Factory Man : How One Furniture Maker Battled Offshoring, Stayed Local - and Helped Save an American Town (9780316322607)

by Macy, Beth

  “It’s getting to be like a murder in New York City,” Slaughter replied. The closings were so common that his publication barely deemed them news.

  That’s when it dawned on Slaughter: With Dorn’s track record, it was wholly possible that John Bassett had just irrevocably moved the entire industry’s cheese.

  When Slaughter called the importers and Chinese manufacturers for comment, it was clear that several weren’t taking the petition seriously. “I said, ‘If they can get the ITC to tell Commerce to initiate an investigation, you might be looking at duties,’ and people just laughed at me,” Slaughter told me.

  The beat reporter knew his sources well and didn’t mind offering some behind-the-scenes advice.

  “You better read the law,” he told them.

  The law didn’t care if John Bassett had once imported 9 percent of his furniture (though he was now down to just 2 percent) or if Stanley was already importing much of its bedroom furniture from China. The law didn’t care that La-Z-Boy now had forty-three employees managing import operations. When the opposition argued that placing duties on Chinese exports would not return jobs to the United States, the law didn’t even bother to yawn.

  If the petition struck opponents as disingenuous or hypocritical—that mattered not. The law especially didn’t care that nine out of ten economists characterized the Tariff Act as “being a total departure from economic sense,” as one scholar told me. “Jabberwocky economics would be the best way to characterize it.”

  Economic theory had nothing to do with this battle, Slaughter realized.

  The Tariff Act of 1930 was what mattered most in deciding the case. If John Bassett won, the cheese was his to move wherever he damn well wanted.

  By the time I interviewed John Bassett about the fracas, nearly a decade later, his tone had mellowed. He was all about not criticizing people for the tough business choices they’d made—at least, not publicly—and taking the high road, especially where retailers and relatives were concerned.

  But the fiery tone of JBIII in the fall of 2003 was evident in the recording Rose Maner made of a speech he gave to the High Point Rotary Club. He led off by jabbing at President Bush for his refusal to get involved in the furniture case. Bush had issued tariffs of 8 to 30 percent on steel imported from Europe, Asia, and South America. “A lotta people didn’t like it, and it was probably politically motivated,” he told the group. “But we’re bedroom furniture. I don’t think it’s that vital to the United States. And I don’t think the president is gonna give us any protection.”

  The coalition wasn’t in touch with the White House on the matter, but with the wars in Afghanistan and Iraq now in full swing—and America increasingly in debt to China to help pay for them—it was obvious the Bush administration wasn’t a fan of angering the Chinese.

  But the Tariff Act had been on the books for more than eighty years, and it didn’t require congressional or presidential approval. “When China joined the WTO in 2001, they signed a contract that they would be a nonmarket economy for fourteen years,” JBIII explained to the Rotary Club group. “What this means is… you don’t know how they structure their profits. In fact, China has no SEC, no public reporting or disclosure rules, or financial statements you can see. China is a secret country, and I’ll be very frank: The Chinese are wonderful, honorable and noble. They’re hardworking, ambitious people. But their economy is set up with the most beautiful blend of entrepreneurship and communism.”

  He lauded the State of Alabama’s recent efforts, via $253 million in incentives, to lure the country’s first Mercedes-Benz plant to the town of Vance. Government support of industry was critical, he said, but in a system of legal trade, it was equally critical that government subsidies be transparent. “In China, there’s no way to know what we’re fighting against. So the Chinese never lose. They keep moving. It’s like shadowboxing. You can’t hit somebody if you can’t find ’em.”

  It was a fury of flag-wrapping showmanship that included the line “If you cut me to the marrow of my bone, it’s red, white, and blue.” (Another patriotism-slathered favorite: “I’m not an R or a D. I’m an A. For American!”)

  John Bassett wanted to be clear, he said: He was not asking for a handout. He just wanted the U.S. government to enforce its laws. He hoped, too, to motivate other manufacturers to rise to the challenge of foreign competition rather than close their factories and turn into importers. “One of our biggest problems is turning the attitude around in this country, making people believe in us again.

