Chinese trailer wheel makers push back on dumping charges

Chinese makers of steel trailer wheels and some key customers pushed back at a hearing Aug. 29 in Washington against allegations the makers are dumping their products on the U.S. market.

The hearing was called by the U.S. International Trade Commission (ITC) in response to a petition by Dexstar Wheel Co. Ltd., an Elkhart, Ind.-based manufacturer of steel wheels owned by Kenda Rubber Industrial Co. Ltd.

The complaint covers steel tubeless tire wheels with rim diameters of 12 to 16.5 inches, used road and highway trailers and other towable equipment, including utility trailers, cargo trailers, horse trailers, boat trailers, recreational trailers, and towable mobile homes.

Dexstar alleges Chinese makers are dumping their products at rates ranging from 30.48 to 44.35 percent.

Dexstar is considered one of only two remaining U.S. manufacturers of these type wheels. It filed its petition with the ITC under Sections 701 and 731 of the Trade Act. The ITC instituted the investigation Aug. 8.

Imports of said wheels totaled 50,656 units last year, valued at $73.8 million, increases of 18.1 and 21.3 percent, respectively. Dexstar claims imports grew 17.3 percent in the first half of 2018 to $48.3 million.

Commerce also will look into countervailing duties to determine whether Chinese producers are receiving unfair government subsidies. There are 52 subsidy programs alleged, including preferential lending programs, export credit subsidies, export credit insurance subsidies, export credit guarantees, provisions of goods and services for less than adequate remuneration, direct tax exemptions and reductions, indirect tax exemptions and reductions, and grants.

The ITC is scheduled to make its preliminary injury determinations on or before Sept. 24.

At the hearing, Dexstar said China accounts for more than 95 percent of steel trailer wheel imports, and Chinese makers gained market share during the 2015-18 period of review at the expense of domestic producers.

Executives from Dexstar and related companies testified at the hearing about the alleged damage caused by Chinese imports.

Jerry Sampson, president of Dexstar sister company Americana Tire and Wheel, said he regularly buys steel trailer wheels for his operation, but he does not buy 12- or 13-inch wheels from Dexstar because the price difference in those sizes between Dexstar and Chinese manufacturers is just too great, he said.

"I want to buy all my wheels from Dexstar," Mr. Sampson said, "but I simply can't pay more for my wheels than my competitors do."

Competition from Chinese wheels has forced Dexstar to reduce its manufacturing operation to one full and one partial shift per day from three shifts, General Manager Ray Oglesby said.

"Market demand is up, but we are hurting because we can't compete," Mr. Oglesby said. "Because we aren't producing wheels, I can't keep workers on."

Patricia Bowen, head of sales and customer service at Dexstar, said domestic wheel manufacturers offer advantages such as cheaper shipping, better customer service, shorter lead-times and smaller purchase requirements.

Despite the great feedback Dexstar gets, the services it provides can't compete with the cheaper prices offered by the Chinese, she said.

Dexstar regularly gets calls for help from trailer manufacturers facing wheel shortages, according to Ms. Bowen. "But once the emergency has passed, they go back to the Chinese wheel makers to get the lower Chinese prices," she said.

However, representatives of Chinese wheel makers said Dexstar's testimony painted an incomplete picture at best of the U.S. steel trailer wheel market.

Ting-Ting Kao, an attorney for the law firm of White & Case L.L.P. representing the Chinese manufacturers, said the steel trailer wheel market has several distinct conditions of competition.

For example, there are several U.S. wheel assembly operations in competition with Americana Development, according to Ms. Kao.

"Large independent assemblers do not want to purchase components from America, because then they would be dependent on a competitor," she said.

The Recreational Vehicle Industry Association testified as well, urging the ITC to reject Dexstar's petition based on a lack of evidence that imports are injuring the domestic industry and imposing duties would have a "devastating impact" on downstream industries such as the RV industry.

The RVIA also claims Dexstar is not capable of supplying the needs of the U.S. RV and cargo trailer industries, as it claims.

The U.S. RV industry expects to ship nearly 480,000 travel trailers this year, with a minimum of four to six wheels on each. This means the RV industry will need approximately 2.5 million wheels to build these travel trailers.

"None of our member manufacturers is willing to bet that Dexstar can handle that capacity," the association said.

Tim Miller, president of Lionshead Specialty Tire & Wheel L.L.C. in Goshen, Ind., also testified against the imposition of import duties, saying current and expected increase in U.S. demand for steel trailer wheels cannot be met by U.S. and third-country (non-Chinese) producers.

Mr. Miller also argued that Dexstar lacks the capacity and geographic reach to supply his company and/or the RV and trailer industries reliably.