In the Matter of:	)

) Investigation No.:

IRONING TABLES AND CERTAIN	) 731-TA-1047 (Final)

PARTS THEREOF FROM CHINA	)

REVISED AND CORRECTED COPY

OPEN SESSION

Pages: 1 through 297 (with excerpts)

Place: Washington, D.C.

Date: June 16, 2004

THE UNITED STATES INTERNATIONAL TRADE COMMISSION

In the Matter of:	)

)

IRONING TABLES AND CERTAIN	) Investigation No.:

PARTS THEREOF FROM CHINA	) 731-TA-1047 (Final)

Wednesday,

June 16, 2004

Room No. 101

U.S. International Trade Commission

500 E Street, S.W.

Washington, D.C.

The hearing commenced, pursuant to notice, at

9:31 a.m., before the Commissioners of the United States

International Trade Commission, the Honorable DEANNA

TANNER OKUN, Chairman, presiding.

APPEARANCES:

On behalf of the International Trade Commission:

Commissioners:

DEANNA TANNER OKUN, CHAIRMAN

JENNIFER A. HILLMAN, VICE CHAIRMAN

MARCIA E. MILLER, COMMISSIONER

STEPHEN KOPLAN, COMMISSIONER

CHARLOTTE R. LANE, COMMISSIONER

DANIEL R. PEARSON, COMMISSIONER

APPEARANCES: (cont'd.)

Staff:

MARILYN R. ABBOTT, SECRETARY TO THE COMMISSION

WILLIAM R. BISHOP, HEARINGS AND MEETINGS

COORDINATOR

MEGAN SPELLACY, INVESTIGATOR

HEATHER SYKES, COMMODITY ANALYST

MARY PEDERSEN, ECONOMIST

JOHN FRY, ACCOUNTANT

RHONDA HUGHES, ATTORNEY

DOUGLAS CORKRAN, SUPERVISORY INVESTIGATOR

In Support of the Imposition of Antidumping Duties:

On behalf of Home Products International, Inc.:

CHARLES F. AVERY, JR., Senior Vice President,

Finance, Home Products International, Inc.

PETER GRAVES, Vice President Sales, Home Products

International, Inc.

JOE DEPPEN, Vice President, Manufacturing, Metal

Technology, Home Products International, Inc.

MICHAEL D. BRADLEY, Professor of Economics, The

George Washington University

FREDERICK L. IKENSON, Esquire

ROBERTA KIENAST DAGHIR, Esquire

Blank Rome LLP

Washington, D.C.

In Opposition to the Imposition of Antidumping Duties:

On behalf of Whitney Design, Inc.; Polder, Inc.; and Harvest International Housewares, Ltd.:

JAMES GLENN, President, Whitney Design, Inc.

MARK BROWN, Vice President, Finance, Whitney

Design, Inc.

CALVIN SCOTT, President, Polder, Inc.

RON HO, Managing Director, Harvest International

Housewares, Inc.

RICHARD BOLTUCK, Economist, Charles River

Associates, Inc.

APPEARANCES: (cont'd.)

In Opposition to the Imposition of Antidumping Duties:

On behalf of Whitney Design, Inc.; Polder, Inc.; and Harvest International Housewares, Ltd.:

WILLIAM E. PERRY, Esquire

J. PATRICK BRISCOE, Esquire

Garvey Schubert Barer

Washington, D.C.

I N D E X

PAGE

OPENING STATEMENT OF FREDERICK L. IKENSON, ESQUIRE,	9

BLANK ROME LLP

OPENING STATEMENT OF WILLIAM E. PERRY, ESQUIRE,	14

GARVEY SCHUBERT BARER, ESQUIRE

TESTIMONY OF FREDERICK L. IKENSON, ESQUIRE,	18

BLANK ROME LLP

TESTIMONY OF PETER GRAVES, VICE PRESIDENT SALES,	19

HOME PRODUCTS INTERNATIONAL, INC.

TESTIMONY OF MICHAEL D. BRADLEY, PROFESSOR OF	30

ECONOMICS, THE GEORGE WASHINGTON UNIVERSITY

TESTIMONY OF JOE DEPPEN, VICE PRESIDENT,	41

MANUFACTURING, METAL TECHNOLOGY, HOME PRODUCTS

INTERNATIONAL, INC.

TESTIMONY OF JAMES GLENN, PRESIDENT, WHITNEY	143

DESIGN, INC.

TESTIMONY OF MARK BROWN, VICE PRESIDENT,	149

FINANCE, WHITNEY DESIGN, INC.

TESTIMONY OF CALVIN SCOTT, PRESIDENT,	151

POLDER, INC.

TESTIMONY OF RON HO, MANAGING DIRECTOR,	157

HARVEST INTERNATIONAL HOUSEWARES, INC.

TESTIMONY OF RICHARD BOLTUCK, ECONOMIST,	159

CHARLES RIVER ASSOCIATES, INC.

I N D E X

PAGE

CLOSING STATEMENT OF MICHAEL D. BRADLEY, PROFESSOR OF	293

ECONOMICS, THE GEORGE WASHINGTON UNIVERSITY

CLOSING STATEMENT OF RICHARD BOLTUCK, ECONOMIST,	294

CHARLES RIVER ASSOCIATES, INC.

P R O C E E D I N G S

(9:31 a.m.)

CHAIRMAN OKUN: Good morning. On behalf of the United States International Trade Commission, I welcome you to this hearing on Investigation No.

731-TA-1047 (Final) involving Ironing Tables and Certain Parts Thereof From China.

The purpose of this investigation is to determine whether an industry in the United States is materially injured or threatened with material injury by reason of less than fair value imports of subject merchandise.

Before we begin, I would note that the Commission has granted a request from Respondents to hold a portion of this hearing in camera. We will begin with the public presentations by Petitioners and Respondents. We will then have a 10 minute in camera session by Respondents, followed by a 10 minute in camera rebuttal presentation by Petitioner if so desired.

Only signatories to the APO will be permitted in the hearing room during the in camera session. Following the in camera presentations we will resume with public rebuttal and closing remarks.

Schedules setting forth the presentation of this hearing, notice of investigation and transcript order forms are available at the Secretary's desk. All prepared testimony should be given to the Secretary. Do not place testimony directly on the public distribution table.

As all written material will be entered in full into the record, it need not be read to us at this time. All witnesses must be sworn in by the Secretary before presenting testimony. I understand that all parties are aware of time allocations. Any questions regarding the time allocations should be directed to the Secretary.

Finally, if you'll be submitting documents that contain information you wish classified as business confidential, your requests should comply with Commission Rule 201.6.

Madam Secretary, are there any preliminary matters this morning?

MS. ABBOTT: Yes, Madam Chairman. Vice Chairman Hillman?

VICE CHAIRMAN HILLMAN: I would only want to note for the record and for everyone in the room that today marks the final day that Chairman Okun is serving as the chairman of the Commission, and I just wanted to take this minute to congratulate her on the superb job that she has done running this agency and the extremely fair and careful and thorough job she has done in presiding over each and every of the many hearings that the Commission has had during her two-
year tenure as our chairman.

Our congratulations to her on this, the final day of her chairmanship.

CHAIRMAN OKUN: Thank you very much, Vice Chairman Hillman.

(Applause.)

CHAIRMAN OKUN: Let me just say thank you, and thank you particularly to my Commissioners, both old and new, who are here. I've had a tremendous two years working with all of you and very much appreciate the support and advice you've given me throughout these two years.

Also, I'll just take a moment to thank you, Madam Secretary, Mr. Bishop and the other members of the Secretary's staff who have helped throughout my chairmanship in putting together hearings, meetings and everything else that goes with the job and to all the staff I've been able to work with. It's been a pleasure.

I would also just want to note in the middle of that and not related, but we do have four visiting staff members from the Korea Trade Commission here today visiting the ITC on a training program for the Department of Commerce and ITC, and I do also want to extend my special welcome to them and hope that they have an informative visit while they're here.

If there is no other business, we will now go to opening remarks.

MS. ABBOTT: Opening remarks on behalf of Petitioner will be made by Frederick L. Ikenson, Blank Rome.

CHAIRMAN OKUN: Good morning, Mr. Ikenson.

MR. IKENSON: Good morning, Madam Chairman. Madam Chairman, members of the Commission and staff, I, too, would like to share the Vice Chairman's congratulatory remarks to you, Madam Chairman, for your excellent stewardship, if I may be permitted to say so.

I am the attorney for the Petitioner, Home Products International, Inc., also known as HPI. The Petitioner is the last remaining U.S. producer of floor standing, metal top ironing tables. We believe that the domestic industry producing floor standing ironing tables has been materially injured and is threatened with further injury by reason of the subject imports.

Over the period of this investigation, imports have soared. Imports increased from 575,000 units in 2001 to 1.5 million units approximately in 2002 and again increased to approximately 2.5 million units last year.

While I am somewhat constrained by the administrative Protective Order, I can say that the import growth has been explosive, whether examined in absolute terms or relative to U.S. production or U.S. shipments, both of which have dropped dramatically. In a word, the import volume and import growth have been significant.

Respondents dispute the significance of this import volume and growth by suggesting that imports were largely accounted for first by Whitney Design, who, according to the Respondents, was merely substituting ironing tables from China to service the same customer base it has served when it had been a U.S. producer and, second, by high end products which Respondents claim HPI has not made and has no interest in making.

The Respondents' efforts to relegate the flood of imports to something less than significant just doesn't work. First, non-Whitney Design imports were huge, and it is evident that Whitney Design marketing activities have not been as benign as they suggest.

Second, there is nothing to suggest that an unduly high percentage of imports is concentrated at the high end. On the contrary, there is every reason to believe that imports are overwhelmingly in the high volume/low end segment where HPI is most affected. It is also not the case that HPI has not made high end ironing tables.

With respect to price effects, when properly analyzed, imports have undersold the domestic industry's most critical product, the OPP or opening price point T-leg. This is true for both the perforated top T-leg and the mesh top T-leg. HPI makes and sells both of them.

Any suggestion that HPI does not have the interest in making and selling mesh T-legs is demonstrably false. The majority of the Petitioner's T-leg sales has been of the perforated type, and indeed many of its customers, including extremely large retailers, purchase only perforated top ironing tables.

Some customers have purchased both types from HPI, and a few have purchased only mesh top. The number of HPI's mesh top T-leg sales has been relatively low not because of disinterest on the part of HPI, but because dumped mesh top T-legs from China have been cheaper.

As for the impact of dumped imports on the domestic industry, we see what has happened to its production, shipment, market share, employment, sales and profits. All these indicators have plummeted during the period of investigation. They all necessarily had to fall in response to Chinese import growth. Chinese ironing tables were virtually the only other ironing tables in this market except for an inconsequentially small number of very high end tables from Europe.

Finally, there continues to be a threat of future injury. Based on a record that ended a year earlier in the first quarter of 2003, the Commission found a reasonable indication of a threat of injury, given numerous adverse conditions in both the U.S. and in China, including rapid and significant import volume and market penetration, likely price depression and suppression, increased foreign capacity, ability of Chinese producers to engage in product shifting and declines in various indicators of industry well-being.

None of these conditions abated, but in fact over the complete year 2003 greatly worsened for the industry. The gloomy scenario described by HPI during the preliminary phase has come true and has certainly been playing out as predicted.

Respondents claim that we have nothing to worry about because based on a rather stale document they say freight costs are rising. They have fallen since that time and, of course, full year 2003 was a banner year for China's imports with very little cause for comfort to us.

CHAIRMAN OKUN: Mr. Ikenson, I just want to remind you that your red light has been on.

MR. IKENSON: I have one final closing sentence if I may.

CHAIRMAN OKUN: Okay.

MR. IKENSON: The Respondents are claiming that China's steel costs are rising and, therefore, the Chinese imports pose no basis for a threat because of that.

In fact, the startling, if not earth-
shaking, developments over the past few months in the steel consuming community has been that prices of hot-
rolled and cold-rolled steel sheet in the United States have been soaring while prices for such inputs in China have been dropping.

Thank you. Thank you for indulging me.

CHAIRMAN OKUN: Thank you. As we are often reminded, there is never a one-minute sentence from a lawyer.

MS. ABBOTT: Opening remarks on behalf of Respondents will be made by William E. Perry, Garvey Schubert Barer.

CHAIRMAN OKUN: Good morning, Mr. Perry. If you can turn your microphone on?

MR. PERRY: My name is William Perry of the law firm Garvey Schubert & Barer, and I'm here representing Whitney Design, Polder and Harvest in this case.

I would like to start with a quote by Mr. Bradley, the economist for HPI, at the end of the preliminary conference. "Today in our presentation we didn't even talk about the issue. It's not a major part of our theory of the case, and it's not an essential part of our injury argument."

That issue was the closure of Whitney's U.S. production facilities. How the times have changed. As you can see from page 1 of HPI's prehearing brief, their major argument has completely changed in the final investigation. HPI now argues that there are drastic declines in U.S. market share, sales, production, capacity, capacity utilization, shipments, employment, et cetera, et cetera. All these trends are based on including Whitney's data in the domestic industry. Apparently the lag didn't happen. HPI didn't get hit as bad as it said it would in the preliminary.

Why didn't HPI concede this point at the preliminary conference? Because as Whitney testified at the preliminary conference and will testify today, it was HPI that drove the prices into the ground long before the Chinese showed up, in effect driving Whitney Design out of business.

Whitney had to close its U.S. factory not because of the Chinese, but because HPI had driven the prices so low in the U.S. market that Whitney could no longer make a profit producing ironing tables with its old production facility.

Not only did HPI drive the prices down in the past, as Whitney will testify; HPI continues to drive the prices down in the USA market today. This is highly unusual. As Whitney will testify, it has raised its price to WalMart, the single largest purchaser of ironing tables in the United States, at a time when HPI was significantly lowering its U.S. price to WalMart.

Understand, there are only two competitors at Walmart, Whitney and HPI. Whitney's price is going up. HPI is lowering theirs down. HPI is the price leader, not the Chinese.

Why? Why? In their brief they say it's not logical. We can only think maybe they're trying to feign injury. Maybe they're trying to play with their stock price because they're trying to take it over. We don't know, but this is a very unusual situation.

Whitney had to raise its U.S. prices not because of antidumping duties. Its supplier in Since, which has a very low dumping margin in the preliminary determination. Whitney raised its price to WalMart because prices for raw material and ocean freight from China are shooting up like a rocket, as high as 70 percent for Chinese steel, the primary raw material in ironing tables in China.

In addition, HPI's arguments that a mesh top T-leg ironing board commands a premium over a perf top T-leg ironing board simply does not wash. Although certain retailers do prefer the mesh top ironing board over the perf top ironing board, keep in mind that at WalMart those products are sold side-by-side or really at the same price point, so certain consumers prefer it, but at the end user level the prices are the same.

The point again is where is the underselling? Where is the causation? Finally, as both Whitney and Polder will testify, internet auctions no longer have the significance in the U.S. market that they had at the time of the preliminary. In fact, Whitney has not seen an internet auction in nine months.

Why? A retailer simply cannot evaluate quality with a blind internet auction. The retailer wants to buy value, not simply the lowest price, and that cannot be done with a blind internet auction. Polder in fact has won at internet auctions not with the lowest price, but because he sold the best value for the dollar.

Regarding the high end products, I should mention that the reason why this came up at the staff conference, the staff asked HPI what are you importing, and they said well, we're importing the high end product from China. That's where the high end product came up.

Finally, look at the data and see whether there's any indication in all of the pricing data before you to confirm the existence of the delayed reaction implementation lag postulated by Petitioner's economist, Professor Bradley. Do you see it? Look at the pricing data and look at who's the price leader in this case. We'll look at all those questions today.

Thank you very much.

CHAIRMAN OKUN: Thank you.

Madam Secretary, if you could please call forward the first panel?

MS. ABBOTT: The first panel in support of the imposition of antidumping duties, please be seated.

All witnesses have been sworn.

(Witnesses sworn.)

CHAIRMAN OKUN: Welcome again to all of you. Mr. Ikenson, it looks like all members of your panel are seated. You may begin.

MR. IKENSON: Thank you, Madam Chairman. Good morning again. I'd like to begin just by introducing my colleagues, and then they will begin their testimony.

CHAIRMAN OKUN: If you could just move your microphone a little closer to you as you do that, please?

MR. IKENSON: Surely. On my immediate left is Peter Graves, Senior Vice President of Sales at HPI. At his left is Joe Deppen, Vice President, Manufacturing, Metal Technology, at HPI, and at my far left is Professor Michael Bradley of George Washington University.

Immediately behind me is my colleague, Roberta Daghir, of our law firm, and on her left is Charles Avery, Senior Vice President of Finance at HPI.

Thank you.

MR. GRAVES: Good morning. My name is Pete Graves. I'm the Senior Vice President of Sales for Home Products International. I've been with our company 23 years, the last eight of which I've held the position of the chief sales officer.

We manufacture and market a variety of consumer housewares products, including ironing tables. About 200 people work in our ironing table facilities in Seymour, Indiana, some of them for over 35 years. We entered the ironing table segment in 1997 with the acquisition of Seymour Housewares, the market leading producer of ironing tables.

We've been making ironing tables in our facility in Seymour, Indiana, since 1947. The facility made artillery ammunition cases during World War II. Like many other manufacturers involved in metal fabrication, we transitioned postwar into consumer products. Our product portfolio was very consistent with other metal fabricators -- bed frames, step stools and ironing tables.

Over the years, most of the other companies either exited the ironing table segment or were acquired by other companies. The ironing table market is a mature one. It's a slow growth category. Ironing table production is very capital intensive, so no new manufacturers entered the market.

To remain a viable ironing table producer, a manufacturer must be prepared to make capital investments in machinery, for equipment repairs and for new products. It's an expensive proposition to be in the ironing table business, and over the years most companies chose not to stay in a capital intensive, slow growth business, and again it wasn't attracting any new suppliers so by the late 1980s there were two remaining ironing table manufacturers, HPI and Whitney Design.

The U.S. consumer ironing table market is not elastic. It does not expand dramatically when lower priced ironing tables are introduced into the market. It's not a multiple purchase category. People don't stock up on ironing boards when they go on sale.

Consumer purchases are event driven, closely tied to new home creation. Consumers buy an ironing table when they need one, and they last a long time. Consequently, the U.S. market is very stable and predictable. It's over five million units annually growing at less than four percent per year.

I can give you a quick primer on the products. I'm going to ask my colleague, Joe Deppen, to assist me. First of all, these products are defined as full-size, floor standing ironing tables. The legs unfold to stand on the floor, and the ironing surface of a full-size would be 13 to 18 inches wide, 48 to 54 inches long.

There are a couple points of distinction in full-sized ironing tables. The opening price point segments are almost always what we call the T-leg design. The trade up model at a slightly higher price would be a four-leg design.

The top surface of the opening price point tables are historically a perforated steel top like Exhibit 1. The other option would be an expanded metal or mesh top like Exhibit 2. Historically the mesh surface was offered as a trade up feature to help differentiate the products in a good/better/best offering. We manufacture and offer both styles in our product line.

Full-sized floor standing ironing tables comprise the vast majority of the market because they offer the best function for a power user. You can erect the product and put it where you want to iron, be it in front of the TV, in the laundry room, in the basement, wherever, and you can close the table and put it away when not in use.

The other products outside the scope are quite different in function. The over-the-door board, Exhibit 3, is not floor standing, but intended to be a space saving device for apartment dwellers, for example.

Obviously you can't move the board to where you want to iron. You have to iron behind the door you have mounted it to. It's a specialized product. There aren't really good/better/best grade levels within the segment. It's a unique function much like ironing boards that pull down from a wall-mounted cabinet.

The other items, Exhibits 4 and 5, are countertop models, much smaller, for use by occasional ironers. The ironing surface is limited. They aren't suitable for power users. Exhibit 4, the wood top model, is really bare bones, low end, and the upgrade to that, which Joe is holding, Exhibit 5, employs an expanded metal or mesh top for better ironing surface.

As a full line supplier, we offer these specialized items for our customers, but they are niche products and not considered viable substitutes for full-size, floor standing ironing tables.

Getting back to the ironing table market, over the years we did attain and maintain the leading market share position through new product development and a reputation for consistent quality and delivery performance with some strategic acquisitions along the way.

Our trade customers are very concentrated at the mass market level with a vast majority of sales occurring with the major discount chains. The historic pricing to these customers is relatively stable. Suppliers would have annual line reviews with their customers, and there would be normal price competition for business. As with all of our products, we price our products fairly and competitively. We are in business to turn a profit and price our product sensibly.

Our company paid $100 million to acquire Seymour Housewares, and it wouldn't make sense to give products away that it historically had sold profitably. I would say we have the same issues as other companies selling their wares to a concentrated group of national chains. Competition is intense with so much of the market controlled by so few customers.

Our approach is to be a capabilities based supplier offering quality products backed by outstanding service as part of a broad portfolio of consumer housewares products. Simply put, our strategy is to be a more important supplier to our customers rather than simply a provider of ironing tables.

We incurred the normal increases in production costs over the years for labor, benefits, energy costs, raw materials, et cetera. These increases were offset by continuous improvement and increased production efficiencies. We automated as many functions as possible in our production.

Historically there was very little importing of ironing tables into the U.S. market due to prohibitive freight costs. European tables have been a factor, but only at the high end of the market. These were ironing tables with larger ironing surfaces and other high end features.

Chinese imports were a small factor up until 2001. Similar to European models, they first became a factor at the high end of the market. The unit volumes at the high end are lower, and capital investments to automate the production of these lower volume models in our facilities would not be cost effective so we began importing higher end models from China like the other domestic producer, Whitney Design.

