Chinese Imports vs. Washington Cabinet Manufacturers Turf War

Sep 17, 2019

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Chinese Imports vs. Washington Cabinet Manufacturers Turf War

The U.S. Department of Commerce has imposed countervailing duties on imports of wooden kitchen cabinets and components from China, a move American cabinetmakers hope will stop the loss of market share and keep companies afloat.     

Commerce’s investigation found that Chinese exporters received subsidies ranging from 11 percent to 229 percent. The department said U.S. Customs and Border Protection will collect countervailing duty deposits from cabinet importers.     

A final determination is to be issued Dec. 17, with the U.S. International Trade to issue a final injury determination by Jan. 30, 2020. The original complaint was filed by the American Kitchen Cabinet Alliance, a trade group whose members include Sumner-based Bellmont Cabinet Co. and Canyon Creek Cabinet Co. in Monroe.      

“We are doing it for the sake of the entire industry, more so than for our own benefit,” said Steve Bell, founder and strategic adviser at Bellmont Cabinet. ‘We feel that the entire industry is in jeopardy.” Bellmont, with 330 employees working in a 220,000-square-foot production plant, specializes in European-styled frameless (no front faceplate) custom cabinets. As was the case with many companies supplying the residential market, Bellmont took a hit in the Great Recession; sales were off 50 percent. But Bell said sales are now double what they were pre-recession, and up five-fold from the recession’s trough.      

Despite its position in the higher end of the market, Bell said his company is seeing the impact of Chinese imports of ready-toassemble, flat-pack-shipped cabinet components. Dealers and independent representatives in its network have had to add lower-priced imported cabinet lines. Chinese producers are “definitely in the semi-custom market now,” he added. “Many of their assembly plants set up around the country will do modifications to the components so they can say ‘we’re semi-custom as well.’ They’ve got a lot of color varieties. Frankly their quality is quite good. … When people look at this product and the domestic product and the imported product is 30 percent less, and from the visual they can’t tell the difference, they’re going with the 30 percent less.”     

Bellmont has had to earn its rebound since the recession by adding dealers and products. “Most of the big companies and many of the small companies are simply holding their own, if that,” Bell said. “At the same time, the Chinese-provided companies, the companies that are assembling Chinese components, are up 50 percent or more. It’s ridiculous; their business has skyrocketed, while the domestic market has stayed the same.” Commerce said imports of wooden cabinets and vanities from China were valued at about $4.4 billion in 2018, up from $3.6 billion in 2016. Bell is concerned with what will happen to domestic producers when the next recession hits. “If we don’t do something now, the next time we see a downturn in the economy, we’ll see a lot of very good cabinet companies go out of business. What will be left in the wake is the Chinese owning 50 percent of the business, and it’ll keep on going.”     

The trade action, he added, is “a shot across the bow as an industry.” But that action is opposed by a different segment of the American cabinet trade. The American Coalition of Cabinet Consumers, a trade group representing importers, distributors and assemblers of ready-to-assemble cabinets, said members are filling a market ignored by what it calls the made-to-order cabinet industry. “The idea that major U.S. cabinet companies are significantly impacted by the success of a handful of comparatively small RTA importers representing a modest slice of the overall cabinet industry is entirely disconnected from marketplace realities,” the association says on its website. Proponents of the trade case have themselves used Chinese components, the association adds. “The filing of the trade case by these large U.S. cabinet companies coincides almost exactly with their move to switch sourcing to other countries,” including Vietnam and Mexico, it says. “They are gaming the system, wrapping themselves in the American flag and seeking to monetize anti-China trade fever to their benefit.”     

The result of the trade case, if the duties are upheld, will be lost jobs and higher prices for consumers, it adds. Bell said what’s happening to the cabinet industry now parallels what happened to the American furniture industry, which was “decimated when Chinese imports started taking over. …It was all started by the furniture companies themselves who were looking for advantages in purchasing components. They started buying parts and pieces out of China when China was really just getting going with manufacturing. They went over and taught the Chinese how to build furniture. Then the Chinese finally said ‘We don’t need you anymore, we’ll take it to the consumer ourselves or to the distributors.’” The cabinet industry, he added, “always thought we were somewhat insulated because we’re 3,000 miles away and the American cabinet industry is different from the rest of the world.” But the Chinese “began chipping away at the soft underbelly by shipping flatpack over and setting up, with American owners, distribution centers and assembly plants all over America and started taking away at the bottom of the market, being the low-cost provider.” 

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