Between 2002 and 2012, hardwood imports grew by more than 700 percent, owning what some industry executives estimated was, at its peak, nearly 40 percent of the business. Significant jumps in dollar value and market share were made each year.
The dramatic increase in sales of imported hardwood was due largely to the aggressive price tag on goods coming from China. Distribution embraced the imports for the discounted pricing but also, they said, the variety of looks available.
In the 2005 FCW Statistical Report, one industry executive said, "It used to be that pricing trends were driven by the country where the products were sold. Globalization has changed all that, meaning pricing is now more likely to be determined in the country of manufacture.•bCrLf That would foreshadow an impactful trend for hardwood in the years to come.
In 2007, growth was tapered somewhat by an International Trade Commission (ITC) ruling protecting U.S. patents. Importers signed licensing agreements, according to the FCW report in July 21/28, 2008 Statistical Issue, allowing them to resume U.S. import shipments. During that same time, some U.S. manufacturers invested in domestic production and export numbers climbed as well, increasing 15 percent on a square foot basis.
In 2010, imports were posted at $614 million. U.S. manufacturers felt the pricing pressure coming from Chinese imports specifically. On Oct. 21, 2010 (FCW November 1/8, 2010) the Coalition for American Hardwood Parity (CAHP) was formed and petitioned the ITC to impose sanctions against Chinese manufacturers for unfair trade practices. It was the beginning of a long arduous process for both the CAHP and the opposition — the Alliance for Free Choice and Jobs in Flooring (AFCJF) — as they fought for the long term viability of their business formats.
At the core of the investigation was whether or not the growing amount of imported engineered hardwood from China was directly responsible for the decrease in domestic manufacturer sales. Said Jeff Levin, counsel for CAHP, in the Oct. 17-31, 2011 issue of FCW, "The volume of subject imports has had a significant and pronounced adverse impact on the price of product being unfairly traded.•bCrLf
While domestic producers pointed to unfairly priced goods and Chinese government subsidies, the Alliance contended that imported products complement domestic goods and that the downturn in the economy and housing starts were the cause of the decline in sales.
In the end, the ITC found in favor of the petitioners and the Department of Commerce set antidumping (AD) and countervailing (CVD) tariffs on imported Chinese engineered wood. The penalties were lower than initially anticipated with "separate rates,•bCrLf the majority of Chinese imported engineered hardwood, set at 3.31 percent for AD and 1.51 percent for CVD.
Jonathan Train of Swiff-Train, who acted as president of the AFCJF during the proceedings, said that there are things imports offer that domestically manufactured products don't. "This hits the core of our issue with the CAHP. The real reason imports are popular is because they provide more choice and variety to the consumer that U.S. producers have not provided.•bCrLf
While the ITC ruling had some effect on a recent return to U.S. manufacturing, industry executives also said that the failing economy and unemployment numbers have also resulted in U.S. consumers taking a closer look at homeland production and jobs.
Ed Korczak, past director/CEO, NWFA, said, "The ITC investigation maybe didn't do exactly to the extent of what petitioners had hoped as imports are still a significant part of the hardwood business, but it did result in increased U.S. manufacturing. Companies that were importing based on price point were able to bring production to the U.S. Many of our larger manufacturers had been sourcing from China because it was marginally cheaper. They are going to gear up their manufacturing here in the States.•bCrLf
Several mid-sized suppliers ramped up domestic production in 2011 including Mullican, Home Legend and Somerset. In addition, Shaw industries invested in its domestic production several years earlier, showing its commitment to U.S. manufacturing and employment. Scott Sandlin, vice president of hard surfaces division, Shaw, explained, "Vance Bell (CEO) challenged us on domestic product to become the leader in the industry. That's why we purchased facilities here and not overseas. With multimillion dollar investment here and the use of North American temperate forests, we feel that we can accomplish this over time.•bCrLf
Unilin Flooring, a Mohawk Industries company, also committed to domestic production of its hardwood products under the Mohawk, Columbia and Century brands. "Recent investments in our domestic production facilities allowed us to bring home production of specific textures that were previously imported,•bCrLf said Harry Bogner, senior vice president, hardwood.
Exports have remained fairly steady. However, some suppliers have ramped up efforts to export goods and to China in particular.
Anderson opened a company-owned retail outlet in Shanghai in March 2012. Also this year, Mannington purchased Amtico with an eye on global expansion in the vinyl category.