HPI developed an import strategy to focus on the low-cost production of volume selling models in our U.S. facilities and source some higher end models to meet the requirements of key customers that offered proprietary branded programs.

Whitney Design closed their U.S. manufacturing facility in the spring of 2002 and moved all of their production to China. By this time, we were seeing startling lower prices offered by many Chinese suppliers.

Throughout 2002, our retail customers challenged our selling prices. Retailers held several on-line bid events between December 2001 and the end of 2002. These events allowed real time participation by Chinese manufacturers, and the selling prices plunged in these events.

As an incumbent supplier in an event like this, you had no choice but to significantly reduce your price or lose your market share. In some cases, we were able to hold onto our business at much lower prices. In other cases we lost our business to the Chinese imports. It wasn't a situation where competitive products were unique or innovative. It was primarily a price consideration for the trade buyers.

I have a timeline of events that illustrates the sales and revenue losses incurred since December of 2001. In December of 2001, a major retailer held an open bid event for a subsequent year's quantity of ironing tables, four models. As a result, the Chinese manufacturers unseated the incumbent U.S. producers. Significant lost sales for HPI started the following year.

July of 2002, a major retailer challenged HPI's selling price on a volume product citing Chinese manufactured competition. HPI capitulated on price to retain market share, but incurred significant revenue loss effective August of that year.

Also in July of 2002, a major retailer held an open bid event for a 12 month quantity of ironing tables, five models. HPI was the incumbent supplier on two of those models. We agreed to a selling price reduction to retain market on one model and were unseated by a Chinese manufacturer on the other. Significant sales and revenue loss to HPI starting in 2003.

In August of 2002, a major retailer challenged HPI's sale price on two high volume products citing Chinese manufactured competition once again. HPI capitulated on price to retain market share with a dramatic price reduction on one model. Significant revenue loss starting the following year.

December of 2002, a major retailer held an open bid event for a 12 month quantity of full-size tables, four models. We were unsuccessful in bidding with domestically produced products. We also were unsuccessful in bidding with Chinese manufactured products.

A major retailer held another open bid event for 2003, promotional quantities of ironing tables in December of 2002. HPI participated in that event as the incumbent supplier. We were unsuccessful in bidding with domestically produced products and were forced to bid using Chinese manufactured product. We were awarded the business at a selling price below the equivalent domestic product manufactured cost.

For the full year of 2003, due to the implementation lag, HPI felt the impact of major customers' purchase decisions made during the 2002 bid event. All major business indicators declined -- production and shipments, sales and profits, employees and hours worked.

In the first quarter of 2004, as a result of the Commerce Department's preliminary antidumping margin determination, we have seen some relief in price negotiations with major customers.

To summarize the injury, the U.S. market for ironing tables was supplied predominantly by U.S. producers until 2001. Selling prices were generally stable. The number two ironing table producer ceased U.S. manufacturing in the spring of 2002 moving its production to China. Retailers conducted several open bid events during 2002 for ironing tables. Other retailers challenged HPI on price. All HPI competitors in these events were Chinese producers.

We incurred significant sales and revenue losses in the 24 month period December 2001 to December 2003. We have seen some relief in the first quarter due to the Commerce Department's preliminary antidumping margins.

The rapid influx of Chinese imports became a real issue for our company. I consider it my responsibility as the chief sales officer of the company to maintain adequate production levels to sustain cost effective manufacturing, and in 2002 we were seeing our sales impacted, our workforce and man hours reduced, our profits significantly eroded all as a result of imports from China.

Our company has taken major steps at our facilities in an attempt to remain competitive. We've made capital investments to improve efficiency and reduce product cost. We have downsized facilities, laid off workers and reduced man hours to the point where three to four day work weeks are not uncommon.

Without protection by an antidumping order, the future of our ironing table business is clear; a continuation of what we experienced beginning in 2002 -- continued price erosion, lost sales and market share and severe revenue losses to maintain share.

We will see production levels continue to fall and product costs increase as our cost base is spread over fewer units. Capital investments won't offer a payback, so new product development will dry up. Finally, I see a decision to close our facilities and follow our competitors to China for 100 percent of our production.

In closing, I would like to reiterate that our company has been manufacturing ironing tables at our facilities in Seymour, Indiana, for over 50 years and hopes to continue to do so for many years to come.

Thank you.

CHAIRMAN OKUN: Thank you.

MR. BRADLEY: I'm sorry. This technology hasn't gotten to the classroom yet.

My name is Michael Bradley, and I'm a Professor of Economics at George Washington University here in Washington, D.C. I thank you for the opportunity to appear today and to allow us to present some of the important facts in the case.

In my time before you, I'd like to really do three basic things. I'd like to talk about what the salient facts are in this case, I'd like to suggest how those facts fit together, and then I'd like to go over three points I think would be very helpful or I hope will be very helpful to the Commission in reviewing the record.

Let's begin by talking about same of the basic facts. I really think a most important, dramatic -- whatever word you want to put on it -- change that occurred in the U.S. ironing table market since 2000 has been unquestionably the dramatic increase in imports of Chinese ironing tables.

As Mr. Ikenson said earlier, it's without controversy that we've had huge increases. They've gone from under 600,000 units to 2.5 million units, which on a percentage basis is a 450 percent increase and so that's really what's changed the landscape of the U.S. market.

How did they do it? Dramatic increase in sales. How did that come about? Was it about a rapidly growing U.S. market? What was the phenomena that occurred? Quite logically, the way they did it is the way most people enter a new market -- with advantageous pricing. They entered a new market, the U.S., by providing domestic retailers, U.S. retailers, with good pricing.

If you look at their data, Chinese imports are selling now and last year at prices well below historical levels. To put that in context, you have to recognize that the total consumption of ironing tables in the U.S. market has been pretty stable. There's some fluctuation year to year, but we see neither trends upward nor trends downward.

That's an important implication. The first implication that's important is the domestic manufacturers were not losing sales because of declining demand. It wasn't as if ironing tables were falling at 10 percent or 15 or 20 percent a year and they were losing sales. Demand has been stable.

On the flip side, it also means that declining prices have not expanded the market. You haven't seen a rapid growth in ironing board sales as prices have come down.

Finally, of course, if you think about it, the first slide shows that Chinese imports are rising. Our second point shows that the total consumption of ironing tables has been about the same, so that has to mean, without question, Chinese imports are essentially replacing domestic production more or less -- more or less -- a one-to-one replacement.

What's that mean? Of course, mathematically the Chinese imports' market share has grown rapidly during this period of time, and that's what the data supports.

Let's put these pieces together. These are the basic facts -- rapid increase in Chinese imports, low prices, total stable consumption demand, increased import market share. Let's put these facts together and think about what they mean. What scenario do they tell us?

Well, let's start out with U.S. conditions. You've got stable domestic consumption. That's the predicate for all the economic interactions over the period of investigation. Add to that price depression, entry pricing, if you will, by Chinese imports to come into the U.S. market, accompanied by, as you saw from the data, rapidly rising imports.

Those three pieces together would suggest that in the classic scenario we would expect to see import share going up, domestic share falling with lower prices, lower revenues and lower units sold, right? If the import share is going up, clearly the domestic share is going down.

What have we seen? Well -- we've seen dramatically rising import market share, and we have seen lost sales and lost revenues by the domestic industry.

So as a result, we are really in a situation to suggest that the scenario of prediction of forecast from our preliminary we said came true.

Now, I have been getting credit for creating the so-called implementation lag idea, and let me just suggest to you that it's a great title, but it's really not a complicated idea. All we are getting at here is, as Mr. Graves pointed out, in the ironing table industry you have these line reviews where the iron board manufacturers will come into the retailers and do similar to this, lay out their products and make a sales pitch.

Shortly after that the retailers will indicate who won that line review. Let's say that occurs in December 2003. The point is that the shipments associated with that line review will not actually take place until April, May, June, July 2004. That's why we are able to foresee what was going to happen in 2003.

We knew what happened in the line reviews in the year at auctions in 2002. It was very easy to see that as a result of those decisions imports would rise, and the domestic industry would lose sales.

So what did we actually see in the 2003 data? We saw that the producer had the litany: lost sales, lower production, lower employment, lower profits, lower revenue and so forth. So, unfortunately for HPI, we foresaw exactly the future.

So I think that gives us an idea of how the basic facts work and what was going on in the ironing table market over a period of time. And let me then turn my attention just to three points I would like to suggest that I think would be helpful in going through the information that we had before.

Oh, I'm sorry, I forgot. I apologize. I wanted to finish up with our scenario with the first quarter of 2003. Excuse me. I forgot that. Let's think of what has happened since the end of 2003, because our scenario went through the end of 2003. What's happened in the first quarter of 2004?

Well, as you know, Commerce issued its preliminary antidumping results showing positive margins. And indeed, from HPI's perspective that's had an impact. They have noticed and they talked to retailers. Retailers are aware of that. It's clearly reduced importers' ability to undersell as they were in 2002 and 2003.

In addition, it puts HPI in the position of being more competitive, and they have received, you know, feedback from the retailers indicating more interest in their sales as a result, as a result of the preliminary dumping determination.

Price depression does remain. Prices have not recovered back to their pre-Chinese import days, and as I said earlier, indeed steel prices have been rising, and HPI also has been raising their prices, but it's hard because, you know, once auto industries and others have found out, once you push prices down, customers, particularly big, powerful retailers, are hesitant to let you push those prices back up again.

They have done it somewhat, but clearly their price increases haven't yet gotten up to their costs.

Okay, so now I'm at the point where I want to talk about those three things.

The first one is, you know, although you will hear -- you have heard differently and you will hear differently -- HPI has not driven down prices. It just hasn't. I mean, factually that's not true. HPI, you look at their data, their records show that they haven't been driving down prices. They didn't drive down prices prior to the appearance of Chinese imports. Their pricing has been stable, and they haven't driven down prices since. You know, it's not there.

I will admit they have lowered prices since mid-2002, but that's clearly in response to challenges they have gotten from retailers indicating that they want HPI to stay competitive or they are going to lose business. They have lost business. Their share is down. Of course they have had to lower prices to match the market to try to keep share, but they haven't lowered prices to gain share. The share is down. Again, there is no incentive for them to lower prices.

Remember, before Chinese imports appeared they had a very large market share. When they cut prices, they cut prices on all of that share, so that means they are losing revenue on 70 percent to try to gain revenue of 30 percent. The numbers don't work. It doesn't make sense for them.

Moreover, predatory pricing only works if you can keep the competitors out. It doesn't work. Our industry has no big barriers to entry. It's not high tech, there is no secret. But predatory pricing, they didn't follow it. It didn't make sense. Exactly as I suggested, HPI has been losing, not gaining, market share. They are not price leaders. They are not aggressively trying to get larger. They are trying to survive and stay where they are. So that's point number one. HPI really just has not driven down prices.

Point number two, the threat of injury is real. It's real and it's severe, and it's not something made up. It's not something they are trying to do to manipulate the stock price. It's a real threat to the company.

There appears to be large and growing capacity in China. The very fact that they could increase their imports from, you know, 1 million to 2 million in just a year suggests there is very large capacity to produce there.

Secondly, our information is the Chinese industry is an export-oriented industry. HPI believes that, you know, the ironing table market in China compares to the outward orientation of the particular industry, and HPI is vulnerable.

As you know from their submissions, they have had a rough couple of years. This is what's called an increasing returns to scale industry. You lower your unit costs by producing more. As they lose sales, units sold, it's hard for them to sustain their unit costs. They tend to go up. Yet they have undertaken productivity increases, engineering improvements. They have worked hard to try to stay competitive. I don't deny it.

But nevertheless as that market share gets lower and lower and lower, it really puts HPI in what I call the danger zone. You know, a fancy name, but the idea is they are getting to the point where it's going to be difficult for them to cover their variable costs, so the threat is real.

Lastly, let me just suggest a little bit about how I would suppose looking at the underselling that's going on in the data. The first thing to think about is, as Mr. Graves said earlier, the demand in the ironing board sector is really concentrated in three large retailers, and these three firms really account for the vast majority of the purchases, and that has implications because it says we can track what's going on prices, and it's saying that's where the action is. That's where prices are driven in the ironing table market.

Obviously, the price competition among these big retailers is intense. If you are supplying one of these big companies, you have to be very sensitive to their requirements or their needs, and the price competition is intense.

So that's where I would suggest that the Commission focus its attention for understanding what is driving prices in this market. Look at it all, absolutely, but that's where the action is, that's where it's driving price.

Secondly, before the import surge, it's important to keep in mind that we have two periods here, one before and one after. Before the import surge is when we had the price hierarchy that we talked about in our brief.

As Mr. Graves said, you know, there is the opening price point sector, and then there is the step-up, or you know, the higher end models.

Within the opening price sector you have the two types he pointed out, the perf top, which is more or less solid, and the mesh-top. Historically, before the Chinese imports came with their very low prices, the mesh-top sold at a premium to the perf top, and there could be a variety of reasons why that may be true, but that is what's true, that's what the data show.

Yet the Chinese make mesh-top, and when they brought them in at low prices they confounded the structure, and I would agree that this structure doesn't exist today as it did before the low pricing occurred.

The other thing that's important is the step-up, which is four legs, it has more steel, more stability, the four-leg model was always priced above the opening price point, quite logically. And again, introducing Chinese imports, that's dropped.

Okay, the last point I would like to make is we believe that in this case the direct exports that occur are really comparable to the import sales, and I want to suggest that the Commission turn its attention then carefully for two reasons.

One, both sides agree that these imports are an important part of the story. They are sufficiently big and important, that you have got to look at them as part of what's going on in the economics of the ironing table market.

Secondly, it's our understanding that the direct import prices really are inclusive of all costs getting it to the domestic facility, so it's not like these costs have to be adjusted up for ocean transportation or inland transportation. They essentially are the cost to the domestic facilities. And they may not be perfectly comparable, but they are pretty close, and we think that we would suggest to the Commission that they look at that closely.

That's what I have to say. I thank you very much for your attention, and Mr. Deppen now will talk to you about some of the technology associated with ironing board production.

CHAIRMAN OKUN: Thank you.

MR. IKENSON: Madam Chairman, may we have a time count, please?

CHAIRMAN OKUN: Madam Secretary?

MS. ABBOTT: Thirty minutes elapsed, 30 minutes remaining.

MR. IKENSON: Thank you.

MR. DEPPEN: Good morning. My name is Joe Deppen, and I am the Vice President of Manufacturing for Home Products International. I am based in Seymour, Indiana. I have been with the company for 33 years, and I am the one who is in charge of production of the ironing tables in question today.

I would like to spend a few moments just taking you through some things that we have already talked about a little bit, but going a little further in detail in the ironing tables that you have before you here this morning.

Exhibit 1 is a perf-top ironing table that we produce in Seymour, and as well the mesh-top ironing table that we produce in the facility there as well. The only difference between the perf-top ironing table and the mesh, Exhibit 1 and Exhibit 2, is the perf-table is produced -- the top portion, the ironing surface is produced on a stamping press, a 400-ton press that stamps out this perforated top. Every time the press trips, and we have a continued process there, we get an ironing surface, or a completed top.

Whereby with the mesh table the table itself is a two-part top. The ironing surface is we have a rim that's formed on the rim rolling machine, and a rim forming machine that forms it into the shape of the ironing table, and then we have a production operation that produces this expanded metal. It takes a piece of cold-rolled steel that's about 15 inches long, and expands it into a 54-inch or a 48-inch top. A lot of folks think these are blank caps, these little holes in the mesh-top are blank caps, but they are actually stretched to make these cuts, and then the steel cutting is stretched into the mesh that forms the tables.

That mesh portion is then run through a straightener and a flattener and makes sure the iron surface is perfectly flat, and then the mesh is placed inside this rim and it's crimped or mashed in so that it stays inside the framework of the ironing table, and that's the basic difference between the mesh-top and the perf-top table.

All the other components that you see here on these two ironing boards are exactly the same. The technology for producing these two are very similar. They are equivalent.

The legs you see, these other components we call ribs, hangers, slide bar, hinge bar, all of these components that we produce are exactly the same on both of these ironing tables.

Exhibit 6 I have, if you took a close look, this is a Chinese-produced opening price point ironing table, and if the Commission took a close look at this ironing table, they could see that there are number of patches on here where the mesh has been patched together, and this is an ironing board that was purchased locally in Indiana, near our factory from a large retailer, and we do that periodically; bring in competitive products and evaluate them, look at them, and compare them to our products.

And I only bring this to your attention to show that the surface is not level on this ironing table, and there are a number of points on here that are not supposed to be touched, sharp points and things like that. And how that occurs, in China a lot of the manufacturers produce their ironing tables with a lot of manual operations. They are a lot more manually oriented than what we are in the U.S. We are more mechanized, more automated, and our process flows are much more refined than what those are in China.

The components that we have on our ironing tables are all de-burred. They go through processes where we do a de-burring operation, we take sharp edges off the product, so consumers would not be injured in any way from a cut or something like that.

Now, some of these enhancements, I want to show you all the ironing tables that we recently incorporate in our products, and again this is in both of our products. The ironing table itself, we have begun powder coating the top so a lot of ironers use a lot of steam or they use a lot of water when they iron their product, so when you powder coat this we give it a much more durable finish to prevent it from rusting and things like that in the ironing process over a period of years.

Also, we have enhanced the leg. The t-
formation on our legs here, we have put stronger, longer rivets in through here, and we have increased not only the quality of this, but also the aesthetic appearance of the ironing table.

We developed what we call a more ergonomic latch release lever, if you will, where the consumer now when they try to find the latch release lever under the ironing table a lot of times they have to get down, grope, and find that little lever. We have improved the appearance of it as well as the finding, if you will, of this handle, and it's a little cover over it also. It's just much more easier to find and to open and close the ironing table than what it was previously.

Also, we have put the caps that we have on the tips now are put on with an automatic machine. Previously we had to put these on manually by hand, and in doing that it was very difficult to get those caps real tight, so now we have a machine that applies these caps automatically, and the caps are now non-
removable, so you can scrape them on the floor and they won't come off of the ironing table.

In addition, we have incorporated a leg lock on this ironing table so that if you carry it from room to room the ironing table legs won't fly out, fall down in front of you, you could trip over them or something like that. It keeps the legs up in place so that they will not fall down.

So these are just some of the enhancements or improvements that we have made to our product over the years.

I would just like to add in summary the process of perf and mesh. We sell, of course, a great number of the perforated top is by far the volume that we sell, and we manufacture in our facilities in Indiana. But we have also customers that prefer the mesh product, and we make mesh product as well there in our facility.

The number of years that we have worked on ironing tables since 1947, we have had continuous process flow, continuous product improvements, and I have been with the company, as I said, for 33 years, and have seen a lot of changes over those years, a lot of improvements that we have made to our product. And we have manufacturing repeatability in that with the mechanization and the automation and the improved process flows that we have incorporated in our company in the production of our mesh and perf-top ironing tables have allowed us to have a quality product that is repeated over and over through this manufacturing repeatability.

I thank you for your time and for your attention.

CHAIRMAN OKUN: Thank you.

MR. IKENSON: That concludes our opening testimony.

CHAIRMAN OKUN: Well, thank you, and before we begin our questioning let me take this opportunity to thank each of the witnesses for appearing here this morning to help us better understand your industry. We very much appreciate your taking the time to be with us.

I might ask Mr. Ikenson, if you can -- I can't see you guys over these ironing boards, I might just ask you to move those maybe, and we will have an opportunity to look at those at the break as well.

And with that Commissioner Pearson will begin our questioning this morning.

COMMISSIONER PEARSON: Thank you, Madam Chairman, and welcome to the panel. I must say this is an industry in which I have only some peripheral experience as a consumer, and no in depth knowledge other than what I am gaining now.

Let me begin with a question for Professor Bradley. You indicated toward the start of your presentation that total consumption of ironing tables has been stable.

Do you have access to the confidential material that's contained in the C tables of the staff's report?

MR. BRADLEY: I do.

COMMISSIONER PEARSON: Okay. As I look at Table C-1, I don't see the U.S. consumption quantity as being stable. Rather, I am seeing it as declining over the three years for which we have complete date, plus the relevant comparisons for the interim period.

How does that square with your assertion that demand is stable?

MR. BRADLEY: I don't know how much I can say numerically in the public hearing, but I would suggest this response; that it's clear that the responses to the Commission's request from importers are limited. There are some importers who did not provide responses in the final phase, and some that, it's my understanding did not get tracked down.

And it's our belief that those importers have a nontrivial amount of imports. So my notion on stability is that it's our belief that imports are understated in the latter periods. And if you would add in those imports to the ones that are already on the record, it may not be -- the 2003 may not be exactly same the same as the 2001, but it would be within, you know, one or two percentage points.

COMMISSIONER PEARSON: And so you are saying that the way the data are compiled. If the ITC staff are missing some imports, then the estimate of U.S. consumption quantity would be lower?

COMMISSIONER PEARSON: Right. Apparent U.S. consumption is the sum of domestic shipments plus import shipments. That's what defines domestic consumption. And if that import shipment size was understated, then total consumption would be understated.

We don't have an independent measure of consumption from those two measures.

COMMISSIONER PEARSON: Madam Chairman.

CHAIRMAN OKUN: Yes.

COMMISSIONER PEARSON: Am I permitted to ask the staff a question at this point?

CHAIRMAN OKUN: Seeing no objection, go ahead.

COMMISSIONER PEARSON: Could I inquire of the staff the procedure for compiling the data on U.S. consumption quantity? Can you explain whether the point that Professor Bradley is raising, is that correct or is that not entirely accurate?

MR. CORKRAN: Douglas Corkran, Office of Investigations.

