Furniture Jobs Saved by US Foreign-Trade Zones Approvals
The U.S. Foreign-Trade Zones Board approved FTZ manufacturing authority for Lane, H.M. Richards, and Bauhaus USA on December 22, all of which are located within the Greater Mississippi Foreign-Trade Zone #158. This approval will not only enable these companies to maintain their in-house cut-and-sew operations, saving an estimated 950 jobs in Lee County, but will reduce the raw good cost of each company by over $1 million annually.
The scope of manufacturing requested in the applications for the three companies, which were filed in June 2007, is limited to micro-denier suede fabrics that are not produced in the United States. Today, each company imports micro-suede upholstery material in rolled form, and pays customs duty rates that range from 7.2% to 17.2%. Many U.S. upholstery manufacturers import pre-fabricated cut-and-sewn kits, which are cut-and-sewn in the Far East, at a “free” duty rate. With the announcement of FTZ manufacturing authority, Lane, H.M. Richards, and Bauhaus USA will be able to use rolled micro-suede material to produce upholstery covers and finished upholstered furniture that may subsequently be entered into U.S. commerce at the same “free” rate of duty that applies to foreign-sourced pre-fabricated upholstery kits.
The application process was initiated by the Lee County Board of Supervisors in October 2003, with over 40 furniture companies throughout North Mississippi invited to participate. Because the FTZ benefits sought by the applications were unprecedented, the financial risk to participating companies was significant. The Mississippi Development Authority and Governor Haley Barbour provided much needed assistance by matching 50% of the application cost through funding provided by the Mississippi Jobs Protection Act, passed in 2005 by the Mississippi Legislature. Even with this financial assistance, Lane, H.M. Richards, and Bauhaus USA were the only companies that chose to formally submit FTZ applications. It was only through the support and constant oversight of the application process by the offices of Senator Thad Cochran, Senator Roger Wicker, and Governor Haley Barbour that the US Foreign-Trade Zones Board signed Board Orders approving the applications on December 22, 2008.
As a result of these precedent-setting approvals, these companies have the opportunity to economically maintain their current level of in-house cut-and-sew operations and potentially add cut-and-sew positions back into their domestic production facilities going forward. FTZ manufacturing authority will contribute to the economies of scale for domestic cut-and-sew operations, upon which domestic upholstery fabric manufacturers depend for their survival. Approval of these applications is expected to serve as a precedent by which other furniture companies may also obtain this benefit.
Statements from our Public and Company Officials:
U.S. Senator Thad Cochran stated, “The furniture manufacturing industry is a vital component in North Mississippi's economy. The FTZ designation will allow these companies to compete on a level playing field, which will help ensure that hundreds of people in Lee County will continue to employ their skills by producing the highest-quality furniture in the world.”
U.S. Senator Roger Wicker stated, “Securing FTZ manufacturing authority will allow these companies to continue cut-and-sew operations here in Lee County and compete on more level footing in the global marketplace. That is good news for 950 employees directly employed here in this important segment of the furniture industry in North Mississippi. This success comes as a result of a team effort at the local, state, and federal levels. I was proud to be part of that collaboration to help keep the process on track and ensure that the Commerce Department had the documentation it needed to approve the applications.”
U.S. Congressman Travis Childers stated, “The furniture industry is a central pillar in North Mississippi's economy and is one of the region's largest employers. FTZ's approval represents an important and necessary commitment to Lee County and North Mississippi jobs. The precedent that this approval sets for the U.S. furniture industry is especially beneficial for North Mississippi's hard working families during today's difficult economic times."
Governor Haley Barbour stated, “I am pleased the U.S. Foreign-Trade Zone Board has approved this manufacturing authority because it allows Lane, H.M. Richards, and Bauhaus USA to remain competitive without outsourcing their upholstery operations overseas. This will substantially cut costs for these companies and protect about 950 good-paying jobs in the Lee County area, which benefits North Mississippi and the state as a whole.”
Bobby Smith, President Lee County Board of Supervisors stated, “In 2003, the Lee County Board of Supervisors invested in an existing industry strategy to use U.S. Foreign Trade Zone benefits to greatly improve the ability of our furniture industry to continue to compete internationally. It was only through the support and constant supervision of the applications by the offices of Senator Thad Cochran, Senator Roger Wicker, and Governor Haley Barbour that the U.S. Foreign Trade Zones Board signed Board Orders approving the applications. Today, five years later, we celebrate our first benchmark in providing this assistance to these three existing companies. And, while the dollars saved by these companies will be easily measured, the human impact on nearly 1,000 families affected by this decision is immeasurable.”
Skipper Holliman, President of Lane Furniture Industries stated, “We are very pleased with the approval of the FTZ manufacturing authority that has been worked on diligently by our management team, the CDF, and numerous government representatives on the local, state, and national level. The savings that we will realize, on the purchases of very popular selling micro-denier suede fabrics, will improve our competitive position and our ability to maintain and create furniture manufacturing jobs here in North Mississippi.”
Joey Tarrant, Vice President of Operations of H.M. Richards stated, “The approval of our FTZ manufacturing authority will help to ensure a future for not only our cut-and-sew operators but all H. M. Richards, Inc. employees. Being able to import micro-suede fabric rolls duty free ‘levels the playing field’ with our competitors who decided to reduce their local cut-and-sew operations and import kits duty free to reduce their material costs. Now we have the advantage of offering our customers a product completely produced in the U.S.”
Al Wiygul, President of Bauhaus USA stated, “I would like to thank our Congressional delegation, Governor Haley Barbour, CDF, and Greg Jones, our FTZ consultant, for making this happen. This is the kind of thing that will make a real change for the furniture industry towards creating a more level playing field for manufacturing in the U.S. We still have the most skilled and best workers in the world when it comes to making furniture. All we need is a chance to show that we can still be competitive. With a little help from the economy I see us adding cut-and-sew jobs back to our workforce in the near future. Thank God that we didn’t give up and that we have the type of people in Mississippi that will stay the course and not give up when they know something is right.”