  “Does that mean we will never close a plant? If we’re inefficient, we will close a plant. But I want to be able to say to everybody in my organization… to look them straight in the eye and tell them that I did everything in my power to save their job. I want a free and fair playing field, and I’m willing to fight for it.

  “I am not gonna turn tail and run.”

  The week before, he’d shared a similar sentiment with North Carolina senator Elizabeth Dole, who pledged to gather support in the Senate. Doug Bassett was already busy midwifing the Congressional Furnishings Caucus, a bipartisan group of twenty-seven congresspeople who represented furniture-heavy districts.

  The clock was ticking. With millions working in its furniture industry, China was now the world’s leading furniture exporter. And projections indicated that in just three more years, furniture would be China’s number one export to the United States.

  Any political strings that could be pulled should be, John told the High Point Rotary Club. A few weeks later, JBIII hoped to meet President Bush, and he planned to give him an earful—during the three-minute audience he’d be lucky to get—about how, as American citizens, “we deserve to have the law applied!”

  A Republican-leaning independent and regular campaign contributor (mostly, but not exclusively, to Republicans), he got a mere twenty seconds with President Bush during a million-dollar campaign fund-raiser in Winston-Salem.

  “Mr. President, we are the ones who have the antidumping campaign against Chinese bedroom furniture,” John said, after having his photograph taken with Bush. “We’d appreciate your help.”

  “Contact the Commerce Department,” Bush told him, shaking his hand and summoning the next donor in line. There was no hint of recognition, no “Thanks for your donation.”

  Still, that was a better response than the one T. C. Morgan received. A Republican and former vice president of the North Carolina Association of Furniture Manufacturers, Morgan had tried to arrange a meeting between Bush and some factory workers and executives, including the state manager for the textile workers’ union. A few months before, Pillowtex had announced it was closing sixteen plants—including the one in Henry County’s Fieldale, near Bassett—and eliminating 6,450 jobs.

  “I actually thought it would be a good thing for the president to come meet with workers who have lost their jobs,” union manager Anthony Coles told the Charlotte Observer, “rather than just meet with people who can afford a $2,000 dinner.”

  Bush had been happy to shake John Bassett’s hand, and he even spoke with regional community college officials about job training. But a meeting with displaced factory employees could not be worked into his reelection-year schedule.

  20

  Mr. Bassett Goes to Washington

  By the time the judgment came down, there were lawyers on the other side coming over to thank him.

  They’d been wanting to start their own practices, and they didn’t know how they were gonna do it—till this case came along.

  —JOHN’S DAUGHTER, FRAN BASSETT POOLE

  The building that houses the U.S. International Trade Commission is all marble and reflective glass. It juts out onto Washington’s E Street like the prow of a ship—rounded, confident, and impervious to the outside world.

  ITC decisions hinge on six people, lawyers usually—three Democrats and three Republicans—whose job is to determine whether domestic industries are being unfairly harmed by imports that are dumped
by foreign companies or by companies that are propped up by foreign government subsidies.

  When President George Bush nominated West Virginia lawyer Charlotte R. Lane, a Republican and a former state delegate, to the commission in August 2003, it was unclear how much he knew about his new nominee. She was fifty-three, a former state utility commissioner, and, perhaps most important for the task at hand, the daughter of a factory worker.

  Lane’s father had worked as a custodian for the American Cyanamid plant at Willow Island for years, and as a child, she attended annual picnics and played with the other factory workers’ kids. As she grew older and advanced up the tax-bracket ladder, it happened that she developed a passion for furniture, especially antiques and reproductions.

  When Lane and some of her fellow commissioners ventured to Galax on a standard preliminary fact-finding tour, it wasn’t the look of the mid- to low-end furniture at Vaughan-Bassett that caught her eye; it was the manufacturing details. When JBIII showed the touring delegation his factory and explained that the finishing process was what separated a moderately priced piece from a high-end item, the furniture devotee in her got excited.