Commissioner Pearson, in collecting the data we identified both the U.S. producers and the U.S. importers. The U.S. importers from a variety of sources: those identified initially in the petition, those identified through foreign producer questionnaires, and companies identified through information from other government agencies.

We then -- in the final phase of this investigation we sent questionnaires to all known importers, and our consumption data is, as noted, a combination of domestic shipment data and U.S. import data both as collected through the questionnaires. We believe that we have all known domestic production.

We do believe that U.S. imports are somewhat understated. We have one known importer that has not responded, and one company that there is reason to believe has imported that could not be contacted, although they were identified by name.

Compared to the responses that we have, we don't believe that the importers represent a substantial portion of the total universe of imports.

COMMISSIONER PEARSON: But they could represent enough so that if they were included in the data that there might not be more than a percentage or two decrease in demand as Professor Bradley has mentioned?

MR. CORKRAN: Given that the decline in apparent consumption is not by an extremely large percentage point, even now, that could be correct; yes, sir.

COMMISSIONER PEARSON: Thank you, Mr. Corkran. I appreciate that clarification, and thank you to the Chairman for that indulgence.

Shifting gears, respondents have argued that the Commission's like products and industry definition should include the over-door ironing boards produced petitioners. Respondents argue that all metal ironing tables and over-door ironing boards have similar physical characteristics, are functionally interchangeable, share the same system of distribution, have similar price points, and can be made in the same facilities with the same production workers.

Please address this argument. How should we take it into our analysis?

MR. GRAVES: As I said earlier, we don't consider them a substitute product. The over-the-door products, while yes you can iron on it, I guess you could make that claim for the counter models, and you know, another functional substitute for an ironing surface like an ironing blanket or something like that, but we consider the tables their own segment because they have the floor-standing ability. It's the vast majority of the market, and from our perspective they are separate and distinct from the specialty niche products which would include the over-
door models, cabinet models, counter-top products, ironing blankets, things of that nature.

MR. IKENSON: If I may add, Commissioner Pearson.

COMMISSIONER PEARSON: Please.

MR. IKENSON: We, of course, address the like product issue in our brief --

CHAIRMAN OKUN: Mr. Ikenson, please pull the microphone closer to you.

MR. IKENSON: Okay. Some of the arguments that I think is instructive is protected by APO. It does relate to questionnaire responses, so I think I can say that if the Commission would look at some of these responses as to other purchasers' perceptions, importers' perceptions of interchangeability, there would be -- I think you can get some guidance from that.

With respect to common channels of distribution, I think we did address that publicly. The floor-standing models are distributed to, for example, hotel customers, and the over-the-door model is never distributed through that channel. You have that distinction.

We also discuss differences in pricing. There certainly was commonality with respect to manufacturing facilities, production processes and production employees. There is overlap there.

But I think the major issue is the one that Mr. Graves has said earlier and what I said. The issue of interchangeability and consumer perception you need to examine in confidence.

And I think the way in which people iron is going to be very important. You really have to see the over-the-door boards in action to realize what the limitations are. People who buy these boards live in often small apartments, dormitory rooms, or trailers, and you are quite limited in what you can do. You can't iron a sheet or a table cloth, certainly not easily, and people who are in the market for an ironing table would not wish to compromise themselves and buy an over-the-door board unless space really dictated.

And I would ask Mr. Graves who is in the business to correct me if I have misspoke.

MR. GRAVES: No, you are correct.

COMMISSIONER PEARSON: Okay, thank you very much. The light is changing, so I will pass.

CHAIRMAN OKUN: Well, thank you, and thank you again to the witnesses. You know, we hear about a lot of different products and in many cases that we hear some I know very little about, and can't imagine what they are, but, you know, here we have a product that I try not to be too familiar with, but I can say I know what it is, know what it does, although, Mr. Graves, I may take issue with your description of why someone wanted the one you can carry, because you said you would carry it to where you want to iron, and I would where I was forced to iron. Haven't got those kids old enough to, you know, make them iron their own things, so anyway. But I appreciate hearing about the industry, and I have some questions.

I think I want to start a little bit about maybe talking about the marketplace in general and who the purchasers are and what are changes in the retail market have -- what kind of impacts that has had. And you have talked about it in your testimony, but one of the things this case reminds me of are the consumer products where you have what has become a consolidated, the big box floors.

I'm just trying to understand what impact that has for you selling into those, and let me start with -- well, I have a number of questions. Let me start with in terms of the line reviews. That's been the way that those stores conducted their price reviews of them, their purchasers, during the whole time you have been in business since '97. I mean, has that been common the entire time? Just help me understand that part of it.

MR. GRAVES: Yes, the traditional method would be a face-to-face line review with the trade buyer where you will be there to present -- it's usually done annually, not always, but typically it's an annual process so you are meeting to review the assortment of products for subsequent year sales.

And historically that's been, as I said, a face-to-face line review with your sales and marketing associates presenting new products, review pricing for existing products, discussing promotional opportunities, anything involved with that customer's sales activities typically for the following year.

A variant of that would be the online auction which came into play a couple of years ago, and that is a different approach where the products are selected prior to the event to be auctioned, if you will. Sometimes it's the individual item, sometimes it's a market basket where the products are auctioned in a weighted average price.

And in those events suppliers have been pre-
selected to attend. They are done online as I mentioned, and you have -- the bidding starts at a certain price, and the bidders are bidding their bid prices electronically, real time, and the result of that is it's a winner take all scenario typically where whoever bids, whether it's individual or a market basket scenario, whoever is the lowest price bidder is going to be awarded that business for that period, whatever it is, again the following year.

CHAIRMAN OKUN: Okay. And one of the things you had mentioned was that the prices had been stable in the market prior to the imports coming into the market. And I guess the intents of a line review, if you were the incumbent seller, are you -- do you go in with the expectation, or did you to this point go in with the expectation that the Wal-Mark, K-mart, Targets of the world would not ask you to lower your price if you were the incumbent and you came in with the same quality, that you were going to be able to maintain your prices during these line review?

Or is the expectation that you would go in and they are going to be expecting the lower price because of your products or maybe you have got a basket where you have got products that you would get a higher price on? Tell me a little bit more about that in terms of the prices.

MR. GRAVES: Well, typically, it's a function of competition, to be quite honest. You know, you always -- our policy is to price our products competitive and fairly. And if you have new improvements to the product, which we did in a pretty significant way last year, that's your opportunity in the line review to convey that.

But as far as your expectation of prices being challenged, if you will, it happens quite often in a review situation, and you just have to react to that challenge if you receive it, and look at your product cost, and your overall pricing strategy, and work with the customers that you can. That's the way we would approach it.

CHAIRMAN OKUN: Okay. Well, you know, I'm curious about that just in terms of, you know, the impact of pricing and the imports because one of the things that I'm trying to find, but there has been an interesting theory of NPR stories about Wal-Mart and how it brings in its suppliers. And I took from that the expectation that when it puts on a line review they expect prices to go down, you know, that's the reason they do that, and that's why I am curious as to whether -- again I'm trying to understand in a market like this where you have concentrated purchases what power they have.

We have heard a lot about price leaders here.

MR. GRAVES: Right.

CHAIRMAN OKUN: I'm trying to figure out, you know, what is the price leader in a market where you're a taker.

MR. GRAVES: Well, there is no question they have significant clout and buying power when you are thinking of all the major chains. And again, our line review processing, they are seeing all the competitors in the market, whether they are U.S. suppliers or wherever. You know, they buy worldwide. All the major retailers have buying offices all over the world, so it's not a closed market by any means. They are going to see all suppliers from all exporting countries as well as domestic countries -- domestic producers I should say.

So I wouldn't say that you are going into that review every time with the expectation that they are going to challenge you on the price. It depends on what's happening in the marketplace, and how your product and value, quality level, service levels, those things all come into play in a typical face-to-
face line review.

CHAIRMAN OKUN: Okay. And another change that's happened in the marketplace has been the closure of retailers, Ames & Bradleys were mentioned, the bankruptcy of K-Mart.

MR. GRAVES: Right.

CHAIRMAN OKUN: And then just the changes in Wal-Mart and Target and others in terms of their size. One of the points that the respondents have raised is that, in essence, if you had a domestic producer who has some portion of the market, when they start importing that really HPI was just trying to grow their share by displacing, so you haven't been injured because essentially they displaced what they used to do domestically with Chinese.

MR. GRAVES: Right.

CHAIRMAN OKUN: And that we shouldn't expect injury in the market where you would have to have gone from incumbent to actually take that market share. And I wondered if you could comment on that. I see Mr. Bradley is reaching for his microphone, but let me start with the industry and then turn to you, Mr. Bradley.

MR. GRAVES: Okay, so to make sure I understand your question. With the closure of some retail chains, and the move of our competitors' production to China, I think what you're asking is have we really been injured by that shift. Is that your question?

CHAIRMAN OKUN: The shift where -- you know, and obviously, we're not going to discuss this specifics who might have been your customers, but in a general way where you didn't have the customer anyway. You weren't necessarily the big incumbent or maybe you were one of them, but that the other, the Whitney simply moved brought material in from China that they otherwise would have produced domestically; therefore that you are really just complaining you haven't been able to capture the share they had, and is that really injury to the domestic industry?

MR. GRAVES: I see. Well, I don't think that's true. We have, you know, lost significant revenues and sales irrespective of Whitney's move really, so I would submit that we have suffered significant loss both in share and revenue based on the general influx of Chinese competition, not specifically related to Whitney Design.

CHAIRMAN OKUN: Mr. Bradley.

MR. BRADLEY: In fact, I was just going to make that point; that HPI's share is not what it was when Whitney did its conversion. It's much below that, and that's the indication that there has been injury apart from any effect of Whitney.

CHAIRMAN OKUN: Okay. Let me just -- well, my yellow light is one so I may not be able to get into the next question. I appreciate those answers.

Let me turn to Vice Chairman Hillman.

VICE CHAIRMAN HILLMAN: Thank you, and I appreciate your taking the time to be with us and the information that you have provided in your pre-hearing brief.

Let me just make sure on a couple of issues that the Chairman was raising on this issue of the line review to make sure I understand it.

When these line reviews are conducted, the price that is negotiated then holds for how long a period of time?

MR. GRAVES: Typically, the following -- until the next review which would usually be a year later. That's the normal procedure.

VICE CHAIRMAN HILLMAN: Okay, so has the pace at which there have been line reviews changed over the period of investigation, how frequently they are conducted?

MR. GRAVES: I would say line reviews no, but there have been perhaps more frequent, you know, reverse auctions in a period of 2001 and 2003.

VICE CHAIRMAN HILLMAN: Okay, and do the reverse auctions, does that also hold for a one-year period of time?

MR. GRAVES: They vary. Sometimes it's for one year. Sometimes it might be for a five-to-nine-
month period. It depends on the retailer that's doing them, so it's not always a year. Sometimes it's less.

VICE CHAIRMAN HILLMAN: And would a sale for a five-to-nine-month period of time be less than what you had seen prior to the introduction of these reverse auctions?

MR. GRAVES: I would say yes, because they normally would have been for an annual quantity for the following year.

VICE CHAIRMAN HILLMAN: Okay. And once they are set though, has that one-year period of time, or the five-to-nine months remained as such, or have you seen requests for price changes within that year period?

MR. GRAVES: No. Once they are set they would be in effect for that predetermined period, whatever it would be.

VICE CHAIRMAN HILLMAN: All right. Then if I can go to the issue of trying to understand the price competition between the mesh and the perf top.

MR. GRAVES: Okay.

VICE CHAIRMAN HILLMAN: Because obviously our data is reflecting that the Chinese product is largely in the mesh top, almost entirely.

MR. GRAVES: Yes.

VICE CHAIRMAN HILLMAN: And that your product is more heavily in the perf top.

MR. GRAVES: That's right.

VICE CHAIRMAN HILLMAN: So I am trying to understand how I look at price comparisons to try to understand what are fair numbers to look at.

You mentioned that the consumer, the consumer end, that there is not necessarily a significant price difference between what the mesh and the perf top is sold for. Let me start with from your end of it from a cost standpoint.

Is it cheaper to produce a perf top from a pure manufacturing cost standpoint, or is it cheaper to produce a mesh top?

MR. DEPPEN: The perf top itself is a little more expensive to produce because there is a two-
portion assembly to the top.

VICE CHAIRMAN HILLMAN: For the perf top or the mesh top?

MR. DEPPEN: The mesh top, I'm sorry.

VICE CHAIRMAN HILLMAN: The mesh top is more expensive to produce?

MR. DEPPEN: Yes.

VICE CHAIRMAN HILLMAN: Okay. Now, it requires less steel?

MR. DEPPEN: Actually, the steel is about the same, but there is about five labor operations more in the mesh than there would be in a perf top.

VICE CHAIRMAN HILLMAN: Okay. So it's a little bit more expensive. Can you give me a sense of how much more generally to produce a perf top? And if that's confidential, don't provide it. I'm happy to get -- I'm not asking you to tell me if it's confidential.

MR. IKENSON: We would like to put that in the post-hearing brief.

VICE CHAIRMAN HILLMAN: Okay. And again, I'm just talking about cost, not about pricing.

We then go to the pricing if you can. You describe the notion that at least historically there had been a price differential with the mesh tops being considered a higher end product?

MR. GRAVES: Yes.

VICE CHAIRMAN HILLMAN: Tell me a little bit about the price competition between mesh and perf?

MR. GRAVES: Well, as I said, historically, meaning with the domestic producers, the perforated top was offered as normally the opening price point, and the mesh top, that is, the expanded metal top, were then offered as a mechanism to trade the customer up to higher price points.

So what has been again historically prior to probably 2002, not a big premium for the mesh, but you know, somewhat of a premium if that top surface was offered.

VICE CHAIRMAN HILLMAN: And were they advertising such? I mean, described as a better product to the customer? I mean, does every consumer go in and say, oh, perf top is not as good as, or I want mesh top, it's better?

MR. GRAVES: I think from a selling and marketing standpoint we to the trade customers do it that way. In fact, in our packaging we talk about the steam penetration on mesh top being a better surface, yes.

VICE CHAIRMAN HILLMAN: Okay. Okay, so in terms of looking at price comparisons your sense is it's not appropriate to compare perf top to mesh top prices?

MR. GRAVES: Well, I would say I would agree with what the respondents said earlier that now if you walk into a Wal-Mart, for example, you're going to see that they are interchangeable at the opening price point level, because the other supplier has offered those to Wal-Mart at that opening price point level, that's true, a true statement.

MR. IKENSON: But they are offered --

VICE CHAIRMAN HILLMAN: Sir, you have to use that microphone for the court reporter.

MR. IKENSON: I'm sorry. They are offered in the mass merchants' facilities that were described at different stores, so it's very rare that there will be an opening price point mesh top and an opening price point perf top in the same store.

Isn't that correct?

MR. GRAVES: That's true.

VICE CHAIRMAN HILLMAN: Mr. Bradley.

MR. BRADLEY: Thank you, if I may. The other thing I would like to focus on are the wholesale prices. I mean, we were talking about the fact that the mesh top sold at a premium to the perf top. I was specifically talking about prices to the retailer at the wholesale level.

And Mr. Graves mentioned of the advertising was they are advertising to the retailers suggesting that the mesh top was a step up. It's there where we think the price comparison is not one to one; that if you want to look for underselling by an imported mesh top, you have to recognize that historically that product is selling above the perf top. So if it comes in at a price equal to the perf top, it's essentially undertaking price competition.

VICE CHAIRMAN HILLMAN: Okay. And obviously in your brief you have calculated a weighted average premium that you think we ought to be attaching to the mesh top tables, and then applying that premium to our pricing data in order to do these comparison, because obviously we are struggling with how do we compare when the domestic product is largely one perf top and the imports are largely the other.

I wonder if you can give us any more details here in terms of how you calculated the premium and again any background data you want on the record, and I'm trying to make sure I understand why this is an appropriate way for the Commission to look at this.

MR. BRADLEY: I just wanted to make sure I could answer without getting in trouble.

The method was to say if there is a premium, it should be the case that if one customer is buying from a supplier, the mesh top to that customer should consistently sell at a higher price than the perf top customer.

So what I did was I looked at HPI's sales records, and I looked at individual sales from HPI to individual customers. I took all instances where they sold both mesh and perf, and calculated the amount by which the mesh top was higher than the perf top.

Because they sold different amounts to different customers, then I calculated the weighted average of those premiums to be fair. So the average premium that we produce was the historical amount by which mesh tops to perf tops -- mesh tops exceeded perf tops on, you know, a one-to-one heads-up scale.

We didn't use overall averages, although that would have offered giving premium to be careful that we were not confounding customer-to-customer effects with just the mesh to perf effect.

VICE CHAIRMAN HILLMAN: Okay.

MR. BRADLEY: Does that --

VICE CHAIRMAN HILLMAN: No, I understand that. I mean, if there is anything that you want to add in the post-hearing, you know, to just document this --

MR. BRADLEY: Thank you.

VICE CHAIRMAN HILLMAN: -- I think that would be useful because obviously this is one of the things that we are going to struggle with is whether, you know, what does our pricing data show us in terms of underselling and all of these other factors.

But then the other thing I want to try to understand is, as I heard your testimony, and again this is trying to make sure I understand what's in the record on this, the Chinese started out in the high end. And as you describe it, I think, has come down and are also competing in the lower end products.

I'm trying to understand how I factor that into this analysis of how do I look at mesh versus perfs. The Chinese have always been in mesh is my understanding.

MR. GRAVES: Yes, they have. That's the manufacturing method that they have chosen as their production approach, the mesh production.

VICE CHAIRMAN HILLMAN: Okay. But nonetheless, if they had been coming down, and starting out in the high-end mesh, and now producing, or what we'll describe, I guess, as lower-end mesh --

MR. GRAVES: Yes

VICE CHAIRMAN HILLMAN: -- how do I look at that in terms of trying to understand this issue of whether this is an appropriate premium or not, or how I should be comparing those prices.

MR. IKENSON: If I may start. We'll start with I'd like to give you an opening price point explanation, and then Dr. Bradley will give you the step-up version of this.

The imports of high-end products from China are not simply mesh. These are the step-up products, and there is a variety of four-leg ironing tables, going from a basic four-leg table to a very elaborate one with many features. That is what we were referring to when we said the initial imports from China were high end.

When you look at the price data in the record for product 1 and product 2, that doesn't include those products. That's only including the low-end opening price.

VICE CHAIRMAN HILLMAN: Okay. Given that the red light is on, I need to come back on any further issues on this. Thank you very much.

CHAIRMAN OKUN: Commissioner Miller.

COMMISSIONER MILLER: Thank you, Madam Chairman.

Mr. Bradley, did you want -- Professor Bradley, did you want to finish responding to the question or -- okay, all right.

Well, thank you to those of you who -- all of you here, but particularly the company representatives. We appreciate your willingness to be here, away from your business, and explaining the industry to us.

I think I will stay for a minute with a couple of questions related to the product just to make sure that I have that, and that is again the mesh versus perforated tops, the competition there.

Let me ask you this question. Do retailers request that you bid one or the other? I mean, whether you're talking about these online auctions or otherwise, are they saying to you -- are they saying when they put out the request for the bids, you know, we want the mesh bid or we want the perf bid?

MR. GRAVES: Typically in a line review situation you're going to present the product that you feel is the most appropriate for the customer from your perspective.

When a retailer would do an online event, they are typically going to specify the attributes of the product, the size, the type of the top would certainly be one of those, and they have -- to be quite honest with you, in different auctions the spec has varied. Sometimes it has been specified as a perforated top, sometimes mesh top, other times it hasn't been that specific a specification going in. So it kind of varies, but typically they are going to specify one or the other top surface.

COMMISSIONER MILLER: So they usually would be asking for mesh or perf?

MR. GRAVES: Yes.

COMMISSIONER MILLER: Okay. To counsel and Professor Bradley, I don't know if you can address this perhaps in a post-hearing submission, I don't think our records on some of the lost sales and revenue items and our record on the auctions provides that information. I don't think it told us that. And if there is information that we should be aware of in terms of what was being asked in those online auction bids, a little more detail perhaps than we actually currently have, I think we should be aware of.

MR. IKENSON: Commissioner Miller, we will be pleased to put that information --

COMMISSIONER MILLER: And we'll see if that kind of information was out there with those specific --

MR. IKENSON: Yes, it is available, and we will present it to you.

COMMISSIONER MILLER: Okay. Then a moment ago, Mr. Graves, you mentioned once again the four-leg product which we haven't really talked about very much. Mr. Graves, does HPI make the four-leg model?

MR. GRAVES: Yes, we do.

COMMISSIONER MILLER: You didn't bring one of those for us to see.

MR. GRAVES: No, We're sorry. We should have brought one along. Apologize.

COMMISSIONER MILLER: That is -- tell me a little bit about how that one fits in. I mean, retailers offer both typically, the large retailers, are they offering -- you know, I get the impression they must.

MR. GRAVES: Yes, the primary attribute that a consumer is looking for is stability in the product. So a four-leg model in theory is going to give you better stability than a t-leg model. Therefore, the premium attached to that is a better or best type of a product.

The high-end models are almost always four legs, for example. Medium-grade products are typically four legs, and the opening price point is usually is going to be a t-leg.

COMMISSIONER MILLER: And I'm sorry, did you mention that the Chinese products when it began entering was more of the four legs. Has that changed over time or are they still predominantly -- I don't know what the percentages or proportions of these different kind of products is, but I just want to have some sense as to how much -- your impression is that they would be in that four-leg high end?

MR. GRAVES: Well, the Chinese suppliers are offering much like the whole spectrum of ironing table products with better/best premium and so forth, four-
leg models all the way down to the opening price point t-legs.

