Chinese hanger makers
tagged with stiff tariff
tagged with stiff tariff
A tariff on wire hangers imported from China has gained preliminary approval
from the U.S. Department of Commerce and could add at least 33 percent to the price cleaners pay for hangers.
The department, responding to a petition filed last year by M&B Metal Products, determined that Chinese producers and exporters of wire
hangers have been selling their products at less than fair market value in the
United States. The department has granted an extension in the time the Chinese
producers have to appeal the decision. Final determination by the department is
now scheduled for August 7.
Chinese-made hangers have come to dominate the U.S. market in recent years. From
2006 to 2007, the department noted, wire hanger imports from China increased by
52 percent; hangers imported to the U.S. were valued at an estimated $68.5
million in 2007, the department said.
The influx of Chinese hangers began long before that. In fact, in 2002 M&B joined with several other U.S. hanger manufacturers in petitioning for a
tariff on Chinese hangers, saying that the imports were undercutting the market
for U.S.-based manufacturers, depressing prices and adversely affecting their
businesses.
The International Trade Commission agreed and in 2003 ruled that hangers made in
China “are being imported into the United States in such increased quantities or under
such conditions as to cause market disruption to the domestic producers of like
or directly competitive products.”
However, the Bush Administration disagreed and in April 2003 announced that there would be no tariff on wire hangers imported from China. The administration noted at the time that
domestic producers still had 85 percent of the U.S. wire hanger market and “have the opportunity to adjust to competition from Chinese imports even without
import relief.”
Five years later, M&B is the only surviving producer of hangers in the United States out of the
group that petitioned for relief in 2002.
Last year the company again filed a petition with the Department of Commerce
alleging that imports of steel wire garment hangers from China are being sold
in the United States at less than fair value.
In March, the Department of Commerce concurred and issued a set of tariff
recommendations for various Chinese hanger producers ranging from a minimum of
34 percent for Shanghai Wells Hanger Co. to a high of 221 percent. Within days,
however, the department recalculated the rates, leaving Shanghai Wells at 34
percent while reducing others. The top rate was set at 182 percent, but for
most producers the rate would be set at either 46 or 57 percent.
In 2005, the Commerce Department said, Chinese imports accounted for just over
one billion hangers at a value of $31.4 million, an average of about 3 cents
per hanger. In 2006, 1.77 billion hangers were imported at a value of $45.2
million — about 2.5 cents per hanger.
Imports continued rising in 2007 to 2.7 billion hangers with a value of $68.5
million, again about 2.5 cents per hanger.
When the International Trade Commission first visited the issue in 2002, it
found 405 million hangers were brought in from China in the first nine months
of that year, an annualized rate of about 540 million and about one-fifth the
number imported in 2007.
While a final determination of the tariff is yet to be decided, hanger prices
are on the rise.
In a fact sheet e-mailed to members, the Drycleaning and Laundry Institute said
prices for U.S. steel for hangers had already risen 60 percent in the past
seven months, and are expected to go up another 40 percent before leveling off.
Rising prices for steel and the declining value of the dollar are also
contributors to hanger price increases, DLI noted, adding that the cost of
imported steel has risen even more than for the domestic product.
“Ultimate prices for hangers will be affected by both the cost of steel and the
tariffs,” DLI said.
DLI also noted reports of hanger shortages, primarily, it said, among smaller
distributors who have offered deeply–discounted prices. Other distributors told the DLI that they expect to be able
to meet the needs of their existing customers and will try to service new or
one–time customers as inventories allow.
“There are two factors affecting hanger shortages,” DLI said. “First, the total tariff amount on a large shipment of hangers coming in from
China will have to be paid directly at the dock to U.S. Customs or the hangers
will not be released. This could be a substantial amount of up–front money.
“Second, there is a worldwide shortage of steel, which is the major reason that
steel prices have been climbing significantly. A shortage is a shortage, and
those industries that can afford to pay more will tend to get what they need
and those who can’t afford to pay as much will take the largest brunt of any shortage.”
The plight of cleaners facing higher hanger prices has been brought to the
forefront by many media outlets since the tariff was announced. With headlines
like “Wire prices leave cleaners hanging out to dry,” “Hanger costs belt cleaners,” and “Hangers could be to blame for rising drycleaning prices,” news stories explained that consumers can expect to see the rising costs for
hangers show up on their drycleaning bills.
The New York Post, in its trademark succinct style, headlined a story on hanger
prices: “Hung out to dry.” Interviews with two New York drycleaners and National Cleaners Association
Executive Director Nora Nealis spelled out the problem: hanger prices
immediately went up when the tariff was announced and cleaners are caught in
the dilemma of absorbing the increase or passing it along to customers.
“Right now many cleaners are eating the costs, but at some point we might need to
put out a poster explaining why they are forced to raise their prices,” Nealis told the Post.
In an e-mail sent to cleaners, Nealis recommended that they “take the lemon of a tariff and make lemonade.”
“The scene has most certainly been set for both price increases and serious
initiatives in recycling,” she said. “Capitalize on all the publicity attached to this news story. Begin your
recycling and green campaign. Think about investing in hanger caddies for your customers. Think
about biodegradable poly. Think about promoting your professional wetcleaning
services.”
