Alliance rubber square off at ITC antidumping hearing

An antidumping and countervailing duty case involving rubber band imports from Thailand, China and Sri Lanka was the occasion of impassioned and often personal testimony at a preliminary hearing before the U.S. International Trade Commission.

Representatives of a U.S. rubber band manufacturer said they had to let their workers go and deny raises to remaining employees because of import competition.

However, distributors of imported rubber bands accused Alliance's executives of being "greedy opportunists" who were trying to blame foreign manufacturers for their own bad business decisions.

The ITC held the hearing at its Washington headquarters Feb. 20, in response to the petitions filed in January by Hot Springs, Ark.-based Alliance Rubber Co. under Sections 701 and 731 of the Trade Act.

According to Alliance, importers from those three countries are receiving subsidies from their governments and selling their rubber bands in the U.S. at less than fair value.

In 1999, Alliance had 250 employees and produced 25.5 million pounds of rubber bands annually, said Alliance President Bonnie Parker Swayze at the ITC hearing.

Now, its annual production is only 15 million pounds, and it employs only 176, Swayze said. Whereas 40 years ago there were 14 domestic rubber band manufacturers, now there are only three, she said.Alliance accounts for at least 90 percent of all rubber bands produced in the U.S., and its only real source of competition is imports from China, Sri Lanka and especially Thailand, Jason Risner, Alliance director of business strategy, said at the ITC hearing.

Last year, Alliance was surprised to find it had lost a contract with Staples Inc. to supply private label rubber bands, according to Risner. Staples assigned the contact to a supplier in Thailand, he said.

That contract, which began in the summer of 2016, was worth millions of dollars annually to Alliance, he said.

"We were told that Staples was switching its sourcing of rubber bands to Asia because it was offered one-half the price that Alliance was giving Staples," Risner said.

Alliance is concerned that Staples will source even more of its rubber bands from Thailand, and that Staples' competitors will follow suit, according to Risner.

Because of the Staples business, Alliance built a new 20,000-sq.-ft. warehouse adjacent to its Hot Springs factory, according to Risner.

"Alliance believed that the Staples sales would continue into 2018 and beyond," he said. But now that Alliance has lost the Staples contract, the warehouse is now useless, he said.

Distributors of the rubber bands from Thailand, however, argued that Alliance's assertions were misleading.Shipments of rubber bands from Thailand, Sri Lanka and China all declined substantially between 2015 and 2017, according to Lizbeth R. Levinson, the Washington attorney representing the importers.

Michael P. Aversano, co-president of rubber band distributor Frank Winne & Son Inc., accused Alliance of deliberately misrepresenting the rubber band market in its petitions.

"Alliance does not address the biggest factor affecting the price of a rubber band: the rubber content," Aversano said.

Alliance may have lost Staples' business because it refused to provide the lower-rubber-content, lower-price rubber bands Staples wanted for its private label, according to Aversano.

Kevin J. Jordan, president of rubber band distributor Schermerhorn Bros. Co., said it doesn't even compete with Alliance for the Staples business.

"We don't do retail, we don't do office supplies," Jordan said. "All Alliance talks about is price, price, price, as if all rubber bands are the same."

To build a new warehouse based on a contract that is bid every year was a poor risk, according to both Aversano and Jordan.

"Instead of blaming themselves for a horrible business decision, Alliance started this proceeding to blame their problems on other people," Jordan said.

The ITC is scheduled to vote by March 16 as to whether there is a reasonable indication of material injury to the U.S. rubber band industry because of imports.