COMMISSIONER MILLER: Is it a matter of price competition among them? I mean, is there a differential? I mean, if I can go buy a four-leg for the same price as the t-leg, you know, am I going to buy four-leg, or no? I'm trying to find out what a typical purchaser is going to decide whether they want one or the other for any reason.

MR. GRAVES: You're talking about a trade customer?

COMMISSIONER MILLER: Well, the trade customers that really matter to use. Obviously, they are driven by what their purchaser wants too.

MR. GRAVES: Yes, I would say, if I understand the question correctly, if a retailer is offering a four-leg product for the price that would typically be attached to a t-leg, that would be an outstanding value for the consumer, and they would probably --

COMMISSIONER MILLER: I asked partly because you made much of this premium between that and perf.

MR. GRAVES: Right.

COMMISSIONER MILLER: And I'm wondering about the premium between four leg and t.

MR. BRADLEY: If I may, I think to help try to make a little clearer, if we go back before 2002, let's go back to 2000 and 2001, at that point the Chinese imports were not only four-leg imports but what we call high end, which means they have other features, ironing rests or linen rack or it could be, I don't know, chrome or fancy. They are quite a bit more expensive at the retail level.

When we talk about the dramatic increase in imports, those are t-legs. So the surge in imports we have seen is the t-leg, which is the opening model.

Now, within that t-leg you have mesh versus perf, and that was the premium we were talking about, entirely the t-leg. And I apologize. When I did my hierarchy, I did not make that clear. It's the four legs at the top, then you have the t-legs below, and then within the t-legs mesh versus perf.

COMMISSIONER MILLER: Okay.

MR. BRADLEY: And I apologize for not making that clear.

COMMISSIONER MILLER: That's why you concentrated on that particular premium as opposed to the --

MR. BRADLEY: That's right, that's where the imports are. Thank you.

COMMISSIONER MILLER: Mr. Graves?

MR. GRAVES: Just to give you an idea, about 75 percent of the ironing table market is in the open price point.

COMMISSIONER MILLER: Don't see any reason to trade up very often.

MR. IKENSON: And Commissioner Miller.

COMMISSIONER MILLER: Yes.

MR. IKENSON: The reason for the examination of the premim. was because those were the two products, the two sides of t-legs --

COMMISSIONER MILLER: Yes.

MR. IKENSON: -- for which you were examining Professor --

COMMISSIONER MILLER: That we have data.

MR. IKENSON: Right.

COMMISSIONER MILLER: Right, exactly. Okay.

All right, let me go back to make sure I understand exactly how and when the Chinese competition began impacting your prices. You have mentioned the December 2001, in your testimony you have that has your first --

MR. IKENSON: Yes.

COMMISSIONER MILLER: -- point on your time line. Does that mean that's really the first point when you had this one retailer having the open bid and the Chinese unseating the incumbent U.S. producer? Is that really the first moment at which you recognized this competition?

MR. GRAVES: That would be the first significant bench mark we could cite. We had a similar scenario with another customer where we -- perhaps earlier than that, in mid-2001, I believe, would have lost some sales to the Chinese imported products. But the major event, December 2001, would be the first --

COMMISSIONER MILLER: That really made you sit up and take notice, correct?

MR. GRAVES: Correct.

COMMISSIONER MILLER: Okay. And now we're going to hear about the Whitney closure as clear from Mr. Perry in his opening statement. When did you become aware, and I know I'll ask Whitney this question, but when did you become aware of Whitney's closure? I mean, at the time it happened, or was this months ahead that you knew? When did you know?

MR. GRAVES: Probably right after it happened. I don't know if we would have had any advanced knowledge of that; just when we, you know, saw it in a news report or something of that nature.

COMMISSIONER MILLER: It wasn't something rumored long in the industry so to speak?

MR. GRAVES: If so, our rumor mill isn't very good because we didn't have any advanced knowledge of that.

COMMISSIONER MILLER: Okay. I'm kind of jumping around here a little bit, but there has been different things that have caught my interest.

One comment about our question about the online auctions. First of all, you describe them as a winner take all scenario. Is that different than your other typical line reviews? Have these online auctions brought more of this winner take all results than you have typically seen in the past? Is that fair to say?

MR. GRAVES: Yes, I would say so. They are not all winner take all, I don't want to make that generalization, but usually they are. One supplier can come out of it with -- you know, each event with all the business.

And prior to that the line review business, I would say had more of a potential to be fragmented and spread across different items, potentially from different suppliers.

COMMISSIONER MILLER: Okay. And what do you see as the future of the online auctions? Do you see them continuing?

MR. GRAVES: Well, they are continuing for us not in ironing tables, we haven't had one, as the respondents correctly pointed out, for about nine months. But in other facets of our business we supply other product categories, they are continuing. So I don't think they are going to necessarily go away. I wouldn't make that statement.

COMMISSIONER MILLER: Okay. Mr. Ikenson?

MR. IKENSON: Yes. Commissioner, while it's true there hasn't been an auction for awhile, an auction was planned by major retailers to follow the date of the Commerce Department preliminary determination. That was in early December. Because that determination was postponed, the auction was postponed.

And then when the preliminary determination finally was -- it was postponed to a date following the new date of the preliminary determination by Commerce, and then a new one was planned, so that was cancelled. We will be able to discuss this.

COMMISSIONER MILLER: Okay, but you are telling me you do think that -- the red light is on so I am not asking you -- you definitely think the reason they have gone away is because of the pendency of this case. That's what you're suggesting?

MR. IKENSON: Yes.

COMMISSIONER MILLER: Okay, thank you. I appreciate your answers very much. Thank you.

CHAIRMAN OKUN: Commissioner Koplan.

COMMISSIONER KOPLAN: Thank you, Madam Chairman. I want to thank the witnesses for their presentation today.

I'm still struggling with this issue involving the premium. I'm coming back to the back and forth you had with Vice Chairman Hillman. Let me see if I can walk through this with you.

I noted that on pages 36 to 40 of your prehearing brief you make the argument that substantial underselling of Chinese subject imports in 2002 and '3, you explain it by arguing that a traditional underselling analysis is difficult to perform because there aren't any importers' perforated to our buying the tables to compare with domestic perforated to our buying the tables.

Then you go on and state that a comparison of imported mesh-top prices, domestic mesh-top prices show significant underselling.

My concern is that the Chinese ironing tables are exclusively mesh top, and the domestic ironing tables are largely perforated. The Chinese ironing tables don't carry a premium with them. That's my understanding. There is no premium involved.

You suggest that we remedy -- that we can remedy your suggested analysis by calculating the premium that was discussed by which domestic mesh tops oversell domestic perforated tops, and then adjust the imported mesh tops to make them comparable to the perforated top prices.

To me, it's still coming across as an apples to oranges comparison from mesh-top tables that you produce in far fewer quantities than the perforated ironing tables. And as I look at Table 5-1 of the staff report, that, to me, appears to be a more apples to apples comparison.

And if I'm looking at that table, in all quarters the Chinese product is priced above the U.S. product. This part is public. With margins ranging from 2.7 to 84.1 percent, and the average is 19.3 percent.

Help me out on this. I'm still struggling with your suggested analysis.

MR. BRADLEY: I think Table 5 can be --

COMMISSIONER KOPLAN: Yes, I also want to note, and this is also in the staff report, that we note in the preliminary phase of this investigation that in the final phase that examine product mix issues and whether prices items needed to be more narrowly defined, and the parties were asked to address theses issues in their comments regarding the selected pricing products in the Commission's draft questionnaires, and no parties suggested or requested any change of their additions for the pricing products at that time. So I would just mention that, and that's in a footnote in this same chapter.

Can you help me out?

MR. BRADLEY: No, I just want to refresh my recollection what 5-1 is before I answer your question.

COMMISSIONER KOPLAN: I can't get into the details of the 5-1 because that table -- the numbers are certainly proprietary.

MR. BRADLEY: I would raise two issues with Table 5-1.

CHAIRMAN OKUN: Mr. Bradley, I just want to make sure that you don't have the EPI version with -- okay, all right.

MR. BRADLEY: I wanted to see the title to this.

MR. BRADLEY: No, no, I just wanted to know what the title to this -- I want to know what title 5-
1 is.

COMMISSIONER KOPLAN: Thank you for that, Madam Chairman.

CHAIRMAN OKUN: Ye

MR. BRADLEY: Yes. The table, as I understand it, compares mesh tops to perf tops.

COMMISSIONER KOPLAN: Right.

MR. BRADLEY: And I would suggest that in trying to understand underselling and price competition by imports, that is not an apples to apples comparison because I believe that before the imports came mesh tops were selling at a price above perf tops.

And so for a Chinese import to come in and sell at a price equal to a perf top is in fact underselling because they are offering to the retailer a product which has always been priced higher at a lower price relative to the perf top.

And so I guess I would suggest -- you are right, there is a difficult, it's not easy because we don't have perf versus perf in large quantities or mesh versus mesh in large quantities, so is difficulty as it has to be done, and I would suggest that the adjustment is appropriate because otherwise we're going to misunderstand the degree of price pressure the imports are putting on the domestic industry.

It's like they have -- you know, in the old days I think it was the Pontiac and the Chevy were basically the same car, but different prices, or you're selling a higher priced case at the price of the lower one, that's real price competition, perhaps even underselling even though the absolute price themselves are the same, and that's why I think the adjustment is appropriate.

The other thing I don't know if I'm allowed to say about the table, so I would like to check with counsel before I answer if that's okay.

COMMISSIONER KOPLAN: Absolutely.

(Pause.)

MR. BRADLEY: The other answer is going to have to be confined to our post-hearing brief, unfortunately. I had one other reason that I would add cost to the table, but I need to provide that confidentially. Sorry.

COMMISSIONER KOPLAN: No, I appreciate that. I just want to suggest to you that I'm still struggling with this particular issue, and anything that you can do to expand in the post-hearing would be helpful to me, and at that time you all can specifically address the table I'm referring to. And if you want to prepare a table that you are suggesting that we substitute, I would like to see the basis for that, so you can get quite specific for purposes of post-hearing. I find that helpful.

MR. BRADLEY: Thank you very much and we will indeed do that.

COMMISSIONER KOPLAN: Thank you.

MR. IKENSON: Commissioner Koplan, if I may just supplement the responses. I think you had asked why we did not pick up on the Commission's invitation to comment on the difficulty in product comparisons.

COMMISSIONER KOPLAN: Well, neither side did.

MR. IKENSON: Yes. But I think in fairness the products that we were concerned about where we thought you can get the best apples to apples comparison was the product with the least features, and that's the opening price point product, which is the t-leg.

Once you get to four-leg product and above there is such a range of features, it would be very, very difficult to compare prices of one person's four-
leg with another, and they will be combined. It's very, very difficult to isolate.

So the best isolation I thought we could get was with respect to the t-leg, and there are the two types of t-legs as you know.

COMMISSIONER KOPLAN: Thank you, Mr. Ikenson. I appreciate that.

I would also like to hear from respondents post-hearing on this same issue. That would be most helpful to me as well.

Let me stay with you if I could, Mr. Ikenson, for a moment. You heard Mr. Perry argue this morning that raw material prices and freight charges in China are skyrocketing. This is directly contrary to what I think I have heard from you today, and I'm asking what more you could submit for the record or present now that would help me on this to reconcile.

MR. IKENSON: With respect to freight, I have to dance around this issue because there was confidential information submitted by respondents.

COMMISSIONER KOPLAN: Yes.

MR. IKENSON: With respect to steel, I think we will have to put in our post-hearing report evidence from publicly available reports, which I don't have with me, indicating the very peculiar schism that occurred earlier this year where prices in the U.S. were rising and prices in China were falling.

So we would be pleased to develop that in our post-hearing brief.

COMMISSIONER KOPLAN: Thank you. I appreciate that very much.

CHAIRMAN OKUN: Mr. Deppen, you noted, I think, the imperfections in the Chinese-produced product you purchased locally in Indiana.

Are you suggesting that there is substantial quality differences in the two products, and if so, have your customers raised these concerns?

I ask that because purchasers have identified quality as their number one ranked factor in their purchasing decisions.

MR. DEPPEN: No. Actually, what I was trying to persuade the Commission is that the differences in manufacturing process is between those, the perf tops that we produce in Indiana versus the Chinese sets. The Chinese have a lot more of manual operations in producing their products. Consequently, there is more opportunity for errors in the manufacturing process.

And the one that I brought was a typical example, not that all Chinese products are that way. They make good products also, very competitive products, but it's not unusual to find in our sampling that we have taken products like the one that we brought today that has unlevel ironing surfaces, and sharp points and things like that in them.

COMMISSIONER KOPLAN: Thank you. I appreciate that clarification.

Mr. Graves, let me see if I can get this one out really quick. Are the losses you described where you were unseated by Chinese manufacturer's competition, were these loss to someone other than Whitney Design or a mass merchandiser that is importing directly?

If you have not already done so, can you provide information on who the successful bidder was, who the importer was, and what the successful bid prices were?

MR. GRAVES: We would be happy to do that in the post-hearing brief.

COMMISSIONER KOPLAN: That would be very helpful as well.

I see my red light is -- had you finished that response?

MR. IKENSON: We can say publicly that it's other than Whitney Design.

COMMISSIONER KOPLAN: Okay.

MR. IKENSON: But the details will have to be furnished.

COMMISSIONER KOPLAN: Thank you. I see my red light is about to go on. Thank you. Thank you, Madam Chairman.

CHAIRMAN OKUN: Commissioner Lane.

COMMISSIONER LANE: Good morning. I am sort of disappointed that we don't have the four-legged table here because I don't know what one looks like, and I was sort of hoping to see what it looked like, and how it might be more appealing for ironing purposes than the regular one, but I'll go out and try to find one.

One of you testified, and I forget which one, it may have been Mr. Deppen -- no, I think it was Mr. Graves -- that HPI's profits have significantly declined. How would you characterize your current financial health on a stand-alone basis without regard to looking to where you were to your current status? And maybe you might want to do that in a post-hearing brief, unless you can testify to it now.

MR. GRAVES: Yes, we would be happy to do that in our post-hearing brief.

COMMISSIONER LANE: Okay, and I think it may have been Mr. Bradley said that HPI has not driven down prices. What can you point to specifically to buttress that argument?

MR. BRADLEY: What we will provide to you in confidential nature would be a history of HPI's prices, showing what they have done, and item-to-item instances of their interactions with their customers.

COMMISSIONER LANE: Okay, Mr. Deppen, you made a persuasive argument of the quality of your product, so let me ask you a general question about the quality.

Is there anything in the construction of a mesh-top table that would result in the mesh-top table being generally a better quality than the perforated-
top table?

For instance, is there anything about -- it is sturdier or are there characteristics that you put into the mesh top that make it better quality than the perforated top?

MR. DEPPEN: The perf top and the mesh top ironing tables are pretty much the same as far as we are concerned. There is not a big difference in the two. The difference being it's a two-part top and a one-part top perf versus the mesh.

As I mentioned earlier, the mesh table takes slightly more labor to produce. But as far as the durability and the functionality of the two tables, they are pretty much interchangeable.

MR. IKENSON: Commissioner, may I expand on that for a moment?

COMMISSIONER LANE: Yes, you may.

MR. IKENSON: I feel particularly obligated to since I am the person responsible for the failure of the record to have a four-leg table here, and I'm sorry that you have been disadvantaged, but we just determined that we were bringing too many things to the hearing room.

First, with respect to that, in our petition, the antidumping petition, we had as an exhibit a brochure, a product brochure showing the various products that were made, including four-legged products starting with low-end four-leg products to fully featured ones. So while this may be a poor substitute for the real thing, it will be available for you to see in the record.

COMMISSIONER LANE: Okay, I appreciate that.

MR. IKENSON: Secondly, the kinds of products that Mr. Deppen is discussing with you when he is comparing the perf to the mesh is t-legs. He's talking about the perf t-legs, and the mesh t-legs.

If he were to talk to you about mesh four-
leg, and the various four legs, he would have a lot more to say about improvements and features and differences in quality.

Our focus has been on the t-leg because that is really 75 to 80 percent of the market, 75 to 80 percent of our production, and we think 75 to 80 percent of what's coming into the country. That's an opening price point product.

COMMISSIONER LANE: Yes. And I'm not sure if it's in the record and I'm not sure if you are allowed to tell me, but I will ask. HPI produces both mesh tops and perforated tops. Can you tell me what the ratio is of one to the other, or the percentages of one to the other?

MR. IKENSON: We can provide that to you in post-hearing brief. It's confidential.

COMMISSIONER LANE: Okay, fine.

MR. IKENSON: But it's important to understand that while historically we have been focusing on perf tops, and we have very few mesh tops, what I said in my opening statement is true. We could make more mesh tops if the market went in that direction.

And to the extent that large buyers are saying we want mesh and we can get mesh from China, but not from the United States, that is absolutely incorrect. And Mr. Deppen could explain if you would permit us, Commissioner, to tell you of the flexibility that HPI has in producing mesh should there be an interest on the buyers part.

COMMISSIONER LANE: Okay, I would like a further explanation as to why a mesh-top table may be better than a perforated-top table.

MR. IKENSON: The argument has been is that it permits steam to flow through at a higher rate. We understand that it's very, very minimally higher, and we can present in our post-hearing report a laboratory analysis showing you precisely how much more steam gets through. We're talking about a very, very small difference.

And I think the staff report and the Commission's determination at the preliminary phase, and I think representatives on the other side pretty much acknowledge that at the consumer level there is no -- certainly for the opening price point level, they are viewed as essentially interchangeable.

The retailer may have a preference. Retailers' customers have not shown a preference.

COMMISSIONER LANE: Good. I'm glad to know that I'm not alone in thinking that perhaps there is no difference between the two when it comes to actually ironing.

Okay, my next question is for Mr. Graves or Professor Bradley, and I'm focusing on the domestic like product issue. There is a dispute between petitioners and respondents regarding the over-the-
door ironing board. Petitioner is satisfied with excluding them, while the respondents wants them in.

Putting aside the test for a moment, let's look at the measure of harm. If we included over-the-
door boards, would the gross in imports relative to the total market, the price impacts, and the profitability of the domestic industry be changed dramatically?

MR. BRADLEY: To give an accurate and complete answer, I would like to do it in the post-
conference brief. My immediate recollection from looking at the data is that the changes would not be dramatic, but to be fair I would really like to go back and look at the numbers and give you a complete answer. I just don't feel I can, you know, do it fair justice without refreshing my recollection.

COMMISSIONER LANE: Okay, thank you.

I would like now for one of you, and perhaps Professor Bradley would be the right one to ask, what has been the effect on the marketplace in the recent closures of stores like Ames, Bradlees, the bankruptcy of K-Mart, and the continuing corporate growth of Wal-
Mart? What effect has that had on your industry.

MR. BRADLEY: I will be glad to give the economist answer, and Mr. Graves can give you the real world answer.

COMMISSIONER LANE: Let's let the real world answer first.

MR. GRAVES: That's all right.

MR. BRADLEY: Yes.

MR. GRAVES: Okay, the real world answer, Ames & Bradley by comparison were smaller retail chains to Wal-Mart, or a K-Mart or a Target certainly, so they were not a major factor.

K-Mart's bankruptcy and store closures have been a factor certainly for us. So then what you can see happening is the consumers that used to shop at a K-Mart that their store has been closed, they are going to logically shop at another discount chain, likely to be a Target or a Wal-Mart. That would be the transfer of sales, if you will, from a discount customer who no longer has their store that they previously shopped at available. They would go to another one, we would argue.

COMMISSIONER LANE: Okay, thank you. My time is u

MR. BRADLEY: Can I get --

CHAIRMAN OKUN: Do you want to allow him to answer, Commissioner Lane, or do you want to come back?

COMMISSIONER LANE: If you will give me the time.

CHAIRMAN OKUN: Why don't we just finish u

MR. BRADLEY: I was just really --

CHAIRMAN OKUN: It's my last day so --

(Laughter.)

MR. BRADLEY: Thank you. I know we heard earlier you can't have a one-minute lawyer, but I will try to be the one-minute economist.

I would just put formal language on exactly what he said. The transitions you talked about have not really affected the total amount of ironing tables purchased; just the channels by which they get to the customer.

COMMISSIONER LANE: Okay, thank you. Thank you, Madam Chairman.

CHAIRMAN OKUN: -- lawyers, I like it. I'm going to start liking economists here soon.

Commissioner Pearson.

COMMISSIONER PEARSON: Thank you, Madam Chairman.

Respondents report that in the first quarter of 2004 both HPI and Chinese producers faced significantly higher production costs attributable to higher world steel prices. Respondents argue that as a result of the production cost increases Chinese shipments to the U.S. market and Chinese market share declined in 2004.

Could you please address that argument?

MR. IKENSON: Commissioner, something else happens in the first quarter of 2004. The Commerce Department announced essentially a long awaited preliminary determination in this case. They announced their preliminary dumping margins which were extraordinarily high, and we set those out in our briefs. They were so dramatic and so favorable to us, I should have submitted them to memory.

The country-wide rates was 153.76 percent. One of the very large producers Shunday Yung Gen, received that same rate. Three other producers received the rate of 69.59 percent, and the remaining producer, Sinnes Hardware, had a rate of 7.66 percent. That was the lowest of the preliminary margins. This has had an impact, as one would imagine, on buying patterns and on the dynamics in the market.

So the Commission knows from the statute under which it operates that Congress expects you to take into account sudden shifts in trends after an antidumping proceeding begins, particularly after a Commerce preliminary determination. So I think we are looking at a very classic situation here where there was a shift in the marketplace in response to a rather substantial shock from the Commerce Department.

What those preliminary margins translate into is an immediate cost and immediate great uncertainty for the importing community. The only way that they could import after that preliminary determination is to either pay estimated duties in the amount I have identified or post the bonds covering that amount. But we think that is a major, major event in the first quarter that changed that.

