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American Manufacturers Battle Chinese Scofflaws

American steel wire manufacturers — including leader Alabama-based M&B Hangers — continue to battle Chinese companies adept at skirting U.S. customs laws.

Milton Magnus III works to keep his company, M&B Hangers, profitable.

Milton Magnus III works to keep his company, M&B Hangers, profitable.

When Business Alabama visited with him two years ago, Milton Magnus III was hanging in there — up to his neck fighting illegal imports from China with scant help from the U.S. government. 

The situation is better now, but Magnus expects conflict with the Chinese to continue. “The Chinese don’t play fair; they don’t play by the rules,” says Magnus, president of Leeds-based M&B Hangers, which makes steel garment hangers for the dry cleaning and textile rental industries.

Begun in 1943, M&B Hangers was among a handful of leading American steel wire hanger manufacturers when illegal Chinese imports began in the United States around 2000.  The imported steel wire hangers, dumped at rock-bottom prices in violation of the World Trade Organization framework, put immediate pressure on M&B Hangers and other American manufacturers.

Within a few short years, M&B Hangers was the only domestic steel wire hanger manufacturer left standing and was itself on the brink of going out of business. So for almost 15 years now, Magnus has been in the middle of a fight to curb illegal Chinese imports of steel wire hangers. In more recent years, he and others have pushed for federal legislation in that arena.

Jeania Stoves, an M&B employee for 26 years now.

 

A major breakthrough came in February, when President Barack Obama signed the Trade Facilitation and Trade Enforcement Act. According to thehill.com, the legislation is an overhaul of U.S. Customs and Border Protection and “streamlines trade rules that aim to keep importers from skirting U.S. antidumping and countervailing duties” as well as addressing other issues.

The law includes provisions developed and proposed by the American Steel Wire Producers Association, an 86-member trade association that Magnus has served as president for the past two and a half years.

U.S. Customs and Border Protection (CBP) has been tasked with coming up with a plan to implement the new law. M&B Hangers — with companies that include Leggett and Platt, Nucor Steel, U.S. Steel and others — is working with CBP to ensure the law’s implementation is on target.

“We want to make sure what we’ve worked hard for is actually in the plan when it’s implemented,” Magnus says. 

CBP’s plan for implementing the new law is due in August. Magnus hopes that the coalition of companies he is working with will develop a stronger, more transparent relationship with federal Customs personnel.

“We would like to see more transparency and accountability working with Customs,” Magnus says. “We would like to have it where if we file an allegation, like we’ve done in the past with our reports, Customs immediately responds to us and tells us when progress is or isn’t being made. They could be pretty secretive in the past. We feel good about the new law, but we still want to see something happen.”

The frustration level for M&B Hangers and other American companies impacted by the illegal imports has been off the charts. It has been a cat-and-mouse game with the Chinese, and enforcement of trade laws has been lacking, Magnus says.

Ordered several years ago to cease illegal shipments of steel wire hangers to the U.S., China simply stopped shipping them directly and starting shipping through other countries. Since then, illegal imports from China have been shipped through Taiwan, Vietnam, Malaysia, Laos, Sri Lanka and Cambodia. “We’ve even had some coming in from the Dominican Republic,” Magnus says.

Raw materials align M&B with big steel producers on some trade issues.

 

But finding that the Chinese are cheating and getting federal enforcement action have been two separate things. 

“It’s really frustrating,” Magnus says. “It costs a lot of money to file a dumping case, and you have to be in dire shape before you can file a case and win it. And then you see that the enforcement has been spotty at best.”

Magnus says America’s perception of China has become more wary in the past 15 years. Shortly after the illegal Chinese imports began, former President George W. Bush was given the opportunity to impact the dispute by siding with M&B Hangers and other American companies. He — surprisingly, perhaps — declined. 

Since then, “I think the view of China has changed drastically,” says Magnus. “(Washington) sees what the Chinese have done to American businesses, American manufacturing, and I think whether it had been a Republican or Democrat in the White House — at the time President Bush (was there) — wouldn’t have made a difference.

“It was pretty political, and to sacrifice a small industry to keep good ties with China was important at that time, and we were the scapegoats. But I think the national outlook on U.S. manufacturing and, basically, what China has done to our manufacturing is on the forefront of everyone’s mind.”

Magnus expects the Chinese to continue dodging the rules and illegally shipping wire hangers to the United States. He cites the imports, Chinese “knock-offs” and the SEC’s probe into accounting practices at China’s online giant Alibaba as examples of incorrigible rule-bending by the Chinese.

“They will always try to find ways to get around U.S. laws,” he says. “I think it’s almost bred into the culture. It’s a cultural thing they have to change, and it doesn’t change quickly.”

Since last speaking with Business Alabama, Magnus has taken other steps to keep M&B Hangers competitive. “We’ve invested in robotics,” he says. “They are not up and running yet, but they are being tested, so we can have more control over our products and be competitive with anybody in the world.

“We’ve made it clear to everybody in the plant here so nobody will be scared. This won’t affect anybody working here at the plant today. It might affect our hiring habits when somebody leaves. So, eventually, we might be making the same number of hangers with fewer jobs or more hangers with the same number of jobs.” 

Charlie Ingram and Cary Norton are freelance contributors to Business Alabama. Both are based in Birmingham.

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