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Industry Braces for Higher Hanger Prices

Ian P. Murphy |

WASHINGTON, D.C. — A preliminary determination from the U.S. Department of Commerce (DOC) that may result in tariffs sent wire hanger prices soaring last month for many drycleaners.
Though the initial increase in costs to manufacturers is in the form of a cash deposit left with U.S. Customs upon arrival, anecdotal information suggests operators are already seeing substantial price increases from industry suppliers. If DOC reaffirms its position in June and the International Trade Commission agrees, tariffs will be levied to make up the amount companies are underselling their hanger products from fair market value.
A DOC release says that Chinese factories have sold hangers at a 33% to 221% discount from fair market value. Most suppliers, however, can expect any tariffs assessed on imported wire-hanger products to top out at 84%, the Drycleaning & Laundry Institute (DLI) says, with a resulting increase in end users’ total supply costs of 1.4% to 2.2%.
The decision operators now face is whether or not to raise prices to deflect the rising costs. “While they are reluctant to do so, cleaners nationwide are working on such slim margins that they will have to increase prices if they want to stay in business,” says Nora Nealis, NCA’s executive director. “More price hikes could be just around the corner. My advice to consumers is to clean everything soon. Don’t wait, because none of us can predict what is going to happen next.”
The DOC's determination was the result of a petition from Leeds, Ala.-based M&B Metal Products, the last company to maintain substantial wire hanger production in North America. Until the 1990s, wire hangers were made almost exclusively within U.S. borders.
The first shipments of hangers from Mexico were logged in 1995 following passage of the North American Free Trade Agreement (NAFTA). Shipments from China began in 1997 and grew to 500 million by 2002, when domestic manufacturers first sought trade protections.
Denied by the Bush Administration against ITC's recommendations, most U.S. firms moved hanger production overseas or went out of business. By 2005, China exported more than 1 billion wire hangers to the U.S. annually, accounting for more than 85% of the market.
Prices for wire hangers have risen 60% in the last seven months due to an increase in the price of carbon steel wire, according to DLI, and could go up another 40% before reaching a plateau. While scattered hanger shortages have been reported, most U.S. distributors told DLI they expect to be able to meet customers’ needs.

About the author

Ian P. Murphy

American Drycleaner

Ian P. Murphy is a freelance writer based in Chicago, and was the editor of American Drycleaner from 1999 to 2011.

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