With respect to steel cost increases, here we would have to go into some confidential information. We would like to address that in our post-hearing if we may.

COMMISSIONER PEARSON: Okay. So you are not saying that steel didn't play any role, but you will talk about that later?

You are arguing, if I understand correctly, that whatever was going on in in steel was overwhelmed by what was going on at the Commerce Department?

MR. IKENSON: Well, on the Chinese side we think that is absolutely true, but on the U.S. side we have said that our steel costs have been increasing, and our prices have not been able to match the increased costs, so we have been seeing price suppression in the first quarter by reason of that phenomenon.

What you don't see in the first quarter is what has been happening to our steel costs that have been incurred in the fourth and first quarter, which will be reflected in our second quarter results, because the steel prices have been increasing for us. And so if there is price suppression and we can't match those steel cost increases, we are going to have tremendous difficulty, as you understand.

COMMISSIONER PEARSON: Okay. Respondents maintain that Chinese ironing table producers are operating at high rates of capacity utilization, and facing electricity shortages along with the increased steel price. Respondents argue that these factors, among others, indicates that Chinese imports do not threaten the domestic industry with material injury.

Could you please address that argument?

MR. IKENSON: Commissioner, I can try. Mr. Graves or Mr. Deppen wish to add, I would invite them to.

But from our examination of the record, much of which is confidential, we know that -- I know I can say this; that the questionnaires went out to, I believe, 23 different foreign producers, and four have responded. So you have a paucity of information regarding total Chinese capacity. And in fact one company that claims to be the largest did not even complete a questionnaire for the final phase of the investigation.

So we think that the capacity -- the record doesn't show the full extent of the capacity, and we know that it's very easy to move between producing one metal -- fabricated metal product and another, so the product shifting is essentially huge.

And with respect to the electricity issue, this is something that we just saw in one of the articles that respondents provided to us. We have not had a chance to fully research that. We will look into that.

COMMISSIONER PEARSON: Okay. Please comment on the expectation that demand for ironing tables in the Chinese home market will increase as consumer incomes and housing starts rise.

In other words, are they going to start absorbing more of their ironing tables?

MR. GRAVES: I don't have any data to support that. I am not an expert on the Chinese market. I focus on domestic sales.

In my own brief experiences visiting retail outlets in China, I usually don't see any ironing tables for sale, so I'm not sure that's going to be a big factor. I'm not aware of it.

MR. IKENSON: We also know from the confidential record there are certain projections by some of the various producers, Chinese producers, including responses at the preliminary phase, which might be instructive.

COMMISSIONER PEARSON: Okay. Yet another argument by the respondents is that the U.S. industry has performed well over the period of investigation, generating high levels of profitability to HPI despite the 2001 - 2002 recession. Respondents state that as the U.S. economy emerged from the recession, in interim 2004, most of the production and financial indicators have registered market improvement over previous year levels.

Is this an accurate description of the state of the domestic industry

MR. BRADLEY: I think not. Much of my response in terms of looking at specific numbers I would like to do in confidence, but I would point out that the suggestion that the U.S. economy recovered in the first quarter of 2004 is a bit off. I mean, recovery really started in 2002. And as you well know, the third and fourth quarters of 2003 were record growth for the overall economic condition.

So what happened in the first quarter of 2004 was not the economic recovery, it was in fact, as Mr. Ikenson said, the preliminary dumping margins, and that's what changed the economic conditions in the industry.

In terms of what it's done specifically to HPI's indicators, I would not agree with their characterizations, and I would prefer to do them in confidence if that's appropriate.

COMMISSIONER PEARSON: A somewhat related item, in compiling their ironing tables' price series the respondents made two adjustments.

First, respondents' price series begins in the third quarter of 2002 because, they argue, it was during that quarter that Whitney Design began importing ironing tables from China in commercially significant volumes.

Second, respondents combined the price data for products 1 and 2. They argue that doing so extends to petitioners the benefit of the doubt since you have argued that Chinese mesh-top ironing tables compete head to head with and are fungible with the perforated-top ironing tables you produce.

Do you agree with respondents' methodology

MR. BRADLEY: Thank you. In terms of the first issue, the timing, I would suggest we look at all of 2002 instead of just start in mid-year, but I would agree with them that the action in terms of price competition really did start occurring in 2002, and have no objection to beginning it at that time.

In terms of the second methodology, one is always a little dubious when the other side offers to help you unlooked for, but I would suggest that really what they have done is they have taken the apples and oranges issue and sort of combined it in -- not to make a bad joke -- fruit salad. But you know, I think putting together actually confounds that issue as opposed to clarifying it and making it more illuminative to the Commission.

So no, I would not agree with that methodology. Indeed, I don't think it's particularly favorable to the petitioners' side because it implicitly establishes inequality between Chinese mesh and domestic perf, and it's our sense that Chinese mesh really has been underselling domestic perfs by bringing that mesh price down through time.

So no, I would resist putting them together. Although I thank them for their consideration, I would suggest that that would not be the appropriate value.

COMMISSIONER PEARSON: Any other comments on that? General agreement among the panelists?

MR. IKENSON: Commissioner, there may be additional information which will be confidential and difficult to explain now. I would like to reserve the right to put that in our post-hearing brief to respond to your question.

COMMISSIONER PEARSON: Okay, that's fine.

My light is changing so I will terminate.

CHAIRMAN OKUN: Well, thank you, and I would like to just continue on the price comparison question if I could with regard to the argument that you have made both in your brief, and Mr. Bradley, in your presentation.

You talked about direct imports are comparable to import sales, and how we should look at those. In this record where we know that at least some imports of ironing tables are made by a firm that imports the product and then sells them directly to consumers, you may be aware, isn't our normal way to collect data at that level because I think it can be argued that we're talking about a different level of trade.

And I wanted you to comment on what type of analysis and comparisons we can make or should make with those, keeping in mind such issues as would the purchase price or the acquisition cost of that retailer be comparable to the sales prices of U.S. producers and U.S. importers which have signed arms-
length, and presumably with a markup to retailers. How do we take that into accounts? And if you can comment on that now, I mean I obviously want to see some more in the post-hearing, but I will give you an opportunity now.

MR. BRADLEY: Thank you, and we will follow up in more detail.

I am sensitive to the fact that this is not the normal comparison, and it is an issue to be worked through. In thinking through it myself I think two points ought to be considered.

One is, at what stage is the direct import price being reported? That is to say, is it being reported in the home country? Is it being reported FOB U.S.? Is it being reported at the domestic facility?

And I think that's helpful to the Commission in sorting out your second question, which is, what's the gap, what's the difference between the arms-length importer sales and the direct imports.

My sense here is that really the only difference between the two is the markup, that the prices that the Commission receives included everything else, and I have some ideas on how to address that, but I think they need to be put in the post-conference brief.

CHAIRMAN OKUN: Okay. I will look forward to that and obviously we will give the respondents an opportunity to do the same as well as we continue to settle this pricing data here.

Let me also related to pricing go to one point with regard to -- well, I guess the high-end boards and I know you have spoken about it, but I just want to make sure I understand, and again, I understand what we have in the record about the large percentage being, I think you used the 75 percent figure as the majority of the market being in these t-
legs.

But if you are looking at what portion, both you in the petitioners' brief and respondents have characterized there being these segments, a high-end segment and a low-end segment. I don't think we have in our record at this point the percentage that would be attributable of the Chinese imports that you would classify as being high-end imports.

Is that information something that can be provided, that can be broken out, at least I guess for your imports it can, and how we should evaluate that if I want to take a look at that number?

MR. IKENSON: Madam Chairman, the answer is, with regard to our imports, we have already attached an exhibit to our post-conference brief which took us up through the first quarter of 2003. We will update that and bring it up to first quarter 2004, so you clearly will get a very detailed report on this between imports and what we produce. And you will also see the different types of tables that are being imported and produced here.

With respect to the mix in imports generally, we really are going to have to scour through the records to see to what extent we can subtract out products which we know to be mesh t-leg and perf t-leg. My belief is that we do have the ability to do that, and I think the Commission and the staff have those data available where product was broken down by type.

So it's in the questionnaire responses, but we will be able to aggregate it and give you a correct number.

CHAIRMAN OKUN: And is it your sense that you are both -- both the respondents and the petitioners, that you are both referring to the same type, the Chinese imports that you would refer to as high end not produced domestically, that you agree on the definition?

MR. IKENSON: I think the problem may be here, there is a breakout, for example, in purchases of mesh t-leg, perf t-leg, and then four-leg tables. So the four-leg tables is not -- may not adequately be broken down in the request for data. So high end doesn't mean four legs. There are some four legs that can serve as an opening price point table, so that's where we may have a little bit of noise.

You will be able to see --

CHAIRMAN OKUN: Stay with your microphone, please.

MR. IKENSON: I'm sorry. You will be able to see the volume of four-leg table imports. You won't be able to -- I don't think -- we will have to analyze the record very carefully. I don't think we will be able to differentiate between the really high-
end products, the products that sell at 39 and 49 dollars retail, even $29 retail. There are products like that. They are a very small percentage of volume, but they are like that in there; that there are also four-leg tables that sell at 19.99 retail.

CHAIRMAN OKUN: That are produced domestically?

MR. IKENSON: Oh, absolutely, absolutely.

So we will give you a complete split of what we produce by type. I don't think we are going to be able to give you the analogous split of the imports, but we will give it our best shot.

CHAIRMAN OKUN: Okay. Mr. Graves, let me go back on one question about the difference between line reviews and the internet auction.

You referred to the internet auctions as being a weighted average price, that when you bid it is a weighted average price. Is that different than in a line review?

MR. GRAVES: Yes, it is. Usually -- well, there have been some auctions with multiple products that weren't weight average, but it's the typical way to do it if you have more than one item in a market basket versus a line review where normally your items and prices are considered individually.

CHAIRMAN OKUN: Okay. One of the things for post-hearing because the information here is confidential is on the internet, the information that the staff has collected on the internet auction, I would like your analysis of how we take into account this weighted average price which includes a basket of goods, some of which, I guess, are along the continuum of prices and how we would evaluate that.

MR. GRAVES: Okay, we can do that.

CHAIRMAN OKUN: And also, and this may be something you can just answer here, which is, when we are looking at the lost sales, lost revenues and the product descriptions, would these all be sales -- would any of these be a situation where you would have also had multiple products that you bid at the same time in a basket?

MR. GRAVES: Where some of our losses is a result of the baskets, yes, there will.

CHAIRMAN OKUN: Okay, so if I could ask -- excuse me, Mr. Ikenson.

MR. IKENSON: We have to reexamine that. The lost sales and lost revenues allegations, I would have to reexamine to see whether any of those covered baskets. There were some very specific product losses, relevant to specific products, but I --

CHAIRMAN OKUN: I know the report. I just want to make sure if you can go back and comment on whether it would be a situation where -- similar to the way I have seen somebody describe with regard to the reverse auctions where you would have had a basket bid, and I want to make sure that we're not just seeing one product pulled out of there when it's part of a basket being bid on.

MR. IKENSON: Understood. We will do that.

CHAIRMAN OKUN: Okay, I appreciate that.

Then one other question with regard to kind of our big purchasers. Do any of them have any restrictions when you are bidding on carrying only one line? Like in other words, does a Target not want to purchase a product that's also being at Wal-Mart? Are there any type of restrictions on who is selling at these big stores?

MR. GRAVES: No, there is no formal restrictions of that type. They are free to, you know, have a line review with anybody they wish to invite to it, or that request to be participating in a line review. So in our classes of goods they are generally unbranded, or more specifically, retailer branded, so the difference in suppliers is kind of anonymous to the consumer.

CHAIRMAN OKUN: Anonymous to the consumer, but is there any restriction when something is being bid for you? In other words, if you are supplying one store and they have got a market for their K-Mart brand or Wal-Mart brand or Target brand --

MR. GRAVES: Right.

CHAIRMAN OKUN: -- would Target or anyone else say we're not going to mark that as our own brand because it's already being sold?

MR. GRAVES: Right. The only restrictions I can think of there would be a big product that we have developed as part of a proprietary program, which we have done for a retailer. Just to give an example, the Martha Stewart program in K-Mart, this was a product we would have developed specifically, and then we would be restricted from selling that exact same product to another retailer, and another retailer might have their own similar program where the opposite would apply.

CHAIRMAN OKUN: Okay. And would you describe that as being --

MR. GRAVES: It's a very small part of the business. They're all high end products and, again, would represent that minority part of the market.

CHAIRMAN OKUN: Okay. I appreciate that further information on that.

I have some other questions, but that finishes kind of the line of thought that I wanted to do on that, so let me turn to Commissioner Miller.

COMMISSIONER MILLER: Thank you, Madam Chairman.

I really only had one more question and it was the first question the chairman just asked about the implications for our data when you may have a retailer that's importing directly, so I'll be interested in your response, Mr. Bradley.

I was interested in your response to her and I will look very carefully at what you provide for the post-hearing submission because I think there is an issue about our data there, but I guess I would just sort of pose the same question or a similar kind of question, a related question, to the companies and that is to the extent that any retailers is importing directly, to the extent you're aware of that or is it changing the dynamics of the marketplace for you or that's not really something that you're particularly either aware of or care about or whatever?

Any comments?

MR. GRAVES: Well, direct importing is a significant factor in our business, the preponderance of products made offshore typically in Asia, specifically, China. We face that in all our product categories and we feel very much that we need to remain viable, need to be competitive with that.

COMMISSIONER MILLER: You say that's something in all your product categories, that the retailers are directly importing from the foreign producer and not necessarily using an importer to facilitate that trade?

MR. GRAVES: That's increasing in most of our businesses, that potential for a retailer to import the product directly from China.

COMMISSIONER MILLER: I have no further questions.

I appreciate all the testimony and all of the answers that you've given today. Thank you very much.

CHAIRMAN OKUN: Commissioner Koplan?

COMMISSIONER KOPLAN: Thank you, Madam Chairman.

Mr. Ikenson, if I can start with you, I think you suggested a bit ago that the improvement to prices and performance in the first quarter of 2004 was due to the announcement of the Commerce Department's calculations of high less than fair value margins. Am I correct in that recollection?

MR. IKENSON: Yes.

COMMISSIONER KOPLAN: Okay. Let me --

MR. IKENSON: At least in part and perhaps in major part.

COMMISSIONER KOPLAN: A major part?

MR. IKENSON: Yes.

COMMISSIONER KOPLAN: Let me stay with you on that for a second. These margins, though, were not announced until February 3rd of this year. That's in Appendix A to our staff report. That's the Federal Register notice. And I thought you had previously suggested that there's a lag of several months in this industry. So if there is such a lag and this didn't come out until the beginning of February, how could this have affected prices so quickly where prices are typically set by reviews once a year?

I don't see in looking at the first quarter of 2004 how the announcement on February 3rd is attributable to what I'm looking at in my table.

MR. IKENSON: Actually, Professor Bradley will answer that question. I just would point out to you the information was known a week earlier.

COMMISSIONER KOPLAN: A week earlier?

MR. IKENSON: Yes. It was known in the end of January. I realize it doesn't affect the tenor of your question, but February 3rd was the official publication date and we already were getting feedback from the market a day after Commerce had announced its preliminary results, but I'll let Dr. Bradley --

COMMISSIONER KOPLAN: Dr. Bradley, it seems to me there's a bit of a stretch. Can you help me out?

MR. BRADLEY: Yes. Thank you. It's an excellent question, a very good question.

I think it's important as we tried to explain in the prelim and I really didn't make clear today to think about what these line reviews do. Specifically, the line reviews set an agreement to buy the product from the supplier and they propose a price at which the product will be shipped. However, they're not contracts and, I think as Mr. Graves would agree, it is not unusual for price changes to take place within the year of the line review. For example, if materials costs go up, they would go in and raise their price.

COMMISSIONER KOPLAN: But I'm looking at a 60-day period here.

MR. BRADLEY: Right. Right. Okay. What I'm suggesting is that immediately upon the announcement of the prelim results retailers at that point have the flexibility, because they're not contracts, to shift their sources of supply, so literally what happened was in anticipation of the announcement they were prepared to do so and after the announcement it was easy for them at that point to contact HPI and say, look, I'm interested in buying from you now because I'm worried about these margins.

So it's not so much that --

CHAIRMAN OKUN: Can you document that?

MR. BRADLEY: Yes, we can. It's not so much that there was another line review, but within the established parameters --

In addition, we have to keep in mind some retailers split their distribution, so it's not necessarily one-to-one from a supplier to a retailer and, obviously, that makes it very easy to make the transition. But we will provide the details in confidence.

COMMISSIONER KOPLAN: That would be helpful. Yes.

Let me come back to a question Commissioner Pearson asked, when he asked about the state of the domestic industry. What I'm trying to understand is if you've been unable to cut your raw material and energy costs and pass them along to your customers in the form of higher prices, how have you been able to achieve the profit levels that had existed during the period of examination that I'm looking at in Table C-1?

I can't get into the numbers there, but you know what I'm referring to. The numbers are actually confidential, but I'd like you to either respond to that here or in the post-hearing.

Mr. Ikenson, you look like you're reaching for your microphone.

MR. IKENSON: I need about 30 seconds.

COMMISSIONER KOPLAN: Could you just move the mike directly in front of you?

MR. IKENSON: I need about 30 seconds to refresh my recollection to see whether I can respond publicly.

COMMISSIONER KOPLAN: Sure. I'm counting.

MR. BRADLEY: While he's looking, there are indeed other costs that have changed and I don't want to be any more specific than that, but they have taken other actions to support or preserve their profitability and I will detail those as we can. I think they would prefer we don't do them in public, but I will do them post-conference.

COMMISSIONER KOPLAN: Good. I appreciate that.

Ten seconds, Mr. Ikenson.

(Pause.)

MR. IKENSON: I can give part of the answer.

COMMISSIONER KOPLAN: Go ahead.

MR. IKENSON: There are certain numbers that are in that report where you see a trend which shows not what you suggested, Commissioner.

I think I can say publicly there's been a very substantial decline in profits over the period, a substantial decline in profits.

COMMISSIONER KOPLAN: Well, I'm looking at first 2001 through 2003.

MR. IKENSON: Yes.

COMMISSIONER KOPLAN: Okay. Maybe you can walk through that in the post-hearing submission.

MR. IKENSON: Okay. We'll be pleased to do that.

COMMISSIONER KOPLAN: Thank you.

MR. IKENSON: We distinguish between the ratio of profit to revenue and profit. It's an important distinction. The other side is very quick to point to profitability ratio and suggest that somehow we could exclude consideration of everything else. I'm not suggesting that our profitability ratios are high, but if you just look at profitability ratio, the suggestion they're making is to pretty much decide the case, that somehow we can be perceived as being healthy.

It's wrong for a couple of reasons. First of all, all that the lawyers on the other side have to do is just ask themselves if at the end of their business year the managing partner would tell them, ladies and gentlemen, we've learned that your revenues have just fallen from $10 million to $5 million, but the profits of the firm have gone from $5 million to $2.5 million, profitability has stayed exactly the same. Would they be unhappy? I think so.

If their profitability ratio went up, let's say the revenues fell but the profit to revenue ratio increased so that instead of making a certain amount of profit last year, instead of making half of it this year they've made 40 percent less, that's not something to pop the champagne cork over. So I think we have to look at profit as an absolute level and see what's been happening to that.

I had a second point and my age is getting in the way of letting me remember, but if it comes back to me I hope I'll be given an indulgence. Thank you.

COMMISSIONER KOPLAN: Certainly. You can come back to it.

Thank you, Madam Chairman, for pulling me back.

MR. IKENSON: I remember.

COMMISSIONER KOPLAN: I knew you would.

MR. IKENSON: It really goes to the fundamental legal framework in which you decide your cases. Going back to 1979, when Congress moved the antidumping provisions from the '21 Act into the Tariff Act of 1930, it took the pains to instruct the commission to consider certain factors when you make your decision: import volume and growth, price effect and impact on the industry. That was the directions to the commission from day one, when the '79 Act was passed.

During the 1980s, a number of your predecessors adopted a methodology which was called the two-step method where they first asked the question is the domestic industry healthy and if the answer was yes, that was the end of the inquiry and they would vote negative.

COMMISSIONER KOPLAN: Let me just say I want to get a few more questions out.

MR. IKENSON: I'm sorry.

COMMISSIONER KOPLAN: Can we suspend this and come back to it?

MR. IKENSON: I'll be pleased to.

COMMISSIONER KOPLAN: That would be great. Thank you.

Respondents argue at pages 37 to 41 that the Chinese do not have significant idle capacity to generate a surge of subject imports and that the ratio of Chinese units produced to average production capacity has remained high.

Similarly, they argue that Chinese capacity utilization is correspondingly high and, importantly, their sheet steel costs have increased 40 percent since last August when we rendered our preliminary determination.

They conclude that when these factors are viewed in combination with the lack of a high inventory overhang what remains is insufficient for an affirmative threat determination.

What do you respond? Do you want to do that post-hearing?

MR. IKENSON: I think so. It was a point that I had made earlier in response to Commissioner Pearson that the record respecting foreign capacity is quite incomplete and inadequate, but we'll respond in the post-hearing.

COMMISSIONER KOPLAN: Thank you.

Now, Mr. Avery --

CHAIRMAN OKUN: Oh, look.

COMMISSIONER KOPLAN: It's the last day.

CHAIRMAN OKUN: I'm not being nice to the commissioners on my last day, only the parties.

We're very near the end. You just go right ahead, Commissioner Koplan.

COMMISSIONER KOPLAN: Thank you, Madam Chairman.

CHAIRMAN OKUN: You might forget it before you get back to the next round.

