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Can we save the American Cabinet Industry? We talk with the KCMA about it
Episode 14443rd December 2022 • Around the House® Home Improvement: Expert Advice for your Home • Eric Goranson
00:00:00 00:53:30

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We sit down with Betsy Natz, CEO of the Kitchen CabinetManufacturers Association. We dive into how they test and rate cabinets so that they will hold up and meet their industry standards for durability. We dive into the KCMA helping protect the American Cabinet Manufacturers from dumping of low priced imports. We talk about the trade wars in residential kitchen and bathroom cabinetry that have been going on behind the scenes and how they are trying to protect the American Worker. This is somewhat of an unusual deep dive for Around the House but to really understand what is going on here we need to get to that level of detail so there is a greater understanding as it is not a simple issue. For more information about the KCMA head to https://kcma.org/

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Transcripts

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[00:00:25] Betsy Natz: Subsidizing the industry with 20 different steps. It includes a lot more than just like, you know, um, labor. Um, very, very cheap, but also lots of other subsidies and their mo. China's is to go in at all costs. Take over an industry, give it away.

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[00:01:13] Eric Goranson: And we're gonna talk with the Kitchen Cabinet Manufacturer's Association, and Betsy Nats, welcome to Around the House, Betsy.

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[00:01:34] Betsy Natz: There

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[00:01:54] Betsy Natz: Uh, yes, we have. Indeed, I'm happy to jump into our trade case if that's [00:02:00] what you'd like me to do.

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[00:02:02] Eric Goranson: Let's, let's give a a just a little bit about what you guys do out there, and a lot of people will maybe go, ah, is that that sticker on the inside of my Sink

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[00:02:20] Betsy Natz: Whom you probably know, the game family and the Wellborn family and the March family. And then of course later on you've got the bells and you know, and so and so forth. So, um, not soon after, uh, the founding of the K cma, those leaders in the. Industry on the board said, you know, we need to, we need to make sure our cabinets stand the test of time, and so let's come up with a certification program that is as rigorous as as it can possibly be.

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[00:03:20] Betsy Natz: Uh, you are allowed to carry our seal on all your advertising in your dealers, with your designers and all the various other channels, big boxes, loaves and depot, who always look for these seals. And so the way that, the real quick, the way that that program works is that, A third party goes in and randomly pulls a cabinet off a factory line takes, I've seen it happen.

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[00:04:13] Betsy Natz: Uh, the weight bearing test on the wall hunt cabinets is 600 or more pounds of weight to make sure that. You put, and I have very heavy dishes, . Um, I always wondered, is that gonna, is that gonna fall? The fall? Um, and then the spill test where, you know, you, uh, you're always concerned about spilling mustard or when my son was little, he spent, he, he spilled, uh, the egg dye from Easter egg dye.

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[00:05:13] Betsy Natz: And as you, you know, way more about wood than I do it, uh, has unique properties that way. And then, um, edge banding tests to make sure that the edge banding doesn't come off of those cabinets that are edge banded. And so, Companies that have their cabinets tested the first time don't pass. Mm-hmm. and, uh, 50% actually.

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[00:06:02] Betsy Natz: All of them did. All of them asked for it. And then I went on to talk about our environmental stewardship program, which is another, a major pillar. Uh, yes, pretty huge. KC A and, uh, but on our certification program, both we. Started over the past couple of months, a major marketing effort, uh, that, uh, has reached now probably 600 different magazines and news outlets.

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[00:06:56] Betsy Natz: our, our, our consumers want to know that they're gonna buy cabinet that's gonna [00:07:00] last. So we're real proud of that program. As a matter of fact, John Game and I were emailing about it yesterday, and he had said he, he. Said, you know, it really is the crown jewel of the K cma. And I said, can I, can I use that?

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[00:07:19] Eric Goranson: That is awesome. Yeah. What is that? That is a 1 6, 1 0.1, if I remember

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[00:07:34] Eric Goranson: you should, because I don't know how many times, you know, I've been in the design and and cabinet world, you know, for way too long.

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[00:07:57] Betsy Natz: And, and, you know, vice versa, you know, you [00:08:00] could Yeah.

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[00:08:26] Betsy Natz: And we have about, we have some, some non-members in the program. I think we're about 170 companies. Nice. That certify into our program. So it's, uh, it's impressive. And that's

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[00:08:51] Eric Goranson: Yeah. Thank. Yeah. Well, let's talk about the, the, the legislation side before we get over to the E S P, uh, environmental Stewardship [00:09:00] Program. Legislation has been such a big deal, even more so over the last number of years because you guys have been going to war in trying to defend the American cabin industry.

