Wire hangers caught in twists of trade dispute

By Newhouse News Service

In Westfield, N.J., Suho Chae urges customers to return used hangers to his dry cleaning shop. He’s paying $50 for a box of 500 pants hangers, up from $24 six months ago.

In Leeds, Ala., M&B Hangers, the only major hanger maker left in the U.S., has doubled its work force and still can’t keep up with demand.

And in Monticello, Wis., a hanger factory once shuttered because of cheap foreign competition has reopened — an about-face worthy of Alice in Wonderland.

Welcome to the latest chapter in the trade tug of war with China: the wire hanger. The twists and turns of this humble piece of steel illustrate how disputes between trade officials thousands of miles apart can ripple through the global economy all the way to your closet.

The tale goes back almost a decade, when Chinese manufacturers started undercutting U.S. producers with cheaper hangers. M&B joined others in charging that China was unfairly subsidizing its own producers and dumping hangers on the U.S. market.

In 2003, President Bush rejected M&B’s initial case. Chinese imports ballooned — from 774 million hangers in 2004, to 1 billion in 2005, to 1.8 billion in 2006, and 2.7 billion in 2007, worth $68.5 million, according to the International Trade Commission.

Last September, the ITC found domestic producers were unfairly injured, and in March the Commerce Department instructed customs officials to start collecting duties.

That set off a furor in the hanger world. Dry cleaners and uniform providers — the primary users of wire hangers — started stocking up. Wholesale hanger suppliers, most of which got their hangers from China, boosted prices as the duty made costs soar.

A duty, or tariff, is a tax imposed on imports or exports of a certain product. While the importers or exporters pay the tax, they may pass along the cost by increasing the price of the product to wholesalers and/or consumers.

The tariff on Chinese hangers averages 46 percent across several different hanger types, said Mary Scalco, a senior vice president with the Drycleaning and Laundry Institute, an industry trade group. Complicating matters, the price of steel has doubled in eight months.

In the meantime, dry cleaners face dramatically higher costs.

“These Chinese tariffs are killing everyone,” said Derek Samble, division manager at Belmont Laundry in Springfield, Mass., which paid 5 or 6 cents per hanger 18 months ago, 9 cents six months ago, and now pays between 13 and 15 cents. The company uses 6,000 to 7,000 hangers a week for dry cleaning, and 15,000 a week in its uniform rental business, Samble said.