One of our men on the ground in China left a message on my cell phone Sunday night, “Lisa I have to discuss a US import issue with you.” Hmm I thought, it seemed a little dire. I wondered what this was going to be about. I awoke to an urgent email, “As you know, there is a large spring company called L&P (as in Leggett & Platt) ¦they are prosecuting spring factories which are located in China, South Africa and Vietnam. I hope we can get more information about anti-dumping duty etc. from you ¦please come back to me as soon as you can.”
Sure enough, a quick Google search yielded a couple of mentions. Apparently the situation is as follows, according to Bed Times (I didn’t name it that trust me) Leggett & Platt filed an anti-dumping petition on December 31. In their petition they took a broad swipe at covering a range of innerspring products requesting, “that the term “uncovered innersprings” include both pocketed and non-pocketed innerspring units.” The petition goes on by suggesting the material harm incurred by the US innerspring industry is significant as the anti-dumping duties to be collected on these imports must be large enough to “offset the amount of the dumping, which the petition alleges can exceed 100%.”
L&P has pulled out all of the public relations stops. They are claiming that the US innerspring industry has been harmed. The sad news is that the USITC (US International Trade Commission) voted on Friday of last week to hear the case.
Innersprings by way of reference are made of steel wire. I have a few photos but didn’t manage to upload them properly so that will have to wait until our next post.
Now to disclose my background, our firm, Aptium Global worked with a US mattress manufacturer on a China import project for mattress innersprings. We were paid by the US mattress manufacturer for our services. We are no longer involved in this project or taking any fees for having worked on this project.
I believe this anti-dumping case is totally and completely without merit.
First, ask yourself how could three countries, China, South Africa and Vietnam all be dumping at the same time? Doesn’t that alone indicate that the US market is woefully uncompetitive if imports are coming in from three separate countries?
Second, the US innerspring market is fairly concentrated ¦meaning a small handful of suppliers have the lion’s share of the entire US market. One of these suppliers is Leggett & Platt. Are they not just interested in saving their oligopoly? Furthermore, in my opinion, and according to what I have heard from those in the US mattress industry, L&P’s quality leaves a little to be desired. It’s no wonder then that imports have eaten into their market share.
Third, and let me share some of our sourcing strategies with you on this category. These sources of supply are able to offer their products more competitively for a number of reasons including the fact that there is still a good deal of labor content in every innerspring. In addition, the price for steel wire is not the same throughout the world. Companies have been trading semi-finished metal products globally for centuries because of price arbitrage opportunities. So it is not surprising that other countries can offer innersprings more competitively on the basis of both the raw material costs and the labor.
Last, with limited competition on the domestic front, US producers are able to charge a premium for their innersprings. Now who wouldn’t fight for that?
Watch this space for updates on this story.