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[00:09:36] Betsy Natz: Uh, and the first thing I did was I went around, I started meeting with companies and their executives, and what I heard was there was a lot of rumblings about China and the concern about, uh, the industry. Loss of market share. And so that was, uh, early in 16 January. And so by the early 17 [00:10:00] I started, I worked with a group of companies that you know very well.

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[00:10:25] Betsy Natz: Started meeting with the Trump administration, will Ross and Peter Navarro, and so on and so forth. And, uh, There are a lot of different trade remedy laws out there. There's the three oh ones and the two oh ones, the 2 32 s, and they're all aimed at different things. Yeah. And so I knew nothing about trade, as you can imagine.

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[00:11:16] Betsy Natz: Law that says you can file cases if you believe and have substantial data to support it. If you believe that the domestic US industry, in our case, Kitchen cabinets, component parts thereof, um, have, uh, been materially injured, your industry as a result of unfair trade. And so we started looking into that and what we found out was that we had lost the domestic cabinet, industry had lost 40% market share from 2016 to 2018 to China.

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[00:12:27] Betsy Natz: So you file two petitions. You file one at Department of Commerce and you file one at the International Trade Commission, and you have to win at both places. And so the International Trade Commission spends 13 months, we file on the 6th of March, 2019. And hearings, and I just can't even tell you , what went into, you know, leading up to filing and then that year that followed the, the, the amount of work and resources was truly unbelievable and it cost us about 4 [00:13:00] million.

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[00:13:23] Betsy Natz: To say that you have to go through hoops is, is such an understatement. Um, and to protect your own industry and your workers. We represent 250,000 American workers, 40% minority, underserved, community communities, single women, many whose jobs and livelihood and their family's livelihood depends upon it.

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[00:14:18] Betsy Natz: Other countries and not ours. So anyway,

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[00:14:42] Eric Goranson: to be able to do that. I mean, it's not like you guys had 4 million bucks sitting around as an organization. That's a couple years of, of budget. That should be something if, yeah, they should have been able, where you come in and say, okay, here's our report. This is what's going on. And if they were doing their [00:15:00] job that these people are supposed to be doing, they should be able to take that ball and run with it and not do the opposite of what they've been.

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[00:15:33] Betsy Natz: So you had wonderful 50 amazing domestic manufacturers that said, you know, the view is worth the climb. Here. We're gonna ship we're we believe in. We believe in America,

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[00:15:52] Betsy Natz: check. Yeah. And then, and it was not cheap, but so you file, you know, so you file with [00:16:00] Department of Commerce who looks at the tariff margins.

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[00:16:25] Betsy Natz: Obama. I get those confused sometimes. But anyway, um, same. And so in the end, in March of 2020, The International Trade Commission voted five to zero in favor. Um, essentially saying that the domestic cabinet industry had been materially injured as a result of unfair trade. And that includes companies dumping product at below market value and the People's Republic of China.

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[00:17:22] Betsy Natz: And so then at the Department of Commerce, commerce said, um, so here are the, the. They call 'em margins, but here are the tariffs that we're gonna put in place. So they put in place for dumping, 5% for a company called Ancient Tree. And then they applied Total Adverse Facts, available the highest rate to DA and Micin at 262%.

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[00:18:22] Betsy Natz: 400% or whatever was. Yeah. And then if you add presidents Trump's 3 0 1 s, you're at a hundred percent at the lowest and then way up. So what, so what that did from when the orders were put in place in April of 2020 until this past April, um, I mean the industry just exploded. Not only did they gain that market share back and then some, and so it was the largest trade case ever filed in US history against one country and our, our industry just flourished.

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[00:18:59] Eric Goranson: well borne, expanded [00:19:00] good on the

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[00:19:26] Betsy Natz: And so in April of this year, the Department of Commerce came out with its preliminary findings on the first annual review for all the companies that had filed a request to to be review. Long story short Commerce gave one company a zero key fus in you, um, and then, uh, applied total adverse facts available to Beauty Star at 251%.

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[00:20:18] Betsy Natz: And so for those 15 other companies, they get 1 25. Yeah. So they, they come out with this prelim in April, we spend, or may, June, July, August, September, October. You know, working with our friends on Capitol Hill, Republicans and Democrats, it's not a bipartisan issue. And it's not bi camera issue. Senate House.

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[00:21:07] Betsy Natz: It creates a huge funnel. So

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[00:21:12] Betsy Natz: So here we spent all this time enough for money. We finally got back to where we're we should have been in on our own soil selling our own domestic product. And look, our companies will tell you, and you know this Eric, they can compete all day long with the, with, you know, marsh, with wellborn, with whomever.