COMMISSIONER KOPLAN: Actually, I've got it in writing for that very reason.

Mr. Avery, I note a June 2, 2004 press release issued by HPI states that your company has entered into an agreement with Mr. Tenet's company, who also happens to be your chairman and chief executive officer, that he intends to buy the company and take it private.

If you can tell me, what would the benefit be of investing in the company now which you allege is facing injury by unfairly traded Chinese imports? How has this investigation influenced the reported decision to take the company private?

MR. AVERY: I don't think I'm in a good position to answer the question. Mr. Tennant is the one who has made the offer to buy the company. We can comment on it --

COMMISSIONER KOPLAN: Could we get a response for purposes of the post-hearing?

MR. AVERY: Pardon me?

COMMISSIONER KOPLAN: Could we get a response?

MR. AVERY: Absolutely. We'll give you a confidential response.

COMMISSIONER KOPLAN: Thank you, Madam Chair.

Thank you for that. I'd like to see that post-hearing, if I could.

CHAIRMAN OKUN: Commissioner Lane?

COMMISSIONER LANE: Thank you. I'm afraid now if I forget a question I'm going to also be made fun of.

I think we need to understand that Commissioner Koplan is going to be charge of our hearings for the next couple of years and we should be nice to him.

COMMISSIONER KOPLAN: I would not have brought that up.

COMMISSIONER LANE: Professor Bradley, you stated in your presentation that in this industry if production volumes decline the average cost per unit goes up. I understand that, but let's assume that factors such as productivity or raw material costs actually resulted in lower average cost per unit, even in the face of declining market share.

In a competitive industry, even a fairly competitive industry, would you expect price declines to reflect these lower average costs per unit?

MR. BRADLEY: If understand the question, the scenario is -- put aside economies of scale, if we have lower material costs and lower, say, labor costs that reduce the unit cost of the product?

COMMISSIONER LANE: Yes.

MR. BRADLEY: Would that translate into lower prices?

COMMISSIONER LANE: Yes.

MR. BRADLEY: Is that what the question is?

I think that the answer to that is yes, we would expect to see that in any competitive industry, as efficiency gains take place. That will allow some reduction in price unless the manufacturer responds to the cost savings by essentially enhancing quality. In other words, there's two ways that they respond to these efficiencies. One would be to have competition drive down the price, but the other way they sometimes respond is to up the quality of their product and keep the price the same.

So I think that to the extent that we would -- yes, I would say to the extent that there are efficiency gains, they would be reflected in the ability to charge lower prices and I think in this case HPI's efficiency gains were stirred in part by the necessity to lower prices to try an unsuccessful attempt to keep their market share.

COMMISSIONER LANE: Okay. Thank you.

I want to go back to a follow-up to a question I asked earlier that you're going to respond to post-hearing and a question similar that Commissioner Koplan asked.

I understand your focus on absolute levels of profits and not on ratio to sales, but what if we looked at a ratio to assets employed in the manufacture of ironing tables? Does that ratio show a much more significant decline from 2001 to 2003?

MR. BRADLEY: I think there are some important issues associated with how one calculates that ratio and the appropriate way to do so, but I would like to -- I think it's an excellent question, but I would like to respond to it in confidence because some of those issues relate to HPI's internal decisionmaking and if that would be acceptable I would prefer to do that --

COMMISSIONER LANE: Yes, that would be fine.

MR. BRADLEY: Thank you.

COMMISSIONER LANE: While I have you on the hot seat, as I understand your argument as discussed in your pre-hearing brief, you are saying that we should look at a premium of mesh topped tables over perforated top tables and if the evidence shows a significant collapse of that premium, is that the equivalent of underselling?

MR. BRADLEY: Certainly economically it would be in the sense that, as I tried to explain before, that if I have two products, one is selling -- let's make up a number -- 30 percent more than the other before the imports appear and the price of that higher product is what's being imported, the 30 percent higher one, to the extent that that price falls to match the lower price, I would consider that to be underselling, yes, because it's a higher priced product and even though the absolute price is the same, the relative price between the two products has changed. And that's really how people make their decisions on the relative price, so I would suggest that that would be. Yes.

COMMISSIONER LANE: Okay. On page 26 of petitioners' brief, you state that a given retailer typically does not carry both perforated top T-legs and mesh top T-legs in the opening price point segment. Why not?

MR. GRAVES: I think a more precise answer would be they wouldn't in the same store carry them simultaneously. We do, as it's been noted, share distribution at a major retailer where our product that we offer at the opening price point is a perforated top and the competitor's is a mesh top, but typically there's going to be one entry, one product at opening price point, so therefore you're going to have -- I should mention that split distribution is a geographic split, not side-by-side, so typically you're going to have one product offered at opening price point and then it's going to be either a perf or a mesh top.

COMMISSIONER LANE: Okay. Thank you.

Information on the record indicates that some imports of ironing tables are made by a firm that imports the product and then sells them directly to consumers. Commission staff does not normally include such data in the price series used to determine margins of underselling or overselling between the selling prices of the U.S. produced product and the imported product.

Petitioners argue that these direct import data should be included in the comparison. However, doing so seems to mix prices at different levels of trade.

Please comment on the comparisons that can and should be made with these direct import data.

MR. BRADLEY: I think we have a request, actually, several requests, to indicate how we would make that comparison the appropriate one. Without going into the details of it, the point that I'm trying to make is that in this particular case direct imports are a big part of the story and somehow I think they need to be included in the analysis, whether it's through the traditional mechanism or another mechanism, I think that they need to be considered and to do so I think one has to look at what are the -- to say that they're a different level of trade is fine, but I don't think one should stop there.

I think one should say what are those differences and what can be done to ameliorate those differences because I think the record would be far less complete leaving them out than having them, say, even imperfectly compared.

So I think we will suggest a way that that could be done appropriately in the post-conference.

COMMISSIONER LANE: Okay. Thank you.

Mr. Ikenson, I think you talked about the $99 table. What are the characteristics of a $99 table that we don't have here today?

MR. IKENSON: Commissioner, I don't think I referred to a $99 table, but there are certainly fully featured high priced tables. I would prefer, if you don't object, that Mr. Graves would respond to that.

COMMISSIONER LANE: Okay. Thank you.

Yes, Mr. Graves?

MR. GRAVES: The higher retail priced ironing tables are typically going to have a larger ironing surface, so you might go from 13 or 14 inches wide to 18 inches wide. The European style is what we would refer to it as. You also would have enhancements like an iron rest, a place to put your iron on the back of the table; a linen rack that is positioned off the leg where you can fold towels or your clothing and store it there. Things like cord holding devices or even electrical outlets integrated into the ironing table. Those would be typical enhancements you would have at the higher end, plus you might have a different finish, going from a painted or a coated surface to a chrome plated finish which is going to add cost to the product as well.

COMMISSIONER LANE: And do these tables that we're talking about, are they mesh or perforated?

MR. GRAVES: They would without exception, I believe, be mesh.

COMMISSIONER LANE: Okay. Thank you.

Now, the one other questions I had was do your customers have a big event during the year in which they're pushing ironing tables and trying to sell a lot of them on a particular day or period of time?

MR. GRAVES: About 60 percent of the units are sold in a four to five-month period, which is generally considered back to school. Whether they're actually purchased for college bound people or just because you have more foot traffic in the stores due to the back to school period, it's debatable.

Some of them are positioned for the youth market, the teenage market, if you will, but really I think it's more a function of just increased traffic in the stores, therefore more unit sales during that period.

COMMISSIONER LANE: Okay. Thank you.

CHAIRMAN OKUN: Commissioner Pearson?

In your brief at pages 41 and 42, you're responding to a couple of arguments, one being whether HPI drove down prices in the period prior to the POI and what impact the Chinese had.

You cited in your brief a chart on page 42, footnote 84, which talked about the average real selling price for the perforated T-leg calculated by deflating HPI's average perforated top T-leg price by the producer price index and it has some statistics where it comes from. It's from '97 to 2003.

I was just curious, I'm looking at that chart and if I went from '97 to '99, I see the same downturn that you're claiming to be caused by Chinese prices from, I guess you're looking at, you know, if you look at '02 and '03 it would be the same.

I just wanted your comments on that because to me, this whole chart shows prices have been going down since '97 and I'm not sure it supports the argument that I can see in this particular pricing series, that I see a big impact from the Chinese coming in different than I saw from other periods that I could look at.

MR. BRADLEY: Again, without doing the specific numbers, I would suggest and maybe the graphics aren't particularly effective, but I don't think we were trying to make the point that prices never fell prior to the arrival of Chinese imports.

As you were mentioning before, there were certainly efficiency improvements, quality improvements that could lead to modest changes in prices that were associated with the market and so I don't think the argument was that there was never any price declines whatsoever, but rather the point was that HPI was not in the position of aggressively driving down prices anywhere in the magnitude of the price increases that we saw in 2002 and 2003.

I would just suggest, for example, that numerically the decline that you would see in just 2000 alone would exceed the cumulative declines in all the previous years. And so maybe that wasn't made very clear in the chart, but I'll give you the numbers.

CHAIRMAN OKUN: I just don't think the chart supports that. Again, you go '97 to '99, well, prices went down is the same as '02 to '03, if I've got my math right here.

MR. BRADLEY: I don't think so.

CHAIRMAN OKUN: I'm just not sure -- I mean, you can look at it, it's one -- these are not proprietary numbers.

MR. BRADLEY: I think they are. Which chart are we doing? I'm sorry. Are you doing the table or the chart?

CHAIRMAN OKUN: The table.

MR. BRADLEY: Oh, I'm sorry. I'm sorry. I completely misunderstood you.

CHAIRMAN OKUN: Okay. I'm sorry. I'm talking about the --

MR. BRADLEY: Yes. Those numbers are -- your question is what was happening with general prices for non-metal household furniture?

CHAIRMAN OKUN: I'm just saying to me this chart is not supportive of the argument that you're making above. If I look at that chart for those years, I don't see more movement during the period prior to Chinese imports than I do in the period that you're focused on.

MR. BRADLEY: Got it. Got it. Thank you. I'm sorry.

CHAIRMAN OKUN: Okay.

MR. BRADLEY: This chart does not show ironing table prices. This chart is a general price deflater for what was happening to all goods in the economy and, as you can see, commodity prices generally were falling over that period, as you suggest.

I didn't want to overstate the importance of price declines, say, at the end by not adjusting them for general price changes, so I would completely agree with you, this chart does not support the point, nor was it intended to. All here I was doing was providing the values by which I did the inflation. It's like doing the CPI if you're trying to adjust housing prices, you provide the CPI.

What supports the point, I think, though, is the chart, the picture in there which shows the ironing table prices adjusted for inflation. That's where I was trying to make the point. I think my earlier comments will make more sense if you look at the picture. I misunderstood that you were talking about this table and I apologize for that.

CHAIRMAN OKUN: I know which chart you're referring to. Okay.

MR. BRADLEY: Okay.

CHAIRMAN OKUN: All right. That's helpful, but, again, I'm just trying to make sense of the pricing and whatever else you're talking about.

MR. BRADLEY: This '97 to 2003 data really are not -- these are not ironing table prices, these are just a broad metal commodity price that one would do to adjust for inflation.

CHAIRMAN OKUN: Okay. But you don't think it says anything about -- anything more than that.

MR. BRADLEY: No, that's all it does.

CHAIRMAN OKUN: Okay. All right.

I've been sending my staff scurrying around trying to find my Wal-Mart stuff because I found it a fascinating story, but we can't find it, so I'm not going to be able to ask that question about the efficiencies gained by them and what effect that's having on prices, so I think that's probably my last question. Let me just check here. I won't forget it, I'm sure.

I'm going to get off this line before I get kicked out of here by my colleagues, after they said nice things about me.

I'll stop there.

Commissioner Miller?

COMMISSIONER MILLER: I was finished, but I only want to say, Mr. Ikenson, please do provide in your post-hearing submission, I won't ask you to do it now, the rest of the story you were about to tell us in response to Commissioner Koplan when you were talking about the commission history and the history of applying the statute here. I would be interested in hearing it, so I would invite you to supply it post-hearing.

I think my only last comment is, Commissioner Pearson and I sat up here and agreed that once you figure out how to make the ironing board do the ironing for us your market will take off, okay?

I appreciate all your testimony today.

CHAIRMAN OKUN: I will note that that was the other question, I was going to invite Mr. Ikenson to go ahead and finish what he wants to say in post-hearing regarding -- oh, and I also agree with make the ironing board do the ironing would be the better one, but also that I would be interested in the legal analysis and the history of bifurcation at the commission. That preceded my time here.

Commissioner Koplan?

COMMISSIONER KOPLAN: Madam Chair, if there's anything else that you might remember while I'm still questioning, I'd be happy to yield the balance of my time to you.

I do remember that I have one last thing that I would like to cover with you all.

It's my understanding that in April of 2000 HPI opened an additional production facility in El Paso, Texas to produce two-leg and four-leg ironing tables and that that plant as closed in April of 2001 as it had not generated the additional sales that were originally expected. The equipment was then moved to the plant in Seymour, Indiana and used in lieu of older equipment.

I'd like you to first of all confirm or clarify this memory as needed, as well as respond to the following brief questions.

First, how extensive was your firm's investment in capital equipment and to what approximate percentage did it increase your firm's overall capacity to produce ironing tables?

Secondly, what is the current status of the El Paso facility?

Mr. Ikenson?

MR. IKENSON: We will, of course, need to address that in the post-hearing brief, Commissioner.

COMMISSIONER KOPLAN: Okay. I appreciate that.

And with that, unless I've forgotten something, I have no further questions.

CHAIRMAN OKUN: Commissioner Lane?

COMMISSIONER LANE: Yes, I have one question.

On page 34 of respondents' brief, respondents point to your improvement in the first quarter of 2004 as compared to the first quarter of 2003 and state that it reflects recovery of the U.S. economy. I understand Mr. Bradley is saying that the U.S. economy started improving in 2002. But, anyway, is the general health of the economy a condition of competition the commission should consider? In other words, is there some acceptable method of normalizing data over time to reflect economic conditions?

MR. BRADLEY: Interesting question. That's the kind of question one could write a one-minute answer or a book and I'll try the one-minute answer.

I would suggest that in the event of a particularly cyclical industry, and that is an industry which tends to have its sales rise and fall closely related to the business cycle, that it would be important at that point for the commission to make an adjustment in the data that it saw for the cyclical variation and, yes, there are a variety of mathematical and statistical methods one could use to adjust for the cycle. And some goods are particularly cyclical, maybe housing starts or construction or something like that. Often high priced products that require financing may be cyclical.

It's my sense that ironing tables are not a particularly cyclical item, that is to say they're relatively low budget, $15 to $20; they usually are demanded when someone has a need to iron because it's a new household and they usually are replaced when they break or they wear out, not necessarily because a snazzier model comes along.

So it's my understanding that ironing table sales are not particularly cyclical or responsive to the state of the economy and I don't think it's a particularly important issue in this specific case.

COMMISSIONER LANE: Okay. Thank you.

That's all the questions I have.

CHAIRMAN OKUN: If there are no other questions from my colleagues, let me turn to staff to see if staff has questions of this panel.

MR. CORKRAN: Douglas Corkran, Office of Investigations.

Thank you, Madam Chairman. Staff has no additional questions.

CHAIRMAN OKUN: Thank you.

Let me turn to counsel for respondents.

Do you have questions for this panel?

MR. PERRY: No questions.

CHAIRMAN OKUN: Okay. I know we have a lot to cover this afternoon, but this looks to be a good time to take a lunch break.

Before we do so, let me thank this panel of witnesses very much. It's been a long morning. We've got a lot of information and we thank you very much for that and for your continued cooperation as the investigation continues.

We will take an hour for lunch. We will reconvene at 1:30. I would remind the parties that the room is not secure, so if you have confidential business information, you need to take it.

With that, this hearing is adjourned.

(Whereupon, at 12:25 p.m., a luncheon recess was taken.)

//

A F T E R N O O N S E S S I O N

(1:31 p.m.)

CHAIRMAN OKUN: This hearing of the United States International Trade Commission will please come to order.

Madam Secretary, I see that the members of our second panel are seated. Have all of the witnesses been sworn?

MS. ABBOTT: Yes, Madam Chairman.

CHAIRMAN OKUN: Mr. Perry, your panel may proceed.

MR. PERRY: Good afternoon. My name is William Perry from the law firm of Garvey, Schubert & Barer, and I'm here representing Whitney Design, Polder, and Harvest.

Richard Boltuck will be the economist giving our testimony here, and he will also be giving all of our testimony in the in camera, but, first, I would like to ask James Glenn to speak.

MR. GLENN: Good afternoon. My name is James Glenn. I'm the president and CEO of Whitney Design, located in St. Louis, Missouri.

I've been in the ironing board business for the past 17 years. I began in this business as vice president of sales and marketing for Seymour Housewares, the previous name of Home Products International. I worked at Seymour from 1986 until 1990, when Seymour was sold to an investment banking group. After leaving Seymour, I joined another small laundry products company. We eventually acquired the number-two ironing board producer in the United States.

Whitney is a corporation made up by acquisitions of three laundry products companies acquired in the 1990's. We combined those three companies into one, creating Whitney Design.

Our primary product lines are ironing boards, covers and pads for ironing boards, hampers and sorters, and laundry accessories, and closet-
organization products.

The company was started in 1986 and has been under the same senior management since 1990. Obviously, our longevity and years in the industry give us a keen understanding of the industry and the historical knowledge to provide valuable information to this Commission.

Today, the ironing board market is changing. Most significantly, Chinese producers are facing sharply higher production costs because flat steel, the major feedstock in manufacturing ironing boards, has reached record prices in China in recent months. It is common knowledge that China's rapid urban and infrastructure construction activity has resulted in steel shortages and remarkably higher steel costs. In addition, I understand that many Chinese producers have been ordered off the electrical grid at least one day a week, and as a result, are having to use high-
cost diesel generators, all contributing to dramatic production cost increases.

Whitney imports principally from Sense Hardware, and I understand that Sense's steel costs are up significantly.

Higher import costs of ironing boards for importers such as Whitney have tracked rising Chinese production costs almost perfectly since late 2003. The higher costs we are facing in importing ironing boards are similar to, essentially the same as the higher costs we were confronting on imports of other steel-containing houseware products since last winter.

Significantly, I know that higher import costs tied to the steel costs in China are being reflected in higher prices to our customers today. Of course, retailers pricing to their customers typically lags cost changes by a few months because of contracts and other commitments, but Chinese prices are inevitably heading higher to match the trends in import costs.

In its petition, HPI alleged that Whitney closed its U.S. production in St. Louis because of the availability of dumped imports. We devoted much of our efforts at the staff preliminary conference explaining in detail why that was not the case. At the end of the conference, I specifically recall that HPI's own economists indicated that this case wasn't really about Whitney's facility closure at all.

I appreciate HPI's recognition that we closed our U.S. production operations for reasons unrelated to the imports from China. In truth, our facilities were old and inefficient and had become unprofitable at prices that HPI had established in the market in the late nineties through 2002, when imports from China were limited to high-end ironing boards quite unlike the boards either HPI or Whitney made in the United States.

Losing money every year was not our idea of a going concern, and the closure was absolutely inevitable.

Here is the bottom line: Since Whitney's U.S. closure was definitely not attributable to the imports from China, it is important that you not focus on changes in the U.S. capacity, production, shipments, employment, and so forth from the beginning of your investigation period in 2001 to the present because all of those trends largely capture Whitney's 2002 plant closure. Let me state again that HPI's economists conceded this point at the preliminary conference.

At the preliminary staff conference, there were many questions about Internet auctions. In my experience, Internet auctions have been a fad that peaked around the time of the preliminary investigation. Target, for instance, has been an advocate of the Internet auctions for many products and tried them intensively for ironing boards, but Target has backed off its use of auctions in the past nine months. I believe they discovered that auctions alienated their suppliers and don't work very well in identifying the best value for the money.

Value requires an understanding of product and quality differences that cannot be discerned in a general product specification set out for auctions. Today, Internet auctions are simply not a significant factor in the marketplace.

Everyone knows that for certain customers HPI's pricing has declined. In one specific example, we have detailed knowledge because we share the business. In their prehearing brief, HPI tried to defend and counter our claim that HPI themselves, not the Chinese, have led price declines in certain accounts where prices have declined. We have submitted documents in our questionnaire responses and in post-conference and prehearing briefs that directly support our statements.

The largest purchaser of ironing boards in the United States is Wal-Mart. To date, Wal-Mart has not shown any interest in directly importing ironing boards from China. They prefer a just-in-time provider who can supply them good quality quickly.

To compete for Wal-Mart's business today, you must have a U.S.-based distribution facility, which most manufacturers simply do not have.

As I'm sure you understand, Whitney has historically shared the T-leg business at Wal-Mart fairly equally with HPI. Effective May 1st, we lost a significant market share at Wal-Mart to HPI due to price. We are not talking about minor cost differences. Historically, we've always followed HPI's price reductions downward to Wal-Mart over the past years. Contrary to our historical practice, because of the rising raw material costs in China, in January, we began discussions with Wal-Mart of a price increase. In the face of raw material price increases, HPI came into Wal-Mart and cut the price again to an unprecedented low.

We were challenged to meet the HPI price, and we declined to do so. We have given you specific evidence of this in our prehearing brief. The end result was that Whitney lost market share in Wal-Mart to HPI. We implemented a price increase at Wal-Mart on May 1st despite HPI's price decline. Today, there is a very large discrepancy in our pricing and theirs. I'm not talking about nickels and dimes but dollar differences between our invoiced price and theirs.

I rest my case as to who is driving price erosion on ironing boards at Wal-Mart.

