With the recent tariffs imposed on Chinese goods and new anti-dumping legislation, many bedding manufacturers have had to re-evaluate where they maintain manufacturing facilities and where they source products, materials and other components. As these kinds of changes can have a wider impact on the marketplace, we wanted to get a sense of what some brands are doing to help sustain strong profit margins for their retail partners.
So we asked a few industry leading manufacturers the following questions:
Feelings regarding trade talks and tariffs aside, how has your brand responded logistically to the recent legislation? Are there any changes in business operations you’ve made to proactively pivot and ultimately protect profit margins for retailers?
“We’ve had to make minimal changes since we don’t import finished mattresses from China, and only a small percentage of our fabric is sourced from there. Our products are all made domestically, and the vast majority of our components come from domestic sources or countries outside of China.
As a result, we haven’t raised prices, and our products are now more competitive with Chinese imports. This is due not only to the tariffs, but also the anti-dumping duties that recently were enacted. This allows us to become a more important vendor to our dealers because they can still make healthy margins on our products at all price points. We’re in a position to prosper from these recent events, instead of being hurt by them.”
—Stuart Carlitz, CEO of Eclipse International
“Since our mattresses are 100 percent American-made and nearly all of our raw materials are sourced domestically, we haven’t had to make significant changes in our supply chain. However, I’m concerned that our costs—especially fabric and steel—could still rise since domestic suppliers of these materials may feel the need to raise their prices since they are no longer competing against low-cost imports. And it may be difficult to find suppliers in other Asian countries since they don’t have the infrastructure to ship it in a more efficient way. But in the long run, the tariffs and anti-dumping duties should benefit domestic mattress producers, who will be able to offer a wider selection of mattresses with strong margins for retailers.”
—Robert Naboicheck, president of Gold Bond
“Hickory Springs is proud to be a U.S.-based, family-owned company with most of our raw materials sourced domestically, which we feel is an advantage in providing high-quality, low-cost products to the industry. We are focused on the long-term and believe that tariff negotiations between the U.S. and its global trading partners will resolve into a low or no tariff schedule that allows suppliers to compete on a level playing field across regions. We continue to selectively develop global supplier relationships including Mexico and China with this in mind.
Any tariff-related expense we must pass along to our customers has been and will continue to be as minimal as possible and temporary based on the evolving tariff situation.”
—Mark Jones, president and CEO of HSM
“At Malouf, we’ve spent years building a global network of raw material suppliers and factories to support the quality and breadth of products we manufacture. Early on, we invested in worldwide relationships and vertical integration, including our own supply chain team and product research and development team. Now, as other manufacturers scramble to relocate from China, we’re already working from 15 countries in North America, Europe, Western and Southeast Asia.
As the tariffs are implemented, we’ve had to shift some production out of China. We’ve taken production of our mattresses and adjustable bases 100 percent out of China, and other products are being assessed on an item-by-item basis. We’ve thoughtfully relocated our operations to make sure the quality of these products will still match or exceed our high standards—and our prices will still maximize profits for our retail partners.
We still recognize China as a world superpower of production. Chinese factories have made it possible for some smaller retailers and importers to be big players, and we’ve found excellent partners among them. But with the trade war, the landscape of manufacturing is shifting. Fortunately, we have the volume and the means to create exclusive partnerships with the best factories around the world.
This isn’t to say the transition hasn’t been difficult. Thankfully, we’re agile, and proactive, and growing. We’re available as a resource for those who suddenly find themselves struggling to stock their shelves. For those who already partner with us, know you have the power of worldwide sourcing behind you. We play the globe—this is just business as usual.”
—Sam Malouf, founder and CEO of Malouf
This article originally appeared in Sleep Retailer eNews on June 27, 2019.
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