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[00:22:00] Betsy Natz: Yeah. The Chinese cabinet was a hundred, the domestic cabinet was 300. You can strap, you strip out labor, you can strip out material. You can't get to that. No price point. And so anyway, in there on final determination, and this was, this crushed the industry. A week and a half ago, commerce came out and said, we're gonna side with China.

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[00:22:49] Betsy Natz: We be Oh,

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[00:22:53] Betsy Natz: right? And then we get to look forward to the five year sunset review, which is a whole nother adc. It's [00:23:00] a whole nother petition process, which cost another couple million dollars. But anyway, so that's what's going on on that front. But what happens, um, you know, when you file and we, we cut off China, China went from four and a half billion to 60 million a year.

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[00:23:45] Betsy Natz: So we filed five EPA allegations to Customs and Porter protection, which is. Called, um, defined as the Enforcement and Protect Act. And so four have finalized, they take about 18 [00:24:00] months and a lot of money. We won three, well we won four. Yeah. Um, three in the final preliminary, very solid cases. The Chinese appealed and the higher ups at Customs and Border Protection overturned and went to FA China.

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[00:24:44] Betsy Natz: Her boss is Secretary of Commerce Rendo. They all, they, they, they were sent letters from their colleagues on the hill and friends and so on and so forth. So this wasn't made at some bureaucrat level. [00:25:00]

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[00:25:06] Eric Goranson: They're people that, Hey, guess what I get to do for four years or two years, or whatever their stint is in that

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[00:25:29] Betsy Natz: The only one. And that means Democrat, Republicans, the whole shebang. Yep. And, uh, you know, it is just very, very sad. But anyway, the other thing we're doing, and the last thing I'll talk about on trade is our petitions, um, against China. For trans shipping, uh, and circumventing the orders through Vietnam and Malaysia.

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[00:26:20] Betsy Natz: You have to prove that the products that you're shipping in, be it flat packs or component parts thereof that are in the scope of this ad C V D, um, are coming into the United States legitimately and are not originating from China. And so we file that case and we had two companies that were not happy with that.

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[00:27:18] Betsy Natz: A supplier or more, I don't know. Um, but I know they said one supplier that they were purchasing from, they domestically being the importer record, the Department of Commerce said that they were not going to certify them, that they believed that they were either straight trans shipping or sending the product through.

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[00:28:11] Betsy Natz: Suppliers might get dinged and that they may ha be on the hook to pay these tariffs as the importers of record. Now, one could say, if you know your suppliers as everyone should, then you, you would make sure that those products are originating from, in this case, Malaysia or Vietnam, and. Coming from China, their point was that we are quite sure of our supply chain and that these companies either didn't fill the paperwork out correctly or left a blank, or I, I don't

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[00:29:30] Betsy Natz: And, uh, Malaysia and the board, after a lot of very thoughtful deliberation, said in a vote of 12 to three, we're not going to do that. We're going to stand with the domestic industry. And, um, and so they left. They actually got up and walked out of the board meeting. As a matter of fact, one of the companies was supposed to give a plant tour.

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[00:30:08] Eric Goranson: oh, they're rock stars in there. They are. I love those

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[00:30:23] Betsy Natz: And then went up to , to Woodland and it worked out beautifully. But um, and so I hope the companies will come back. But we did have an occasion to meet with the members over those three days in Sioux Falls, and we shared with them Perry Miller, the president of K CMAs board, and I shared with the membership what had happened and the support from every member there was overwhelming.

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[00:31:22] Betsy Natz: So they've decided to go out and create a competing certification program to the KCS program. And I don't know how they're gonna build credibility if they're the only one in the certification program, but, um, that seems

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[00:31:44] Betsy Natz: Well, I think it's, I think it's really too bad to use, you know, to go to that level.

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[00:31:52] Eric Goranson: that's crazy.

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[00:32:00] Eric Goranson: Well, and you know, in, in my opinion, and this is not a K CMA opinion, so I wanna make really clear what I'm saying here is those companies that bailed, um, I've worked with some of them before and they were bringing in a lot of parts from overseas that they were assembling here in the us.

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[00:32:41] Eric Goranson: That should tell you something right

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[00:33:07] Betsy Natz: We're giving all that money, all those jobs to another country. They come in here and then, you know, Assembling stock cabinetry is what it is. Yeah. And I have seen, we have seen huge, if you've just watched the news industry news, um, that a lot of these companies are moving towards stock cabinetry. Yeah.

