Indiana ironing-board factory faces stiff competition from Chinese companies

By Peter Whoriskey
Washington Post Staff Writer
Tuesday, June 22, 2010; A01

SEYMOUR, IND. -- There is one factory left in the United States that manufactures the basic ironing board, and its survival against Chinese competition demands unrelenting, production-line hustle.

The 200 people at the plant in this small town make their boards very, very cheaply and as fast as 720 in an hour. In three low-slung buildings without air conditioning, coils of cold-rolled steel are cut, welded, riveted and boxed, then loaded onto the Wal-Mart and Target trucks backed up to the loading dock. Paid with piece-rate incentives, workers emerge weary at shift's end.

"The people on the line are making pretty good money; it can work out to about $15 an hour," said Dave Waskom, 61, a tool and die maker who readied the plant's machinery for 37 years. "But they work like dogs."

Yet loyalty and hard work are not enough.

The company survives in part because it convinced U.S. trade officials that Chinese firms were unfairly dumping ironing boards into the United States at less than fair-market value; in response, the United States levied anti-dumping taxes of 70 to more than 150 percent on its Chinese rivals.

Now, it looks as if the company might get more help: China, under pressure from the United States, has agreed to allow its currency to appreciate against the dollar, a move that would make Chinese ironing boards more expensive for U.S. consumers.

For now, it is the tariff that gives the plant here, a division of Chicago-based Home Products International, its biggest advantage in selling to Wal-Mart, Target, Kmart and other companies.

But imposing tariffs on foreign goods also elicits loud protests, and not just from the foreign manufacturers who face the burden. Some U.S. retailers say that the tariffs have given the American factory, long the market leader in the United States, a near monopoly on ironing boards. And economists say that the tariffs push up prices for American consumers, who buy an estimated 7 million ironing boards each year.

Even so, there is little doubt in Seymour, home town to singer John Mellencamp and an inspiration for his song "Small Town," that the tariffs saved 200 jobs and leveled a playing field that had been tilted in favor of foreign factories.

Over sweet tea at the local Steak 'n Shake, Jan Engel, 47, a materials manager at the plant, said that without the tariffs, "we would not be here."

Top executives at Home Products International declined to comment.

Daunting challenges

As representatives of the world's largest economies prepare to tackle trade imbalance issues at the G20 summit in Toronto this weekend, exactly how the United States should handle the crush of imports is a matter of urgent debate in many places in the country where manufacturing has anchored the economy.

Under the pressures of globalization, the number of manufacturing jobs in the United States has been shrinking for decades, from 19.5 million in 1979 to 11.6 million this year, a decline of 40 percent.

The Obama administration has said it wants to create and maintain high-paying manufacturing jobs.

But the story of the Seymour plant shows how daunting the challenges are.

Since the '70s, some employees remember, the factory has been continually threatened by low-cost production: first in the South, then Japan, then Mexico.

Over time, workers and managers got used to finding ways to take another penny out of the cost of making the traditional metal-topped, folding ironing board, which in its most basic form can be built for about $7. In 2000, about 400 people worked at the plant; now there are about 200 employees, a downsizing that at least in part reflects the company's ability to streamline costs.

But the competition with China grew more intense.

One warning shot came when Target began importing ironing boards from China. In 2002 a major U.S. competitor, Whitney Design, shut down production in St. Louis and began to import ironing boards. The Seymour plant was the last U.S. manufacturer standing.

In 2008, the company announced a plan to partner with a factory in China. That plan was scuttled after exchange rates fluctuated and other challenges emerged.

Still, the price pressures were unrelenting.

Tom Melton, who retired last year as manager of manufacturing at the Seymour operation, said that with the rise of the Chinese imports about 10 years ago he began to have grave doubts about the plant's future. Executives in Chicago kept asking that the Seymour plant cut costs because of Chinese imports, once noting that their overseas rivals were cutting their prices by as much as $2 off a $7 board.

"I thought, 'If this keeps up, we're not going to be here much longer,' " Melton said.

Melton and other managers would figure out ways of better organizing the work. The workers would try to work faster or more efficiently.

"We always said you have to have a little bit of Kentucky in you, to work in the plant," said Melton, meaning that a person had to be scrappy. He remembers his first day on the line in 1972 when the shift supervisor welcomed him as "fresh meat."

"There's something about the place -- you either make it there, or you don't," he said.

The company used some automation to cut labor costs, but there is little fancy equipment involved.

"It wasn't super-sophisticated stuff," Melton said. "A lot of it was American ingenuity."

Fraud accusations

Between 2001 and 2003, the number of ironing boards coming in to the United States from China quadrupled, according to the U.S. International Trade Commission.

It looked as if cutting costs wasn't enough.

So in June 2003, Home Products International filed a petition with the ITC, alleging that some Chinese manufacturers were dumping ironing boards into the United States at less than fair-market value. The company wanted the United States to levy tariffs on ironing board imports.

In deciding such cases, the U.S. Commerce Department tries to determine whether a foreign company is selling products below cost. This is difficult to do in China, which is not a market economy, so officials chose to calculate costs in China based on those in India.

After the initial investigation, the United States imposed tariffs of as much as 157 percent on some Chinese firms, but one of the major Chinese manufacturers eluded any significant sanctions.

HPI alleged that the company had submitted fraudulent data to U.S. officials. After further investigation, U.S. officials said the Chinese company's information was "unreliable and incomplete."

Eventually, almost all of the Chinese competition was covered by significant tariffs.

"The domestic industry has been helped" by the tariffs, HPI lawyers said in a May legal filing.

But although HPI has been successful in having tariffs placed, their opponents say that the legal strategy could backfire.

"HPI is ticking off their customers," said William Perry, a Seattle-based lawyer who represents some importers and the Chinese manufacturer accused of submitting false records. "They have their hands around their throats saying, 'Buy from us.' "

Perry did not represent the Chinese company when it submitted the documentation that is being questioned. But he suggested that the artificiality built into the tariff investigative process -- calculating costs in one country based on those in another -- invites abuse.

"It's voodoo economics," Perry said. U.S. officials "construct a cost based on prices in India which has no reality in China at all. They're creating a game . . . and the problem with the game is that everyone is going to play it."

He also said that pursuing tariffs might only be a short-term strategy for American manufacturers. Production could shift to other low-cost countries.

Some economists have also questioned whether such tariffs amount to good U.S. policy.

"It doesn't make much sense to force millions of U.S. consumers to pay higher prices for ironing boards to save 200 jobs," said Howard Rosen, an economist at the Peterson Institute who has organized efforts to get retraining programs for workers displaced by the offshoring of jobs. "It would make more sense to help workers move to other jobs."

But the workers in Seymour don't buy the argument that keeping out cheap Chinese products hurts U.S. consumers.

"American consumers don't benefit from the Chinese prices -- they certainly don't if they don't have a job," said Terry Roll, 52, the day shift supervisor. "They need to do something to save jobs."

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