I thank you for this opportunity to share this information with the Commission, and I'll certainly be more than happy to answer any questions you might have at the appropriate time.

CHAIRMAN OKUN: Thank you.

MR. PERRY: Now, I would like to ask Mark Brown of Whitney Design to speak.

MR. BROWN: Good afternoon. My name is Mark Jay Brown. I'm the senior vice president of finance and CFO for Whitney. I've been with the company for over 10 years.

In my testimony last year, we discussed multiple occurrences of HPI's aggressive pricing strategies on T-leg boards at our major customers. To summarize, HPI aggressively attacked our T-leg pricing beginning in 1998, and this negative pricing pressure continued into the year 2000. In certain cases, we matched pricing and retained the business. In certain cases, however, we lost units and market share as we simply could not match HPI's offer.

HPI's cumulative aggression resulted in significant loss of unit volume and overall pricing by our company. The consequence of their actions upon our ironing board manufacturing facility was devastating and forced the closure of our U.S. manufacturing facility.

I reported last year that pricing since 2000 has remained relatively flat, remaining at historically very low levels established by HPI. Unfortunately, this trend has changed. Literally days after our testimony last year, we discovered HPI had lowered prices on T-leg boards at our largest account. Earlier this year, we also discovered that HPI further reduced prices at this account, even while raw material prices have been going up. Due to the confidential nature of this customer, specific pricing information and customer correspondence regarding these recent activities have been presented as part of our prehearing brief.

Moreover, prices have been rising for Whitney as raw material prices in China and ocean freight costs have been rising. We have been forced to pass these price increases on to our customers. While we cannot predict the future, we fully expect these trends to continue as raw material prices and shipping costs increase. Thank you for your time.

MR. PERRY: Now, I would like to ask Cal Scott of Polder to speak.

MR. SCOTT: Good afternoon. My name is Calvin Scott. I am president and CEO of Polder, Incorporated. I've been with the company for 17 years.

Polder is an importer, distributor, and marketer of upper-end, nonelectrical, consumer products sold under the registered Polder Home Tools brand. Polder has been operating since 1976 and currently employs 35 employees in our Port Chester, New York, office and distribution center.

One product category we participate in is the design, marketing, and distribution of the Polder Home Tools brand of ironing boards and accessories. Polder has been producing and importing ironing boards from mainland China for more than 10 years. Polder has been the leader in innovation by consistently offering higher quality, feature-loaded product, particularly in ironing boards, at prices well above the popular price point product produced domestically in the United States.

The market has always viewed Polder as an innovator of better-made, better-designed ironing boards while the domestic producers struggled to improve their product at lower price points for larger discount store chains.

Polder's primary channels of distribution are big-box specialty chains like Bed, Bath & Beyond, Linens 'N Things, the Container Store, mail order houses, home centers, warehouse clubs, department stores, and independent specialty stores. Polder also supplies products to the hotel industry.

In the original petition, HPI argued that all ironing boards are alike and are sold in one market segment. Now, in this final investigation, HPI argues that mesh-top, T-leg ironing boards command a price premium over perf.-top ironing boards. Both statements are simply not true.

The total ironing board business is broken into different subcategories. The first, price point, is the entry level, promotional or opening price point, typically $10 to $15 retail price ranges. These typically are T-leg ironing boards mostly sold in promotion and sometimes as a loss leader by the retailer. Although certain retailers may perceive a difference between a mesh-top T-leg board and a perf-
top T-leg ironing board, right now Wal-Mart is selling a perf-top and a mesh-top T-leg ironing board side by side at the same price.

The second price point is standard ironing boards, which are 54-inch ironing surfaces with four legs typically sold in the $20 to $25 price range. These boards tend to be larger than the T-leg product, with four legs, but don't offer any features beyond the T-leg product other than size and strength.

The third price point, what we call "mid-
price," is the $30 to $50 range at retail. These products offer wider or larger sizes, heavier construction, and usually have one more additional features included in the construction, such as an iron rest, cord holder, clothes racks, that the lower priced categories don't offer.

The fourth price point is the upper end, where ironing boards typically sell in the $75 to $120 retail price range. These products offer the widest ironing surface, with plush pads and covers, multiple built-in features, chromed legs and metal parts, built-in extension cords for irons, basically all the bells and whistles.

Each category has a different degree of importance, depending on the retail or other types of distribution channels. Buyers plan their business around each category. T-leg opening price points tend to be promoted at low prices during the back-to-school season as a necessity for college-bound students, while mid-price to upper-end products are targeted year round to more affluent consumers who desire to trade up to a feature-loaded product. Commercial customers, such as hotels, tend to buy a lower priced product as an accommodation to the guests staying at their property.

Retailer types of channels also play a major role in determining how each category is focused or sold in the market. Mass merchants, such as Wal-Mart, K-Mart, Target, sell more product at the lower priced categories compared to mail order houses and retailers like Bed, Bath & Beyond who cater to more affluent consumers who perceive the higher quality, more feature-loaded product to be a greater value, even though they carry higher retail price points.

There has been a trend during the past couple of years for some mass merchants to expand their ironing board assortment into the mid-price range. An example of this was the introduction of the Martha Stewart range at K-Mart. Until recently, HPI was importing most of its high-end ironing tables, including the Martha Stewart brand, from China. Each category sells to different users whose perceptions of products differ based on quality, function, features, and price.

Although Polder offers a T-leg ironing board for sale with pad and cover produced in China, we focus most of our effort selling product in the standard-to-upper-end categories. We find that we cannot compete at margins that sustain profitability on the Chinese T-leg product when selling against similar product made domestically by HPI. Most of the mid-priced to upper-end products sold in the U.S. market are produced in China and enjoy a relatively level playing field where the retail effect is in design, innovation, function, and brand rather than just price when making a purchasing decision.

Although Internet reverse auctions have declined in recent months, we have participated in reverse auctions in the past for many different products and have found that price is not always the ultimate influence on decision. We have found that business is not always awarded as a result of these auctions and that the price is not the sole consideration in the award of business. In addition to price, the retailer purchasing products often also looks at brand, the quality of the product, the importer's ability to meet specifications, the reliability of the importer, and the relationship it has with each importer.

We have found the reverse auction process in our situation has been used as a means for the retailer to force an incumbent wholesaler to lower its price. In the one reverse auction for several types of ironing boards in which we participated, we were unable to submit a competitive bid on the T-leg business. Our Chinese products simply could not compete with the lowest bidder for that low-end brand or low-end board. I believe that HPI submitted the lowest bid because it was awarded the T-leg business.

In the same auction for boards, we submitted a bid to supply higher quality, four-legged ironing boards that was not the lowest. We were awarded the business; however, I think, for two reasons. We had an existing relationship with the retailer, and we were able to offer a better value as the supplier of ironing boards and other products to the retailer. Importers like Polder have always brought change to the market by offering innovation, quality, and features that go beyond what was being produced by domestic manufacturers. The innovation and creativity we bring to the market enhances competition and gives the consumer choices they never had before.

Do not penalize the creativity, innovation, and hard work we bring to the market by attaching antidumping duties to our products. This would be unfair to Polder, our employees, our customers, and the consumer. Thank you.

MR. PERRY: Now, I would like Ron Ho of Harvest to testify.

MR. HO: Good afternoon. My name is Ron Ho, and I'm the president of Harvest International Housewares, Limited. We are an exporter and producer of ironing tables in China.

I just wish to emphasize the point regarding the rising raw material and energy costs in China. Within the past 12 months, steel costs have risen about 70 percent, and we have had to pass these cost increases to our customers. In addition to steel costs, all other material costs have gone up, including packing material, plastic components, and anything to do with ironing tables in general.

In addition to raw material costs, energy costs have also increased. In the last 12 months, electricity costs have increased about 15 percent, and there are severe shortages. My factor in China has been forced to stop production for at least one day a week because of the electricity shortages. This situation will not change at any time in the foreseeable future.

In addition to rising raw material and energy costs, ocean freight costs have increased substantially. This is particularly significant for ironing boards because even though they are low-cost items, they take substantial space in a shipping container. On an opening-price-point, T-leg ironing board, the freight cost could represent as much as 33 percent of our selling price.

We also do not target the U.S. market exclusively. In fact, our factories sell more ironing tables to Europe than to the United States. We also understand that other Chinese producers are experiencing the same increased demand for ironing tables from Europe, Australia, and Canada. We also believe that domestic sales of ironing tables in China will increase due to the increased spending power of Chinese customers.

We firmly believe that the exports of ironing tables from China do not threaten the U.S. ironing table industry. The U.S. industry can be very competitive because it can produce so many ironing tables with its automated production facilities. In the past, China was more competitive with the United States because of low labor costs. The rising raw material and energy costs, however, make Chinese producers less competitive today.

MR. PERRY: Now, I would like to ask Richard Boltuck to speak.

MR. BOLTUCK: Thank you. For the record, my name is Richard D. Boltuck, vice president at Charles River Associates, Inc. I appreciate the opportunity to testify today on this matter at the request of counsel for Whitney Design, Polder, and Harvest International. Although my analysis is straightforward, it involves inevitably considerable reference to the confidential information of two companies especially, and, hence, the need for an in-
camera session after my public remarks. But first, the background for my analysis, which I can present in public session.

The smoking gun in this investigation that demonstrates clearly the lack of causation of injury by imports from China, either presently or in the future, is the extensive pricing data before the Commission covering, as it does, essentially every sale in the United States, whether of a perforated or a meshed product.

In its preliminary determination, the Commission provisionally credited the existence of an implementation lag that Professor Bradley examined in his presentation at the staff conference. This lag allegedly affects negotiated prices and delays the manifestation of injury in lower U.S. industry prices.

Of course, the Commission is familiar with lags and pricing attributable to long-term contracts or agreements from numerous other investigations and traditionally has often regarded the prevalence of such pricing commitments by buyers as insulating U.S. producers, to some extent, from the impact of imports. But in this case, its reliance on an implementation lag in its preliminary determination worked against Respondents, and, indeed, it was a linchpin in the Commission's finding of a reasonable indication of threat, since, as Petitioners themselves acknowledged during the preliminary phase, the direct evidence of a pricing impact was, even to them, difficult to discern at that time. I would say, from my perspective, impossible to discern.

So the Commission, in essence, extended the Petitioners the benefit of the doubt and took a wait-
and-see position, that is, wait until the final and see whether imports tank HPI's pricing. Now it is time to apply that task, and I will continue with that analysis in the in-camera session. But first, a brief comment on the pricing comparisons, which show consistent overselling by subject imports.

When Petitioners tell you that mesh boards should receive a pricing premium because they are preferred by buyers, they are trying to have it both ways because they also tell you these products are essentially perfectly fungible in the marketplace, that is, mesh and perforated.

Now, Ms. Brum, Target's buyer, testified at the Commission's preliminary staff conference on exactly why Target purchases mesh boards. She testified that, and I quote, "[i]n essence, the Chinese industry is supplying a different product to the U.S. market, meshed-top, metal ironing tables, which are an alternative and improvement over the traditional, perforated-top table made almost entirely by the domestic industry."

In any event, there is no practicable way to quantify any such asserted premium, and, hence, the pricing comparisons cannot demonstrate underselling or support a finding of causation. Why should the premium be based, as HPI advocates, on HPI's production cost differences, in essence, ruling out any legitimate, obvious, comparative cost advantage the Chinese have in a more labor-intensive product? This is the old concept of a scientific tariff, a tariff that offsets cost advantages that imports might have legitimately. But as I will show in the in-
camera session, pricing trends, by contrast, are highly probative and are inconsistent with causation. Thank you.

MR. PERRY: Now we are ready for any questions you may have.

CHAIRMAN OKUN: Well, before we begin our questioning this afternoon, let me take this opportunity to thank all of the witnesses for being here, for providing us your testimony, and for your willingness to answer our questions. We very much appreciate your assistance today.

I will begin the questioning this afternoon. Maybe let me start with the industry witnesses, just in terms of -- we had a number of questions for the panel this morning regarding market structure and what's going on in the industry, and I wondered if you -- you mentioned in you testimony how you view the Internet auctions. I wonder if you could talk anymore about just market structure in general. Obviously, your business practices have changed, but have you seen a change with regard to the presence of the big retailers, the Wal-Marts, the Targets, K-Mart, just anything you observe about the market or conditions of competition that you think we should be particularly mindful of when we're conducting our analysis?

MR. GLENN: I don't see a major shift in any of the methods that the retailers go through. I think, Mr. Graves this morning, I would concur with literally everything that he said. Primarily, it's an annual review.

The Internet auctions is the only thing that really changed, and, again, as I stated in my opening comments, that's really changed. Target, and I'm not just talking about the ironing board industry, but Target has gotten a lot of heat for the reverse auctions throughout, if you will, their reputation, if you will, and it's caused them, I think, some issues.

You might hear a term called "CLR." CLR is something that Target is using today, and it's called a "competitive line review." It's not much different than a normal line review that takes a period of 60 to 90 days to complete, but what Target does is they bring all of the manufacturers into a large room, and they focus on making this decision in a one-day period. I don't find objections to that like Internet auctions because at least you have a face to face. You have to be very prepared, and you have to be ready to go, but at least you can talk about products, you can talk about differences, and you have a fair shot versus looking at a computer screen and just going at it.

But other than that, I don't think there has been a lot of change in the methods and the way a retailer selects product and purchases product today. There's fewer of them, and the demands become much stronger because the pieces of the pie are much larger, and the risk of not getting the business used to not be so high because if you didn't get this account, you could get another one or another one, and today, that account list has dwindled, and it makes everyone more important. That's just market dynamics of the retail industry.

CHAIRMAN OKUN: When you just referred to demand being stronger, you were referring to demand

by --

MR. GLENN: -- by the retailer, yes.

CHAIRMAN OKUN: -- the retailers on suppliers, not demand generally. I do want to ask about that.

Mr. Scott, is there anything else you would --

MR. SCOTT: I think James summed it all up fairly well. He covered most of the points, and really there has not been a lot of change in the way they go about purchasing product, whether it be ironing boards or anything else. They typically have a line review. You come in once a year or twice a year, depending on the customer, and you present your program and hope for the best. I think James covered it pretty well.

MR. PERRY: Could I add one thing?

CHAIRMAN OKUN: Yes, Mr. Perry.

MR. PERRY: We were talking about the Internet auction yesterday, and a couple of things came out. First, it was really difficult. One of the reasons why Target was having problems, it was also at the consumer level because the quality wasn't the same. James mentioned to me that, for instance, they got ironing boards, and they were rusty, and the rust would literally fall out in the bag, and you wouldn't know because when you bid on an Internet auction, you're just looking at the price, and you're not judging the value, the quality of the product.

The other problem with Internet auctions is a company like Bed, Bath & Beyond, it doesn't have a central distribution warehouse, so if a Chinese company were to win the Internet auction for Bed, Bath & Beyond, it probably couldn't fulfill the contract because you have to ship your products to every single separate store, and that's a very, very difficult problem for the Chinese to deal with, and that's why Wal-Mart, for instance, doesn't even do it, uses that situation.

CHAIRMAN OKUN: I have many pricing questions, but let me just start with a couple in line with what I asked this morning, one, just in terms of the role of direct importation in this market and how we should take it into account. The panel this morning, in responding to that, recognized that while the Commission doesn't traditionally collect pricing data in the way they recommended, that in this market with these purchasers, that direct importation plays a particularly important role that ought to be considered by the Commission. And I guess I'll put this to Mr. Boltuck and Mr. Perry; it's a little more legal, although I am interested in how the industry views it. But let me start with you. What would you advise the Commission with regard to the direct-
importation data that we have collected?

MR. BOLTUCK: Well, as I'll discuss in the in-camera session, I certainly thing that is very important data, and I didn't want you to miss it. It's relegated to sort of footnotes in the staff report. I know why that happened. But given the share of imports involved, it can't be neglected.

The second point I would make is, what is the take-away from that data? In other words, what does it really tell you, and what would be overreaching in terms of interpreting it? What I think it really tells you is what is going on in trends because products that are purchased through direct retail sales do compete at the consumer level downstream. That's where all demand originates. Everything else is derived demand further upstream at other levels of trade.

And so when prices increase, for instance, hypothetically, at the end user or at the retail sales level, which is a direct importer's first U.S. sale, to a customer, that makes that product less competitive vis-a-vis other products in the marketplace, including HPI's product. I don't think HPI would disagree with that. In fact, I wish I could tell you otherwise. I wish I could tell you it didn't compete at all, but it does compete that way, and I think the way to interpret it is to look at trends in that pricing.

Now, in retail pricing, the trends that you're going to see are a little bit different because retailers have a variety of motivations for short-term monthly pricing. The have discounts and loss leadership and so on. But there are some things you can see in that that I think are indicative and are very important, given the share that has been imported in that way.

CHAIRMAN OKUN: Okay. I see what we'll see in the in camera, and we can talk about that, I guess, in more detail then.

Did you have something you wanted to add, Mr. Perry?

MR. PERRY: No. I think Richard covered it perfectly.

CHAIRMAN OKUN: Okay. Then let me turn -- maybe I'll put the question this way. Mr. Bradley, in his presentation of the facts of the case, made a few points that I think really need a response for Petitioners. As they have described the market, it's a market where demand is relatively stable or flat, so we don't have a case where demand is increasing, the argument being that that's where the imports are coming in, and that these -- prices haven't expanded the market, and if you look at the market share numbers, the Chinese have increased market share.

The question is, you've placed a lot of emphasis on HPI being the price leader, and I'm looking at the data and trying to understand how is that consistent with the market that was just described in terms of what looks like displacement of Chinese imports, maybe well beyond what Whitney sees in its part of the market, but really just that issue. In the description of the market, which I would agree with, why aren't these just the traditional factors that the Commission would look at to determine injury?

MR. PERRY: One to remember, and I think Richard can talk more about it and maybe even James Glenn, obviously, part of that increase, a substantial part of that, is the result of Whitney's closure. Whitney was forced to go to China.

It's interesting, the point made by the Petitioner, well, predatory pricing doesn't work here. Well, they drove the second-largest company out of the industry. Whitney was forced to turn to China. Then they import product from China, and they bring a dumping case against it. That accounts for a significant portion of that increase, is because Whitney had no choice. HPI had driven the prices down so far that their old production facility couldn't compete. That's part of it.

The other part is --

MR. BOLTUCK: Well, the other part, I discuss briefly in my statement. Target has bought, and I guess everyone knows this because it was testified to at the preliminary staff conference, has bought an imported product. But I think what I would encourage is to really listen to what the buyer testified to. She is not here, so we can only sort of channel her voice through the transcript from the preliminary staff conference, but she testified extensively. No one knows why she bought that product better than she does, and she explained it in detail, and she said, I regard it as a different product, I couldn't get it adequately from any U.S. producer, and that's why I bought it because I wanted a mesh product. She told what she thought the features of mesh products were that were advantageous for her customers, and that was her perception, her analysis.

CHAIRMAN OKUN: My red light has come on. I'm sure I'll have some time to further explore those issues if not covered by my colleagues.

Vice Chairman Hillman?

VICE CHAIRMAN HILLMAN: Thank you, and I would join my colleagues in thanking you all for being here. I appreciate very much your testimony.

I want to, I guess, follow a little bit along the same lines in this issue of thinking about the import volume. I've heard you say that an awful lot of the volume was basically Whitney switching from being a domestic producer to being an importer and that that really did not have any effect on the market because it's the same, and yet, obviously, if I look at the numbers, there is a fair to significant amount of non-Whitney imports, and that's what I'm trying to make sure I'm understanding, what you can tell me about it. I've heard, to some extent, Mr. Scott's testimony that would suggest that at least a portion of that you're describing as high end. I guess that's what I need a little more help on in terms of the relative ratios and whether and to what degree this has changed over time.

Maybe we ought to just start with how it is that you're defining imported product as high end. You started out saying that Polder has basically purchased this high end, and you described these various categories in terms of your price points. I just want to make sure I'm hearing you in terms of whether all of that, including what you're putting at the highest end of your range, has been entirely imported from China, and anything that you can say, either on the open record or perhaps in a post-
hearing, in terms of, again, the volume amounts from China that would fall into those categories.

MR. PERRY: One thing I would add before asking, there was a key interchange, I think, in the preliminary staff conference between the staff and HPI, and they were asking why HPI was importing, and HPI had said, made it very clear at the staff conference, that they had decided to import all of the high-end boards from China. So that was their decision. It's right on the transcript of the preliminary. Cal?

MR. SCOTT: I guess, without getting into volume numbers here, to give you an idea of what high end is -- is that what you're --

VICE CHAIRMAN HILLMAN: You've described it. Your testimony, if I've got it, you have opening price points between $10 and $15, and you have the second category with four legs as opposed to the T, the mid-
range from 30 to 50, the upper from 75 to 120.

MR. SCOTT: Right.

VICE CHAIRMAN HILLMAN: Are you importing all of those ranges from China?

MR. SCOTT: The majority of them. We have imported product from Italy as well as Germany. It's been a few years since Germany, but the Italian boards, occasionally we'll bring in for certain customers, but 99.9 percent of the high-end boards that we sell here domestically are Chinese product.

VICE CHAIRMAN HILLMAN: You mean this upper, $75-to-$120 range, chrome, built-in extension cords, the wider boards; those ones you are bringing in from China.

MR. SCOTT: Yes, $39.99 and up basically is what I would consider it.

VICE CHAIRMAN HILLMAN: The $39.99 up, presumably is some amalgam of what you're describing as mid-range plus what you're describing as upper range.

MR. SCOTT: Correct.

VICE CHAIRMAN HILLMAN: Okay. And would you say that those have always been coming in from China? Again, I'm trying to understand whether there has been a product-mix shift of what has been brought in from China.

