Chinese hangers hurt U.S. firms, Commerce Department says
A revised tariff schedule for wire hangers imported from China was adopted last
month by the U.S. Department of Commerce with a final determination expected to
come this month from the U.S. International Trade Commission.
The department determined that Chinese companies were “dumping” hangers in the U.S. market by selling them at less than fair market value, “materially injuring” U.S. hanger manufacturers. The petition seeking protection from the Chinese
imports was filed with the department by M&B Metal Products a year ago.
“The Department of Commerce is committed to ensuring enforcement of antidumping
laws when investigations find unfair foreign pricing, which disadvantages
American workers in the global marketplace,” said David Spooner, assistant secretary for Import Administration.
A tariff of 15.44 percent will be applied to hangers from Shanghai Wells Co.
Ltd. and a rate of 94.06 percent to Shaoxing Metal Companies. Thirteen
exporters qualified for a separate rate of 54.75 percent and all other
exporters received the China-wide rate of 186.98 percent.
The rates announced last month were lower than those proposed last spring for
Shanghai Wells to which the department applied a 34 percent rate in its
original proposal. Shaoxing’s rate is higher than the earlier proposal which was 57 percent
In its investigation, the department found rapidly rising imports of Chinese
hangers in recent years. In 2002, when the Department of Commerce first visited the issue, it found that hangers were being imported into the U.S.
from China at an annualized rate of about 540 million. Chinese imports reached
the one billion mark in 2005 and were at 2.7 billion in 2007.
In other words, Chinese hanger imports increased five-fold from 2002 to 2007.
Those hangers, the department said, were being sold in the U.S. for less than
fair value. While U.S. producers’ shipments had average unit values ranging from $40 to $44 per 1,000 hangers in
the 2004-2006 period, Chinese imports were in the $32 to $33 range.
As imports rose, the domestic hanger industry was in steady decline. Domestic
hanger production fell from 2.2 billion hangers in 2004 to 6.9 million in 2006,
according to figures provided by four hanger makers to Department of Commerce
investigators. In the same period, total U.S. consumption of hangers fell a
relatively smaller amount, from 3.2 billion to 2.9 billion.
Accordingly, U.S. producers’ market share fell from two-thirds in 2005 to just over one-quarter in 2006.
Chinese imports went from 24 percent to 63 percent market share in the same
period.
Although plant closures reduced the production capacity of U.S. hanger
companies, capacity utilization of the remaining facilities declined
dramatically, from 85 percent in 2004 to 46 percent in 2006.
The department tracked closures and consolidation in the industry beginning in
2003 when Cleaners Hanger Corp. filed for bankruptcy and liquidated all of its
assets, some of which were purchased by Laidlaw, M&B, Navisa and United Wire. The following year, U.S. Hanger shut down its
operations while Laidlaw closed plants in Delaware and Baltimore, MD. Over the
next two years, Laidlaw closed plants in Arizona, Ontario, Illinois and
Wisconsin. Shanti purchased the Wisconsin facility from Laidlaw in 2007.
United Wire reduced production and laid off employees in 2005, then closed its
New Jersey plant and discontinued domestic production in 2006 and became a
distributor for Chinese made hangers.
M&B closed its Virginia plant in 2005 and reduced production in 2007, laying off
employees in both cases.
All of this followed the initial appeal of U.S. companies for help from the
government in the wake of rising imports from China. In 2002 M&B, joined by two other then-functioning domestic hanger makers — United Wire and CHC Industries — asked the department for protection from Chinese imports.
At that time they warned the Commerce Department that hangers were being
imported into the United States in such quantities as to “cause market disruption to the domestic hanger industry.”
The trade commission agreed, finding that shipments from China had increased by
more than 800 percent from 1997 to 2001. The commission recommended at that
time a tariff be placed on the Chinese imports.
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.”
The U.S. Customs and Border Protection has been collecting cash deposits based
on the tariff rates pending the final determination this month by the International Trade
Commission. Should the commission rule against the proposal, the deposits will
be refunded.
