Import fight under study at La-Z-Boy
8/13/2003MONROE - A U.S. furniture industry campaign to seek new import duties on Chinese-made bedroom furniture may be about to pick up support at La-Z-Boy Inc.
Executives, in formulating their position, can't ignore the impact on employees whose jobs are threatened by a surge in inexpensive imports, Chief Executive Gerald Kiser said at the annual shareholders meeting here yesterday.
“Their voice is the voice that will be heard,” he said afterward in an interview, noting that U.S. laws allow a majority of employees to petition to join the campaign on the company's behalf even if executives refused or failed to take a stance.
The board of directors was to debate the measure yesterday, Mr. Kiser said. One possible scenario, according to observers, is that the parent company will refrain from taking a stance on the issue while subsidiaries that are heavily reliant on sales of bedroom suites and other wood furniture would join the campaign.
Those subsidiaries include Pennsylvania House, American Drew, Lea Industries, and Kincaid Furniture. Overall, wood furniture represents 25 percent of sales at the parent firm.
The discussion took place on a day when La-Z-Boy, the nation's second-largest furniture manufacturer, released a disappointing - although not unexpected - financial report for the fiscal first quarter ended July 26.
Lagging furniture purchases that have hurt other manufacturers as well sent sales down 9.2 percent to $452 million from $497 million in the prior-year period.
The firm reported profit of $5.8 million, or 11 cents a share, in the just-completed quarter, compared with a loss of $40.7 million, or 69 cents a share, last year.
But last year's loss resulted from accounting charges. Operating profit declined year-over-year to $11.3 million from $32.9 million in the prior-year period.
Patrick Norton, La-Z-Boy chairman, said problems in the firm's just-completed quarter were a continuation of those experienced last year.
“Fiscal 2003 was a very tough year,” he told about 125 shareholders who attended the meeting. The firm has responded by closing plants and reducing other expenses. La-Z-Boy officials, like other furniture executives, are perplexed that Americans aren't following the typical pattern of buying furniture during periods of strong housing activity and low interest rates. The firm made $96 million on sales of $2.1 billion in fiscal 2003.
“We have not seen substantial improvement in our business,” conceded the chief executive, who noted that imports from China and other Asian nations have contributed to the problem.
“We believe in and support fair and free trade,” Mr. Kiser said. “We firmly believe it should be legal trade.”
So far, however, La-Z-Boy and St. Louis-based Furniture Brands International Inc., the nation's largest manufacturer, haven't joined a campaign by 27 other manufacturers to seek new tariffs on Chinese imports.
“We would welcome their support and hope they do support the petition,” said Stephen Jones, a Washington lawyer who represents manufacturers who plan to file an anti-dumping petition this fall with the U.S. Commerce Department and the U.S. International Trade Commission.
The group has support from more than 25 percent of the industry. Added backing, however, would speed the process, Mr. Jones said.
In other action, La-Z-Boy's board of directors declared a quarterly cash dividend of 10 cents a share, payable Sept. 10 to shareholders of record Aug. 29.