Antidumping cloud doesn't rain on market's parade: Spring High Point Market traffic returns to near pre-9/11 levels.

Renewed energy and optimism seemed to flow through the crowded halls of the Spring International Home Furnishings Market, despite uncertainty over future pricing of Chinese wood bedroom furniture.

"It's probably the most upbeat market I've seen in three years," said Michael Franks, director of strategic planning and communication for O'Sullivan Furniture.

Industry analyst W.W. "Jerry" Epperson Jr. of the investment firm of Mann, Armistead & Epperson Ltd., noted at the start of the market that there was "almost nothing but good news." The market was showing more new product than Epperson said he had seen at any market since 1998, reflecting the risk-taking that comes with an economic recovery.

Epperson, speaking at a seminar sponsored by the Canadian furniture industry, predicted more good things ahead. Interest rates currently are stable, he said, though he expects them to go up in the second half of the year "We're going to see a nice increase in jobs," he said, adding that it should be a good year for performance bonuses. "Corporate profitability will shock everybody."

Antidumping Petition on Peoples' Minds

The uncertainty over whether tariffs will be levied against Chinese manufacturers for selling wood bedroom furniture in the United States at below cost, hung over the market. The U.S. Department of Commerce, petitioned by the American Furniture Manufacturers Committee for Legal Trade to enact a tariff as a way to equalize competitive conditions and save U.S. manufacturing jobs, recently extended its original April 28 date for making a preliminary decision by 50 days. The International Trade Commission now has until June 17 to decide if there will be a tariff and, if so, how much it will be.

"Let's get the petition out of the way," Epperson said. "This whole thing has gotten out of hand." He noted that large retailers, who buy imports in volume, are angry and fighting the petition. Smaller retailers, who are seeing furniture plants close in their towns, are more apt to say, "'What good will a good price (the consumer's benefit of imports) do if people don't have money to buy it?'" Epperson said.

A group of retailers, organized as the Furniture Retailers of America to fight the antidumping petition, staged a luncheon meeting during the market. They appealed for others to join their cause and asked the standing-room only crowd of 200 in Market Square to write their representatives in Congress and the Secretary of Commerce to oppose the petition.

"The message is very simple. 'Play it straight'," said John Greenwald, an attorney with Hunton & Williams, the Washington law firm representing the Chinese manufacturers. "We are not asking for anything other than to keep polities out of this decision making."

Greenwald called the petition "a fraud" and said the materials cost estimates it cites are incorrect.

Bill Silverman, another Hunton & Williams attorney, described a long, drawn-out process of tariff determination and review. He said his firm stands ready to help retailers fill out ITC questionnaires that they will be sent. He added that retailers opposed to the petition would testify in Washington, DC.

"We want this decided on the facts. If you participate, we'll have a much better shot at that," Silverman skid.

Applause erupted when FRA steering committee member Keith Koenig, chief executive of retailer City Furniture, said the petitioners were not "the brightest of the industry," but rather companies that had not adapted to change. He pointed to Ashley Furniture and Furniture Brands International as two U.S. manufacturers "that have adapted to the global reality and are flourishing" in choosing to offshore some of their products. Retailers overall have prospered through globalization of the home furnishings industry, he said, and consumers have benefited.

Lynn Chipperfield, senior vice president and chief administrative officer for Furniture Brands, and a member of the FRA steering committee said that even with a tariff, "jobs are not going to return to this country." The petitioners, he said, should be focusing on preparing employees to compete in a global economy. He drew applause when he called on the petitioners to demonstrate that they did not want tariff money by pledging "every dime" to retraining employees.

Epperson, who once thought the petition had a "very, very high chance of passing," said he is no longer sure. Jobs are going to be a big issue in the November elections, he said, but the petition is not necessarily targeting the right Chinese manufacturers.

The seven Chinese companies the petition focuses on were the large, influential Chinese companies in 2001, 2002 and early 2003. Since then, Epperson said an even more low-price Chinese furniture manufacturer, Dalien Haefueng, has emerged. The company is not included in the petition. Epperson spoke of a bedroom suite that another Chinese company offered in the United States for $725, only to have one of the petitioners, Vaughan-Bassett, domestically produce something similar for $699. Then, he added, Dalien Haefueng came along and offered it for $410.

"The large Chinese manufacturers are as mad at this company as everybody else," Epperson said.

While the petition is mainly aimed at Chinese suppliers selling to U.S. furniture manufacturers, Epperson said the number of Chinese companies selling directly to U.S. retailers is rapidly growth. Some 210 retailers buy direct from China now, compared to 60 a year ago. That may not seem like so many, he said, but "those 210 are the power players."

Uncertainly about the full implications of a tariff is the reason so many people are upset, Epperson said. Once a tariff is in effect, the petitioners can ask that other companies are investigated, and subsequent tariffs would be retroactive to the time the first tariff went into effect.

FBI's Chipperfield, in his remarks at the FRA meeting, criticized the "distraction" the petition represents. We should be over (in the showrooms) buying furniture. selling furniture."

Healthy Crowd

Even as Chipperfield spoke, many of his colleagues were doing just that. All indications were that market attendance was back to normal, 70,000 to 75,000, following a couple of lean years that reflected the recession and the aftershocks of 9/11.

Though final attendance figures were not yet in, by April 27, Market Authority President Judy Mendenhall said that she had talked to her board, ax ld "everybody seems to feel our numbers are up to a good solid market."

Even two companies that had recently undergone traumatic events were emphasizing positives.

Bush Industries filed for Chapter 11 bankruptcy right before the market, but traffic in the Bush showroom was as hectic as ever, according to Public Relations Coordinator Andrew Dickson. "What I've seen today is pretty much craziness," he said.

Bush emphasized its new home of rice and home entertainment pieces and also additions to its fire assembled Eric Morgan line of home office, entertainment and bedroom furniture. The company expects to emerge from bankruptcy by mid summer, Dickson said, as a private company that will have greater flexibility and access to capital.

At Bernhardt Furniture, the Martha Stewart name still appeared to be gold despite the domestic diva's conviction in an insider trading scandal. Rather than backing off from the Stewart connection, Bernhardt added 36 new case goods to "Lily Pond," one of three collections in the Martha Stewart Signature Furniture line, and it is already working on product for 2005, said Heather Bloom, director of brand development for Bernhardt. The company also added 31 new upholstered pieces.

The massive Martha Stewart line, which has 322 SKUs in all, racked up double digit sales increases the last six months, Bloom said. Taking a guess at the reasons, she said Stewart fans might be showing support by buying furniture and that it is a strong product. Once consumers find a product, they like, they tend to stay with it, she said.

"It is doing very, very well. We're so pleased," she said.

Editor's note: Wood & Wood Products will present a report on High Point market trends and major furniture introductions next month.