By Marcy Mason
Frontline Magazine
At a time when domestic manufacturing plants were falling like dominoes because Chinese goods were unfairly priced so low, M&B Metal Products refused to give in. In 2007, the third generation, family-owned business based in Leeds, Alabama, was the last wire hanger manufacturer in America.
“We could have been like all of our competitors that used to make hangers in the United States. They closed their plants and some of them started importing hangers from China. We could have done that, but we wanted to keep production here. We owe it to the people who have helped us be successful over the years to do everything we can to preserve that,” said Milton M. Magnus III, the president of M&B Metal Products.
M&B Metal Products stood alone against the fierce competition from China. The company, founded in 1943 by Magnus’ grandfather, Milton Magnus Sr., and his partner, Roy Brekle, was struggling.
“We had a plant in Virginia that we had to close down in 2006. It was a very painful and tough thing to do,” Magnus said. “We had 85 jobs there that we lost.”
Magnus fought back and filed petitions with the U.S. Department of Commerce and the U.S. International Trade Commission, alleging that Chinese manufacturers were selling wire hangers at below market or “dumped” prices.
“When we filed our dumping case against China in 2007, we were on life support,” Magnus said. “We really didn’t know how we were going to pay our legal bills.”
But Magnus filed the case and won, and for a brief time the company prospered. Then, Magnus and his management team noticed that the imported hangers were coming from other countries.
“We saw hangers coming in from Taiwan and Vietnam,” said Magnus, who filed another dumping case and won. Then the shipments moved from Vietnam to Thailand to Malaysia. “None of these countries were producing and shipping hangers to the U.S. prior to the dumping case against China.”
Suspected Scheme
It didn’t take long before Magnus and his management team suspected that the hangers were still being manufactured at the same Chinese factories.
Only now, the hangers were being shipped through different countries so that importers could avoid paying the extra taxes or antidumping duties that had been added to the price of the Chinese hangers to allow U.S. industry to compete on a level playing field.
As M&B Metal Products’ profits plummeted, Magnus reported his suspicions to U.S. Customs and Border Protection, using an online reporting system called “e-Allegations.”
“We filed e-Allegations from 2008- 2014, but nothing really happened,” Magnus said. “It was disheartening.”
The shipments from Thailand were growing, and in early 2015, Magnus sent an investigator to Thailand to see what he could find. The investigator obtained the Thai manufacturers’ financial reports.
“Most of them had no sales, no assets,’ Magnus said. “They were dummy corporations.”
When the investigator made onsite visits, he found little storefronts, not factories. So Magnus decided to file another allegation. Only this time, he met with CBP in person.
“We met with about eight CBP officials and handed them our in-country investigator’s report,” Magnus said. “They seemed so interested in the report. They listened intently and thanked us, and then we waited and waited for something to happen, but nothing did.”
Unbeknownst to Magnus, CBP was actively pursuing the allegation. “We were just as frustrated by the limitations and restrictions of the process,” said Troy Riley, executive director of CBP’s Trade Remedy Law Enforcement Directorate.
Magnus was determined though. A few years earlier, shortly after the ruling came out on the dumping case against China, he formed a coalition with other manufacturers in the steel industry that had dumping cases.
“They were companies that manufactured nails, threaded rod for bolts and screws, and other items such as bed springs,” Magnus said. “We all saw the same thing happening. Products were coming into the U.S. at very cheap prices from countries that had never produced these goods.”
The coalition wanted stronger enforcement and greater accountability.
“We crafted proposed legislation that we called ‘the Enforce Act’ and lobbied for about six years,” Magnus said. “We met with CBP officials, the National Association of Manufacturers, Congress, and we had White House meetings.”
Then the coalition grew beyond the steel industry. Other companies that were adversely affected by Chinese transshipments such as manufacturers of tissue paper and glycine also joined the coalition.
This article originally appeared in Frontline Magazine, a news publication run by CBP. Read the full original report at CBP’s website.