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[00:33:54] Eric Goranson: You know, I had an episode that, uh, we aired a little bit ago that some of the, you know, some of the [00:34:00] cabinets that were coming in from China, it was coming in as birch, but being shipped out as maple. So as crazy as that is,

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[00:34:19] Betsy Natz: And they were shipping in cabinets, telling the customers that they were maple and in fact they were birch. And so they got dinged on that. They appealed to the court of international trade in new. And the judge said, well wait, you were just deceiving your customers and you ought to take it to the Federal Trade Commission or the, you know, whatever the agency is that handles false claims or, but we are the agency that handles, uh, you know, Trade related issues, in this case Navy, C B D, and so they remanded back to commerce.

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[00:35:27] Betsy Natz: But the reality is the product is birch, then the product is way overvalued so that the, you know, you look and you see, well, you know, they're not dumping it cheap because, you know, you know, and again, I'm not a lawyer, but No, um, so, you know, so it, it, the judge was actually, I'm gonna say he was incorrect and Congress is defending itself, but that it's, it was more than just deception.

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[00:36:02] Eric Goranson: yeah, there could have been a 20% difference there between whatever the current wood pricing was between that birch and that maple. So that could have, that could have protected that Chinese company by 20% on their costs.

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[00:36:39] Eric Goranson: And wow, this one's so much cheaper in their uneducated mind of the cabinet business, they go, oh, well let's Maple, it'll, it'll go great. Unfortunately they were getting something that might not have even been maple. You're right about that. Yeah. Ah, so what do we see in the, in the future with this? I mean, you know, you guys [00:37:00] have a long road ahead of slugging through this Of course.

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[00:37:20] Betsy Natz: Well, I, um, I agree with you. I think that, um, and I, you know, I, I don't, I don't know that it would lead anyone else to any other conclusion when you are favoring a regime like China over our own domestic industry where we.

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[00:38:01] Betsy Natz: But what do these people do for jobs and beyond? You look at the tax base that that creates and just picking on Wellborn, they have daycare for their workers. Yep. They have a onsite wellness sy onsite wellness center with nurses and a doctor that comes in. And Jim. Jim, they have two buses. It's crazy. Hot lunch.

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[00:38:37] Eric Goranson: the well borns. The Well Borns cafeteria is the largest food service in Clay County. Think about that. That's cause Paul told me that ,

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[00:38:50] Betsy Natz: Oh yeah. But it, it, but so where do we go? I mean, sadly, um, you know, we just have to. Slogging it out and [00:39:00] frankly, you know, we're gonna have to wait for a new administration, in my view. Yeah,

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[00:39:16] Eric Goranson: This is fun stuff. I remember when this first came out because I was selling and designing cabinets a lot, I just stopped working at a manufacturer and it was really cool to see a program because it was all over the board on what green was, right, and there was no

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[00:39:47] Betsy Natz: Sure. He lives and breathes it every day. So the, you're right, it, it was, um, first launched in 2006, so that's what, 17 years. And um, the way that it works [00:40:00] is there, it's a point system and, you know, be it environmental regulations or you know, Or, you know, recycling or community involvement. And I, I don't have the various, um, I don't have the point structure in front of me, but there is a possible 110 points, and if you can get 80, then you can carry our seal.

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[00:40:55] Betsy Natz: Uh, and envi environmentally sound products. I do [00:41:00] worry a little bit about greenwashing. Sure. You know where, you know. Um, but one of our newest, one of our newest, um, it's not a program, we hired a firm who is very credible in the field of carbon. Mm-hmm. . Um, and so he put together a paper for us, which essentially says, Um, and he had already been working with the Composite Panel Association, a couple of our members, but says that wood products, and in particular in this instance, kitchen cabinetry, sequesters a lot more carbon than it ever puts off in the production process, and it keeps sequester.

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[00:42:02] Eric Goranson: about the P program is it wasn't just, Hey, I'm putting in green ply. You know what I mean? It's, it really jumped into where the manufacturer, you know, has to have a documented energy conservation program.

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[00:42:30] Betsy Natz: You were right about that. And it's, um, You know, we have been just very, very steady with that program, and I don't know how many companies participate, but I would say most of our, especially our, our semi custom to custom seems like that's the audience that, you know, oftentimes really looks for that.

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[00:43:01] Eric Goranson: it's, it's cool. I mean, it does obviously cost a little more to produce, you know, cuz as always is, you know, when you, when you have to go into that detail, it costs a little more to produce, but you sure get a lot back out of it. And that's the, the cool part. But unfortunately, if we get back into the legislation stuff, none of that's happening on these imported cabinets at all.

