China, Feds Take Industry to the ‘Cleaners’

Consumers are already paying high prices for gas, oil, dairy and bakery products; now, they'll have to pay higher prices at the drycleaners as well.  Who’s to blame for the price hike?  In a news release  today, the folks at the National Cleaners Association place the blame squarely on China, assisted by a slow-to-act U.S. Government.

Background

Circumstances leading up to the recent price hike began a number of years ago with a lawsuit filed by several domestic hanger manufacturing companies, according to the NCA.  They claimed that China was dumping wire hangers on the U.S. market at below production cost pricing in an effort to drive the American manufacturers out of business.  While the U.S. manufacturers technically won their argument, a tariff was never imposed, the practice of dumping continued, and another American manufacturing industry became virtually extinct.

On July 31, 2007, the one remaining U.S. manufacturer, M&B Metal Products, filed a petition with the DOC on the import of hangers from China. On October 5, 2007, the International Trade Commission issued its affirmative preliminary determination and on March 20, 2008, made a final decision -- ruling that hangers from China were being dumped on the U.S. market -- and imposed an immediate large tariff.

Unfortunately, the move came too late to protect most American manufacturers, as the untoward delay in imposing the tariff resulted in all but one U.S. manufacturer closing their doors and opened the door for Chinese hanger manufacturers to capture the vast majority of the U.S. market for hangers.

Within 24 hours of the announcement of a tariff, U.S. cleaners saw hanger prices jump 50 to 100 percent across the nation.

"While they are reluctant to do so, cleaners nationwide are working on such slim margins that they will have to increase prices to consumers if they want to stay in business,” said Nora Nealis, NCA executive director.  “Our hope is that it ends here, but unfortunately we cannot predict what is going to happen next."

Additional information on the DOC rulings can be found on the DOC International Trade Administration web site.

-- Bob McCarty Writes