U.S. starts anti-dumping probe of wooden cabinets imported from China

WASHINGTON (Reuters) – The U.S. Commerce Department said on Wednesday it had initiated an anti-dumping duty and countervailing duty investigation of wooden cabinets and vanities imported from China to determine whether they are being dumped on the U.S. market.

The action was taken based on petitions filed by the American Kitchen Cabinet Alliance on March 6. The alleged dumping margins range from 177.36 percent to 262.18 percent, the department said.

(Reporting by David Alexander; Editing by Mohammad Zargham)

American Kitchen Cabinet Makers File Trade Case Against China

Makers of kitchen cabinets and other hardwood assembly pieces found in almost every American home filed a lawsuit against their Chinese competitors on Wednesday, asking the International Trade Commission to impose anti-dumping barriers and tariffs on China.

The roughly $10 billion industry says it is slowly being wiped out by China companies like Panda Kitchen and Golden Home, based on a petition filed with the Department of Commerce today by the American Kitchen Cabinet Alliance (AKCA).

The move comes at a time when Washington is busy fighting a trade war with China and issues surrounding fair trade practices threaten to undermine a trade deal.

“The United States has lost much of its furniture and textile industries, and China is now targeting American kitchen cabinets in the same way,” says Mark A. Trexler, president and CEO of Master Woodcraft Cabinetry in Texas. “China’s illegal trade practices like dumping and subsidies are hurting American workers and consumers, and today’s filing is the first step in standing up to China.”

AKCA was created this year, likely for the purpose of going after China. Their China trade case is one of the largest ever filed with the International Trade Commission.

They claim that a careful review of the industry will show the market impact from steadily rising lower-cost imports from China.

One major demand driver for wooden cabinets and vanities is new residential construction, which can be measured using housing starts data from the U.S. Census Bureau. This data shows that the number of housing units completed in the U.S. rose 12.5% from 2016 to 2018. Census also regularly measures monthly sales for retail services, including a category for building materials and supplies dealers, which is understood in the industry to be a measure of demand in the replace and remodel segment of the wooden cabinets and vanities market. By this measure, U.S. manufacturers seek to show how demand for their products has grown while financial performance is declining. They’re blaming China.

Early this year, Missouri company Woodpro Cabinetry announced that it was forced to close a facility after manufacturing wooden cabinets and vanities for more than 40 years. Custom Wood Products, a Roanoke, Virginia-based cabinet manufacturer, declared bankruptcy in January.

One of the largest producers of wooden cabinets and vanities, the publicly traded Masco Corp., recently announced its intention to “explore strategic alternatives” to its $1.1 billion cabinetry business, with some saying they may move some production overseas.

Masco seems to be doing well, regardless.

For 2018, their cabinetry products, windows and specialty products line reported $1.7 billion in net sales, $120 million in operating profit and $161 million in adjusted EBITDA. Their stock is up over 30% this year.

AKCA estimates that their members only lost around $116 million over a two-year period between 2016 and 2018. They say subsidies and lower cost wood from Brazil have helped China. While Chinese companies are also making inroads into the U.S.

Based on the petitioner’s filing with the International Trade Commission today, Chinese producers and exporters sold or offered for sale kitchen cabinet merchandise in the United States at prices below normal value. They calculated dumping margins ranging from 175.5% to 259% with an average margin of 216%.

AKCA wants the U.S. government to initiate an investigation on Made in China wooden cabinetry and vanities, hoping to pressure the Commission to slap anti-dumping charges on them.

The Department of Commerce is required to impose so-called countervailing duties on imported merchandise from a country where producers and exporters of that merchandise benefit from countervailable subsidies. As a nonmarket economy, China has long maintained a complex system of economic programs and policies that have favored certain industries or provided some sort of economic relief to help companies maintain employment and grow market share at home and abroad.

Numerous Chinese companies were mentioned in the filing. It is unclear how those Chinese companies can defend themselves against the dumping allegations at this time.

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Originally posted in Forbes.

(Reporting by Kenneth Rapoza)