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[00:43:45] Eric Goranson: They bought a place in Southeast Asia and within a week and a half to two weeks, that whole place was packed up and moved down there. All the employees, all the stuff, everything got moved down there [00:44:00] so they could get around that. But it was the same price. It was the same, you know what I mean? They just, they didn't change, but they went, oh, cool.

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[00:44:08] Betsy Natz: so our friend, um, who I've met with a couple of times, Marty Davis, CEO of Cambria, uh, is, as you know, the, the, the person that filed that case. Initially it was China, then it went on to Indian, Turkey and some others filings. But, um, Luke Meisner, who is our attorney with Sharin Associates is their attorney as well.

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[00:44:51] Betsy Natz: It might be Du Supreme. Yep. And um, and I'm not saying that they do this or not, cause I can't remember, but in their showroom, they'll have their [00:45:00] cabinets with all the Cambria samples. Yep. And, um, I've seen that in a lot of places. Um, so it's, uh, it's been a, I think there's a great partnership there. Yeah.

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[00:45:34] Betsy Natz: Mm-hmm. , which would require these online, um, outlets to. Show and clearly indicate where the product was made. Well, you've got a very large retail lobby in Washington, maybe the largest, I was gonna say it. Huge. And so we, the Walmarts and the Amazons and you know, the big ones, and they fought vigorously against [00:46:00] country of origin legislation.

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[00:46:02] Eric Goranson: Yeah, and I will say this, and this is again me speaking, not K CMA speaking. So if you walk into a home center right now, and you look at the cabinet brands that are in most of the two big, big box retailers out there, and if you look around at those cabinet companies, their entry level, mid-grade cabinet stuff, a lot of that stuff is not machined in the us.

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[00:46:32] Betsy Natz: that is. And I, I agree with you. Um, again,

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[00:46:46] Eric Goranson: They treat their employees so well. I mean, I can tell you so many people that I've talked to in the cabin industry that are in there on the assembly line, that are putting stuff together every week. And [00:47:00] the, the success stories of the single moms raising four kids and the company is helping them along and doing all the things that they need to do.

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[00:47:11] Betsy Natz: away. Thank you. I know that, uh, our, our members are fighting hard and they're really fighting for their companies and their employees and, you know, it is not an exaggeration. All you have to do is look at that part of Virginia, North Carolina. It's annihilated. And so what China did, and John Bassett will tell you this, is that they come in and they, you know, go to the manufacturers and they say, Hey look, you know, we can manufacture your, your table cheaper.

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[00:47:57] Eric Goranson: my advice to everybody out there. And, uh, I'll let you [00:48:00] give your 2 cents your two Betsy, but. Make sure when you're out shopping for that cabinet, for your new house, for your new remodel, whatever you're doing out there, ask a few questions, take a look for that K CMA stamp.

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[00:48:33] Betsy Natz: You know, I couldn't have said it better. Um, Eric, and the other thing I'd say is, you know, look for, look, look for the seals. Look for these companies that American made. If you're wondering who our members are, just go to our website and there's a company search. But also, you know, as you engage in, um, with.

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[00:49:22] Betsy Natz: So, yeah. Thank you so much.

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[00:49:43] Eric Goranson: So the, the list goes on and on. You know, crystal, I've worked with contact. Have you been the kitchen contact show place? Yep, exactly. It's, it's funny, I mean, I, I used to go to, on the pheasant hunts with Du Supreme, they'd fly us out, out in South Dakota and do that, so.

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[00:50:05] Betsy Natz: Did a hunt, uh, with the show place, uh, back not too long ago. But, uh, they're a wonderful group of members and the large majority of this industry really are family owned, family operated, multi generat. Companies who, um, you know, who not only their livelihoods depend on this industry surviving, but all their employees, you look at, you know, you look at some of these companies, they employ 700, a thousand, 1500 employees or more.

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[00:50:41] Eric Goranson: I'll tell you one quick story before we go. That was interesting. And I was at the kitchen of bass show one year and I was literally standing in the Wellborn booth talking with Paul Wellborn and his kids and Angel and them were, there is, you know, hanging out right at the beginning of the show and one of the security guards comes up [00:51:00] and says, Mr.

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[00:51:27] Eric Goranson: Cause I was standing there and looked at it and all they did is put a new cover on it and it was a hundred percent copied and they were trying to

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[00:51:39] Eric Goranson: Yep. It's just outta control. Outta control. Betsy, thank you for all you do for the cabin industry and the American workers out there.

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[00:51:50] Betsy Natz: talk to. Thank you so much. We appreciate it. And um, again, thanks for having us. And if. Do you ever wanna bring myself back or one of our members? Let me [00:52:00] know and we'd be happy to do that. Eric, thank you for the time. We'll,

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