Anti-Dumping: A Topic Every Practitioner and Consultant Should Know About

In this one case, the so called "victim" is a supplier, Leggett & Platt, that I know about from firsthand experience in the metals innerspring sourcing world. I say this because a couple of years back, my wife's consulting firm, Aptium Global, was involved in a mattress innerspring global sourcing project (I even joined her on a trip to China as part of it). It turned out the new Chinese supplier, in the domestic buying organization's words, produced parts of a better quality than their incumbent suppliers (the folks who would later file the anti-dumping complaint). And they were able to purchase these springs at a double digit discount relative to what they paid L&P and others in the past.

But now that this company and others can no longer purchase globally sourced springs because importers have pulled out of the market and export producers selling direct are gun shy, Leggett and Platt and others have raised prices significantly. The irony of this is that in their court filing, L&P is claiming they were "wronged" by the market and those who dumped springs on the US.

While I can believe they were wronged -- by crappy global sourcing and supply chain management, not the market, but more on that in a minute -- I find it impossible to believe that three countries systematically sold goods under cost into the US market (as the anti-dumping complaint claims). That's ridiculous. In a growing country like China, for example, domestic demand for inner springs would negate any opportunity for a manufacturer to sell at a loss (not to mention the cost of energy and raw materials). Simply put, if there’s not profit involved, they’re not producing.

So what really happened here? Bad sourcing and bad management, that's what. On the part of L&P. In my view, the failure of companies like Leggett and Platt to create new, global options for their customers -- either from buying up or building capacity abroad -- represents a sourcing and business failure that their shareholders should be forced to pay for (not to mention the executives who should not be wasting time on Aberdeen's advisory board when they should be figuring out how to actually compete in the market, rather than crying to the courts). Instead of bringing in the "A" -- or even the "B" -- Spend Management team, Leggett and Platt hired a few lawyers and lobbyists, took out the tin cup and cried to a sympathetic "fair trade" Federal ear. And as a result, they're forcing all of their customers to pay higher prices because of their own inability to deploy effective global sourcing and Spend Management practices that keep them competitive with the world price for a given category.

As I mentioned at the beginning of this post, I believe this anti-dumping case matters for all companies engaged in any type of global sourcing activity. For if Leggett and Platt can play the part of the victim successfully -- convincing others that they're not incompetent from a global sourcing perspective themselves, but rather the victim of globalization itself -- then other companies will whine successfully to Uncle Sam too. And that will mean if you're sourcing globally today and domestic alternatives exist to what you're buying, you could very well find yourself losing your offshore options. In other words, think of the anti-dumping statutes as a type of discretionary reverse tariff that can be invoked at anytime.

- Jason Busch