  To Lane, furniture was a lot more charming than magnets, plastics, or swimming-pool chemicals—subjects of some of the other antidumping cases on the ITC docket.

  Furniture, you could get your arms around. You could touch it, tell a story about where it came from. Furniture was a kind of status symbol, like the BlackBerry John Bassett used to call people at all hours of the day and night.

  Furniture was a snapshot of who you were when you bought it, how much disposable income you had, how you felt about the person you were buying it with.

  “The wood itself, before you put on the finish, it was very substantially made, and it was good wood and good craftsmanship,” Lane recalled of her Galax tour during a September 2012 interview in her Charleston, West Virginia, law office. (Like Joe Dorn, she gave me exactly one hour.)

  JBIII showed off the equipment the company had bought as it embraced new “lean manufacturing” techniques. He had spent nearly $40 million in the past five years on high-tech German and Italian routers and state-of-the-art kilns—a capital investment rate that was double his competitors’. The equipment allowed him to make furniture with fewer people, but he didn’t immediately replace the people with the machines, he explained. He allowed attrition to do the work.

  Before the tour, Lane said, she hadn’t understood the full extent of his family ties to the smokestacks; knew nothing about the cousin companies inside the coalition and out. He had the famous Bassett name, of course. But more critical, JBIII had what Congressman Boucher had already witnessed inside the Beltway: that rare ability to simplify something complicated so that you laugh or shake your head—like his notion of comparing cheap Chinese imports to moonshine. (“You got to give people somethin’ to re-mem-ba,” John told me once, winking.)

  With the commissioners gathered literally in his sawdust, the master showman was in an even better position than when he’d hauled the furniture into the Greensboro courtroom to defend himself against the Lexington trade-dress lawsuit. He had them exactly where he wanted them.

  It was mid-2003, the preliminary ITC hearing would soon be on the docket, and there were things JBIII wanted the commissioners to know. He knew he’d inspired a deep animosity, not just from some of his relatives but also from some longtime customers. Jake Jabs, an aptly named Colorado retailer who had once been among his largest dealers, had canceled all Vaughan-Bassett orders the moment the petition was filed. Jabs logged about 150,000 air miles annually on buying expeditions, and he loved to search out remote, unknown factories—especially in China. When John chided the suppliers at his Greensboro meeting and told them they should support the coalition “because you’re an American, that’s why!” Jabs read about it in the press and immediately griped, “Nice political speech, John.”

  The gloves were off. Jabs told a Furniture/Today reporter that the coalition consisted of a “bunch of old North Carolina has-beens crying over spilt milk. It’s a backwards, antiquated, dark-ages type of mentality that would even think of this.”

  The animosity troubled John Bassett, and when he shared that with Lane during the tour, it made a lasting impression. “The fact that he was so willing to go out there and fight for what was right in the face of so much opposition… it was so personal to him,” she explained.

  His genius, of course, was that he also managed to make it personal to her. When he pointed out the vacant factories near his own, she recalled the plant closings she’d seen in her home state. She remembered newspaper articles about desperate people arrested for stealing copper out of abandoned plants, just like in Bassett. She felt for him when he described the sleepless nights he’d spent—staring at the ceiling, worrying whether he was going to have to lay off people whose fathers and grandfathers had worked for his family.

  During Lane’s eight-year tenure, the ITC reviewed 192 claims of illegal foreign-trade practices, and domestic producers had prevailed sixty-nine times. When I asked why more domestic industries hadn’t brought cases before the ITC when so many companies were closing factories and rushing overseas, she blamed legal fees and lack of awareness. “Many people don’t even know the remedy is available. So by the time that people learn there’s a venue at the ITC to bring a case, a lot of the injury has already occurred. It’s very difficult for industries that are being injured by unfair competition to have the money for legal fees.”

