because of the unknowns associated with the review.

Heirloom Traditions by Global Furniture, an importer of solid-wood bedroom, was sourcing about 70% of its product in northern China last spring and the rest in Indonesia. By fall, it had moved everything to Indonesia.
The shift was triggered by a combination of rising wages and labor shortages in China, as well as the uncertainties with the DOC review, said company President and CEO Jack DeBonis.

“At the end of the day, it was just getting too expensive and too uncertain,” he said. “For us, it just makes sense not to expose ourselves. The margins are slimmer and slimmer, and we don’t have the wherewithal to have a sinking fund for some type of government decision.”

Primo Designs President David Ballard said he recently moved one bedroom group from China to Vietnam. He is giving the factory a try largely because it was aggressive in seeking the business and because he believes the workers in Vietnam will do a good job with the heavily carved group.

But he said the move also was “a little bit of an insurance policy” given the uncertainties of the administrative review.

Others plan to wait things out before making any decisions.

David Beckmann, president of importer Emerald Home Furnishings, said he would move product if necessary, but thinks it is unfair to penalize a factory in the beginning of the review process. He said he has faith his source plants will weather the audit just fine.

“Most of the factories we do business with are profitable and are in the business of selling furniture,” he said. “If the process runs correctly, I don’t expect the duties will go up (on these plants).”

Mark Stubstad, a managing partner in Riversedge Furniture, said his company had shifted product to Vietnam in response to the initial antidumping investigation. Today, roughly half of his bedroom line is from Vietnam and the rest from China.

His goal moving forward is to continue supporting the factories in China, including helping them with legal fees and advice to make sure they are abiding by U.S. rules.

“We are comfortable with them being investigated, and we are comfortable with where the tariffs would fall,” he said.

 Bill Kemp, president of Kemp Enterprises, also expressed confidence that his Chinese manufacturing partners would come through the review process unscathed.

“We are committed to those plants, and I believe those plants we are working with understand the issues they must handle if they get reviewed,” he said.