  When Lane wagered that legal fees for a typical antidumping case ran “somewhere between a half million or a million or more,” I almost did a spit-take with my coffee. Furniture analysts have suggested that the bedroom-furniture case has cost $5 million to $7 million, but several trade lawyers told me that $5 million was pocket change compared to the actual legal bills, which are still ongoing—though John and Wyatt refuse to divulge how much they’ve paid to Joe Dorn’s firm.

  John would rather talk about how the government made him display EEOC posters notifying workers of their right not to be discriminated against because of gender, race, age, or disability. But the government did nothing to inform those same workers about illegal trade as outlined in the Tariff Act of 1930—something with potentially greater bearing on their jobs.

  During a lobbying visit to the Small Business Administration in the fall of 2003, John chided the government for spending $33 million to advertise and market its newly redesigned twenty-dollar bill while doing virtually nothing to educate manufacturers about the recourse they might have against illegal trade.

  “I can assure you, there’s no one in my family that doesn’t know how to spend twenty dollars!” he barked.

  Powell Slaughter remembers the moment it hit him. He was sitting in the packed U.S. International Trade Commission hearing room, and he realized: all the good-old-boy backslapping that had been going on for generations in the industry, all the schmoozing dinners at Market, all that butter-squirting chicken Kiev—you could stick a fork in that now.

  It was an exciting time to be a reporter for Furniture/Today, even though getting the players to reveal anything about their strategy had been “like pulling teeth,” he said. He’d had no idea John Bassett had sent a Taiwanese interpreter turned investigator to Dalian, for instance. No idea that John had allegedly strong-armed his own nephew, telling Rob Spilman, “I sure would hate to see people picketing your factories” if Bassett Furniture didn’t join the coalition, according to Rob.

  Once Bassett was in the coalition, John reasoned, Stanley would have to join, or risk losing face in the community, since Stanleytown was literally next door to Bassett.

  “You saw the two sides arrayed, literally on opposite sides of the courtroom… and you just kinda looked at people in that industry, so totally divided now, and you kinda went, Wow.”

  The lawyers on both sides had never argued such a heated case, full of subterfuge and flamethrowing words like extortion and fraud. The fiery exchanges betwee
n Joe Dorn and his opponent at the November 2003 preliminary hearing featured surreptitiously recorded phone messages, the dramatic thud of a surprise-document throw-down, and the worst insult a fourth-generation American furniture maker like Rob Spilman could hear: that the Chinese made better furniture than Bassett Furniture Industries. (If Mr. J.D. had rolled over in his grave at that one, then Larry Moh was surely smiling in his. Deliver a donkey, my ass.)

  The Chinese companies had cast their lot with another top-shelf Washington trade lawyer, John Greenwald, a Jim Belushi look-alike and a former Commerce Department official. Greenwald’s father had been a lawyer and economist who spent his career helping to guide international trade policy for the United States, serving as a representative to the General Agreement on Tariffs and Trade, the post–World War II treaty regulating international trade and a precursor to the WTO.

  Greenwald had argued both sides of the trade-dispute aisle, but in this case it was crystal clear that he was his father’s son. Especially when the first thing he asserted during his opening remarks was that the petition was an out-and-out fraud.

  It went downhill from there. Casting the petitioners as hypocrites who were themselves importing containers, Greenwald played a voicemail message left by a salesman at Lea Industries (a subsidiary of fellow petitioner La-Z-Boy), advising a Rooms To Go manager not to worry about the antidumping case. If duties were leveled against the Chinese manufacturers, he would make sure the retailer could still buy the same products from him—via a factory in Vietnam, where duties didn’t exist.

  “We have been working on this backup… so the ugly stuff can’t happen once you buy this furniture from us,” the Lea salesman said on the recording.

  “Now, I hope that Mr. Kincaid and the Bassett family and the Vaughan family have a sense of shame about the testimony they gave about third-country sourcing,” Greenwald said. “That tape recording says in a nutshell what I wanted to say about the affirmatively misleading nature of their testimony. It’s business fundamentals, it’s not dumping, that’s driving the increase of imports from China and elsewhere.”