MR. SCOTT: We've been importing upper-end ironing boards since 1980, plus or minus a couple of years, beginning from Europe, Germany as well as Italy. What we found over the years was a resistance from European manufacturers to want to help us grow our brand. They preferred that we would import product under their brand, and we were in the middle of building our company and building our brand, and we elected to look for other manufacturers, which ended up being in China, who were willing to work with us and to help us develop our brand.

VICE CHAIRMAN HILLMAN: You mentioned that you do do some amount of the OPP T-leg product. Is that correct?

MR. SCOTT: A very small amount, yes.

VICE CHAIRMAN HILLMAN: And also coming from China.

MR. SCOTT: Yes.

VICE CHAIRMAN HILLMAN: Okay. Again, always coming from China?

MR. SCOTT: Always. The European suppliers never got involved in any of the U.S. opening price point type of product. They were always much higher priced, much larger product, heavy duty, feature loaded, all kinds of built-in functional features that were never available here domestically.

VICE CHAIRMAN HILLMAN: There has been some testimony that, over time, the Chinese started in the high end and moved downward to cover all ranges, but you're saying that, at least from your perspective, you have always been importing. To the extent that you're doing OPP, it's always been coming in from China throughout this entire period.

MR. SCOTT: Correct.

VICE CHAIRMAN HILLMAN: Okay.

Perhaps, Mr. Perry, for the post-hearing brief, because I think it would be useful to see the numbers, you've obviously argued in your brief that, to some degree, we should discount the volume, if you will, by, as I read it, sort of taking out the Whitney product as not taking away existing market share from the domestic industry but just a shift from where it's produced, taking out the high-end product as not competing with domestics because there is no domestic production at the high end, and then, again, as I read your brief, you're asking us to also take out HPI imports.

Again, I'm wanting you to go ahead and give us those numbers. I'm not necessarily suggesting that that's the way we ought to look at it, but then I guess I need to hear a little bit more of, okay, if I do all of that, there is still more product left in the market, and what is it that we are to make of that?

MR. BOLTUCK: Well, the vast majority of the additional incremental product was the Target purchase, I think you will find, and that's what we were discussing a moment ago, that their testimony, Target's purchaser's testimony, the buyer for this product, was that she regarded this, the mesh product, as a different product. That was the product she definitely wanted to buy, and that's what her testimony was at the preliminary staff conference. So I think you have to factor that volume into the market as well. That's what we've been trying to discuss.

VICE CHAIRMAN HILLMAN: Well, but that's a different argument than saying it's not domestically produced. The argument on the high end was that it was not domestically produced. Obviously, HPI makes a mesh product, so that is a different argument.

MR. BOLTUCK: Yes. I would prefer to discuss that in the in-camera session, if I could, because we have actual numbers from the questionnaire responses, obviously.

MR. PERRY: I thought also -- maybe James Glenn could mention because there really is a different philosophy at Target which rolls up into this mesh issue.

MR. GLENN: I think everybody's perception of Target and the way they sell themselves is they offer more in a different environment than Wal-Mart. The two companies market themselves very differently. I do remember Lisa's testimony, and obviously I've had these discussions one-on-one with Lisa Brum, who was the Target buyer at the time who made her testimony at the preliminary hearing.

Their major interest was to differentiate their product offering from Wal-Mart. They didn't want to have the same product on the shelf. Now, you can bring a hundred people in here and get a hundred different opinions: Is a mesh-top board different than a perf-top board? The commissioners themselves are having a difficult time understanding the differences in them, and I think most consumers would if you brought them off the street.

But in Target's vision, mesh top presented a different alternative to their consumer, and the consumer couldn't directly relate the same exact product at retail that Wal-Mart was offering at a lower price.

So I think, Bill, that's where you were going with my interpretation of why Target made that decision.

MR. PERRY: I think one thing that's critical, again, to this issue --

VICE CHAIRMAN HILLMAN: Mr. Perry, move your microphone a little closer. I can't hear you very well.

MR. PERRY: One thing that's critical about her testimony is, remember that the customer for the ironing boards really here isn't the ultimate consumer; it's the buyer, and the buyer is the one who makes the decisions on a lot of these calls as to whether to use the import or the domestic product. The buyers are critical. They see themselves as the ones who make the decision on what goes in the store, what's best for their consumers, and they are critical in making the decision on price and which company they are going to buy from and who they are going to buy from.

VICE CHAIRMAN HILLMAN: I understand that. Obviously, this is an argument, I understand, was made there. It was not made in the final briefs here, and it doesn't, again, go to this issue of whether that, nonetheless, is not competition with the domestic product. It's a different argument. If there is, in fact, domestic mesh product available, it does not, to me, say that there isn't some degree to which these items are competing for each other, which leaves us right back in terms of making our own determinations about what the impact of those particular sales were on the U.S. industry.

MR. BOLTUCK: There is a degree to which I understand that, but I really think we can get into that point and why this should be regarded as still a very valid consideration a little more in the in-
camera session because we have all of these relative production shares and everything from the questionnaire responses.

VICE CHAIRMAN HILLMAN: Thank you.

CHAIRMAN OKUN: Commissioner Miller?

COMMISSIONER MILLER: Thank you, Madam Chairman.

Sort of following up, and thank you to the witnesses for being here, on your discussion just now with Vice Chairman Hillman, I think I'll ask a question that I posed to the witnesses this morning as well, and that is, when a purchaser requests that you bid or that companies bid, whether it be in an online auction or just in a line review, are they making a specific request that you provide mesh or perforated top?

Mr. Glenn and Mr. Scott, both, just tell me what the industry norm is.

MR. GLENN: For the most part -- Target again -- Ms. Brum testimony stands on its own. But for the most part, the retailers are looking for a T-
leg. They are not requesting -- they are looking for price, is what they are looking for. They are looking for quality. They are looking for price. They are not so specific on wanting a mesh versus a perf. Frankly, that comes up in very few discussions. Importing today, we only offer a mesh. I can't quote you one example of any customer that's brought us and said, "Oh, you don't offer the perf.?" I can't even quote you, since we changed our manufacturing to importing versus manufacturing, I can't give you one instance other than Target where that comment has even come forward.

COMMISSIONER MILLER: And just to follow up, when you were producing in the United States, you were producing the perforated top.

MR. GLENN: The perforated top, yes.

COMMISSIONER MILLER: Okay. And when you switched to the mesh, as an importer, you didn't hear comments one way or the other.

MR. GLENN: Relatively seamless.

COMMISSIONER MILLER: Except for the one -- and I don't have the testimony from the Target witness in front of me here; I'll read it before the final decision.

MR. GLENN: Sure.

COMMISSIONER MILLER: I don't have it here in front of me. In your experience at that account, are they specifically making a request for one or the other?

MR. GLENN: Again, I'm making judgments here just from my own personal view of the situation, and I certainly don't intend to try to read her mind. But in the conversations with them, what they were looking for was not perf against mesh. What they were looking for was a differentiation to Wal-Mart's offering. If it had been a wooden top, maybe it would have made a difference. They wanted to offer something different so that there is not a direct price comparison to the low-cost retailer in America. So that's my analysis of her desire.

COMMISSIONER MILLER: Mr. Scott, do you want to add anything to that?

MR. PERRY: Could I add one thing because I wanted James -- maybe he didn't get the reason why. He told me in the past that Target sees itself -- it sells its products a little bit higher than Wal-Mart, so it's trying to justify that price increase.

COMMISSIONER MILLER: I understand that. Mr. Scott?

MR. SCOTT: Our experience, or my experience, in the auction process has been one where when the products that were being auctioned off were already existing products that the retailer was selling, and they put them up for auction, so, therefore, the spec for that product is written as close or as exact to what is already on the shelf, and then they invite people in to try to bid a price on that.

In the case for us, the ironing boards were mesh product to begin with, so they requested a mesh-
product ironing board. Now, if there happened to have been a perforated board there that they were auctioning off, I'm assuming they would have asked for a perforated product as well.

I have not been involved in an auction where they were sort of trying to develop a product and ask for something special and then have people come in and bid on the business.

COMMISSIONER MILLER: Correct me if I'm wrong, but my impression of these auctions, not just from this case, but we have looked at this in other cases as well, they have prequalified suppliers. They ask specific suppliers who they believe offer products that meet their quality -- their certain standards. It's not just sort of wide-open, anybody come forward. Is that not correct?

MR. SCOTT: In my experience, that's correct. You have to be invited into the process, either as an incumbent or as somebody they have a relationship with in another business.

COMMISSIONER MILLER: Mr. Glenn, that's your experience as well?

MR. GLENN: Yes. There is a prequalifying process because they are going to limit the number of people, obviously, that they want on the computer doing these kinds of things.

I'll give you one other example. One of the bids we did was for the GSA, and they described their product as either a perforated top or a mesh top. I can remember that specification that they sent out was either/or.

I think Cal is right. I mean, most of the time, especially on the Internet auctions, and, again, you've got to keep the Internet auctions in some sort of context. There's only a very, very few customers that are doing Internet auctions. There is a handful versus the entire market. Wal-Mart doesn't do Internet auctions in housewares, to the best of my knowledge.

So keep in context, when we get into Internet auctions, what the limited nature of those are, and once you get away from Internet auctions, you get away from very specific specifications. The customer then opens his mind to say, "Okay. What is your opening price for an ironing board? What does it look like, and let us see whether we would be interested or not?" That's totally different than having a specification on an Internet auction where, if you will, you're prequalified, and everybody is focused on price, price, price, price. There is a major difference.

COMMISSIONER MILLER: I appreciate that, and I guess, for your benefit, I understand your comment about a limited number of purchasers using them. We keep seeing them here. We've had a number of cases -- we're kind of used to seeing these Internet auctions.

MR. GLENN: I think the reason why is simply because of the cold nature of them. Again, Target, in my opinion, Target has stepped away from them dramatically because of the alienation that they have experienced from their supplier base. This is not just in the ironing board industry. I serve on the board of directors for the International Housewares Association, and you should hear the conversations about Internet auctions in that venue. It's a very inflamed topic of conversation.

COMMISSIONER MILLER: So you, I take it, at least somewhat disagree with the assessment offered by Petitioners' counsel this morning or by Petitioners that the reason these have been put off is because of the pendency of this investigation.

MR. GLENN: Yes. I don't think that's the reason why they have been put off. We, again, experienced reverse auctions on the cover and pad category, for example. We participated in those a year ago, and those have been discontinued. There is certainly no Commerce Department or International Trade Commission working on covers and pads, at least yet. Target has discontinued their reverse auctions in that category and gone to what I defined a few minutes ago as the CLR.

So I think there is evidence that Target has reduced their computerized reverse auction process significantly. I can't quote you any numbers on that; it's just what I know that's happening in the industry. We're still going through a very rough, competitive analysis in the one-day process, but it's not price, price, price on a computer.

COMMISSIONER MILLER: In response to a question from the chairman earlier in asking you about the changes in the retail environment, both you and Mr. Scott sort of said it's not that different, or they are not operating that differently. I want to make sure I understood you correctly on that. When you say they are not operating differently in terms of the individual retailers, is that what you meant, or did you really mean that the retail environment, as a general matter, hasn't changed in recent years?

MR. GLENN: Well, the only change in the retail environment is less people to sell to. The Caldors and the Bradleys and the Ames have all gone out of business. So from that perspective, certainly the retail climate has changed rather significantly. I think it's been brought out in the testimony here that there are three major purchasers of ironing boards. Most of them are at the big three. Obviously, there's others, but if you look at the dominant volume, it's done in those three.

So that environment has certainly changed from the retail climate of years past. However, the methods, I don't think, have changed dramatically. Selling Wal-Mart for the last 20 years is pretty much the same as it always has been. They do a line review. You go and present your product, and they make a decision. That's rather oversimplified, but that's primarily how it's always been done, and that's the way it's being done today.

COMMISSIONER MILLER: My light is on. I appreciate your answers. Thank you.

CHAIRMAN OKUN: Commissioner Koplan?

COMMISSIONER KOPLAN: Thank you, Madam Chairman, and I thank the panel for its testimony.

Mr. Ho, if I could start with you, you noted sales of ironing tables in China this afternoon. Tell me, what percentage of your production is directed at your home market, and what percentage is directed to export? Could you move your microphone closer?

MR. HO: Actually, 90 percent of my production is export.

COMMISSIONER KOPLAN: Is exported.

MR. HO: Yes, and then 10 percent is domestic sale.

COMMISSIONER KOPLAN: And of the 90 percent, how much comes here?

MR. HO: About 20 to 30 percent.

COMMISSIONER KOPLAN: Twenty to 30 percent. Thank you.

Is it correct that your experience regarding increases in steel costs and utility, freight costs is consistent among other Chinese producers?

MR. HO: Yes. This is the whole situation in China. Steel prices increased, and the other material price increases happens all over China. It also happened to all the factories, all the manufacturers there.

COMMISSIONER KOPLAN: Thank you. Petitioners this morning made mention of the announcement of the preliminary dumping margins, and I had a back and forth on that with them. I noted for the record that those margins were formally announced on February 3rd, and I'm coming back again to the first quarter of this year that we're looking at in our data. I'm wondering if you can tell me, did any of you lose any business in the first quarter of this year as the result of the announcement of those margins? I need to have you use microphone, if you would.

MR. SCOTT: No.

COMMISSIONER KOPLAN: Mr. Scott, your answer is no.

MR. GLENN: There has always been hydraulics in distribution. You gain and lose customers, but I think your specific question is, have we lost customers due to the duties that were imposed?

COMMISSIONER KOPLAN: Yes.

MR. GLENN: The answer is no.

COMMISSIONER KOPLAN: The answer is no. Okay. Thank you.

Petitioners, citing to the preliminary determination, pointed out that the buyers of ironing tables are concentrated at the wholesale level and are dominated by a few large mass merchandisers that sell direct to consumers. Aren't mass merchants the dominant purchasers of ironing tables at the wholesale level?

I would like you to discuss the impact of changes in the way these mass merchandisers have purchased ironing tables during the period examined. I'm particularly interested in whether any of these retailers have commenced direct importing, and if so, how has this impacted the marketing of ironing tables in the U.S.? For example, am I correct that the consolidation amongst mass market retailers has substantially increased buying power? What has been the impact of concentration among buyers in the marketplace? If you could identify yourself for the record each time just for the reporter.

MR. GLENN: James Glenn for Whitney Design.

I don't think there has been the dramatics that maybe you're alluding to. Wal-Mart has always been huge. They are larger now. Again, if a venture goes out of business in St. Louis, Missouri, who picks up that business? Well, it's spread over K-Mart, it's spread over Wal-Mart, and it's spread over Target. So I think Mr. Graves, this morning, said those customers going out of business were not dramatic impacts.

I think I would concur with that. Collectively, they are a large impact, but I don't think specifically any one of them going out of business was an impact to us in terms of buying power. Target has always been a huge purchaser. Wal-Mart and K-Mart; they have always been huge purchasers which you approach, obviously, somewhat more carefully than you would a smaller customer because of the impact that it could have on your business.

I don't know if that answers your question.

COMMISSIONER KOPLAN: Yes, it does.

Did anybody else want to get in on that?

MR. PERRY: No. I think Cal sells to the upper end, not to the big retailers.

COMMISSIONER KOPLAN: Okay.

MR. BOLTUCK: I think the only thing I would add, Commissioner, is that there is more concentration among the large, big box stores, with several bankruptcies in the late nineties and early 2000's, bankruptcies, buyouts, whatever, and naturally you would expect a little more downward pressure from a more concentrated set of purchasers over time.

COMMISSIONER KOPLAN: Thank you, Mr. Boltuck.

Could you discuss the retailer auction system, especially as it may be impacted by changes in mass retailers? How often do retailers decide whether to switch between producers, domestic or foreign, for example, once a year or once a quarter, and under what conditions would a retailer decide to switch from one produce to another, either due to an auction or between auctions? Mr. Glenn?

MR. GLENN: I think the answer is consistent with, again, what Mr. Graves said this morning. They really don't do much switching. They have a line review once a year, and once that decision is made, they pretty well stick with that. Remember, these are very, very busy people. As much as we would like to think otherwise, ironing boards are not the most important thing that they have on their plate. But really, very few changes are made.

Now, I just quoted you an example in my statement that we did have a change on May 1st, which is mid-year line review, but that was driven by pricing, and it was significant pricing, and they made some distribution changes. We didn't lose the business, but we lost a share of that business due to price. We would not meet the competitive price.

So those things do happen, but they are rare rather than common.

COMMISSIONER KOPLAN: Thank you.

MR. PERRY: Commissioner Koplan?

COMMISSIONER KOPLAN: Yes, Mr. Perry.

MR. PERRY: Just because I know you're really interested in Internet auctions, as Cal Scott mentioned, too, the other thing that is interesting is when the Internet auction happened for him, and it was the higher end of the ironing table, even though he wasn't the lowest priced, after he lost the bid at the auction, they came back to him because he was the incumbent and basically used the auction to force down his price. So often the low price at the auction doesn't necessarily get the -- so there will be negotiations afterwards as to what goes on.

COMMISSIONER KOPLAN: Thank you. Maybe I could stay with you for a moment.

You argue, beginning at page 11 of your prehearing brief, and I heard this in Mr. Scott's direct presentation as well, that the ironing table market is segmented into distinct, price-point products "that are generally grouped into low-end and high-end tables." If the Commission were to accept this characterization of the ironing table market as segmented in the manner in which you described, what are the implications for our analysis, that is, should the Commission analyze a segmented market differently than a nonsegmented market, and if so, how?

MR. PERRY: Well, as Richard mentioned, and I think it does tie in, it's the whole point about the high end. At the preliminary conference, HPI said, we import all of our high end from China. They had made that decision, and it was all coming in, frankly, from the largest exporter in China.

So you have the fact that when we look at a segmented market like that, all of the competition is at the low end, but when you look especially at import volume, volume is coming in from HPI and also from the Chinese at the high end, and there is no injury there. That's what our point is.

Richard, you might want to add something.

COMMISSIONER KOPLAN: Mr. Boltuck?

MR. BOLTUCK: Yes. Well, the high-end product is not manufactured in the United States and never has been. Whitney also imported high-end boards to fill out its product line while it was a U.S. producer. Polder sells into that as sort of a niche segment. It's appealing and marketed to a different set of buyers through generally different stores, but, of course, any supplier who wants to have a full product line needs that product, and they are not going to get it in the United States. When HPI and Whitney faced off as U.S. producers, HPI imported it for that purpose, in order to fill out a product line.

COMMISSIONER KOPLAN: Thank you. I see my light is about to come on. I have a couple of questions left, but I'll wait until the next round. Thank you, Madam Chairman.

CHAIRMAN OKUN: Commissioner Lane?

COMMISSIONER LANE: Thank you. First of all, I want to thank you all for the pictures of the four-legged table. I can't say that it really makes me all excited to go out and want to get one and start ironing more, but I really appreciate knowing what they look like.

Mr. Boltuck, the first question I have is for you. You stated in your oral presentation that implementation lag was a linchpin in the Commission's finding of a reasonable indication of threat. I note that the Commission did use the term "implementation lag" in the views of the Commission. However, I found the term used only once in the first seven pages of discussion of threat. Indeed, we did say, "Evidence in the record pertaining to the lost sales and revenues in Internet reverse auctions also support our findings as does the implementation lag regarding negotiated prices."

Could you please provide me with the Commission discussion that you are relying on to conclude that implementation lag was the linchpin of the Commission's preliminary determination?

MR. BOLTUCK: Well, Commissioner, far be it from me to second-guess you or any other commissioner who wishes to characterize it differently. This was my interpretation and an inference I drew from several facts. The facts I was thinking of is that the Commission deliberately refrained from reaching a reasonable indication of present injury determination, and then I looked at the data. I thought, well, I can understand that, why that would be a wise decision, given that it's very difficult to see those indications in the data. And I also recalled that in HPI's presentation at the preliminary staff conference, HPI put a huge emphasis on the implementation lag, the purpose of which was to suggest that the lack of evident present material injury would show up in the future because of the implementation lag. Then I see that the Commission cites implementation lag and never has done so in any past case and reaches a reasonable indication of threat determination.

So when I put all of that together in my mind and tried to reach a reasonable interpretation, I thought that played an important role. HPI thought it played an important role, which is why they emphasized it at the preliminary staff conference, and I agree with them that crediting that fills a logical gap that they faced in getting past the hurdle or the threshold standard for the preliminary determination.

COMMISSIONER LANE: Okay. Thank you.

MR. PERRY: Could I add one thing? I think the other thing is that I also understand where Richard's dynamics were because I think the Petitioner was surprised. It came in at the preliminary conference, assuming that they could prove injury because of Whitney's withdrawal from the U.S. market. And when the testimony at the preliminary conference was, no, the Chinese didn't drive us off; you, the Petitioner, drove us off, that took out a large part of their argument, and that's why we have a concession by the economists for HPI and their closing at the preliminary conference. That's kind of probably why we looked more at the implementation-lag situation.

COMMISSIONER LANE: Okay. Thank you.

In your prehearing brief, at page 5, you argue that we should expand the like product to include not only over-the-door but also four-legged ironing tables. Can you tell me, even approximately, what is the number of four-legged ironing tables produced in the United States and consumed in the United States?

MR. PERRY: I can't tell you off the top of my head. Richard, would you know? We can reply to that in our post-hearing brief.

COMMISSIONER LANE: Okay. Thank you.

This morning, I asked the Petitioner if the basic construction of a mesh-top table being a two-
piece top in any way could result in that product having stronger or more stable characteristics than the perforated-top table. The answer was that there is no inherent quality difference due solely to the two-piece-top construction process. Do you agree with that?

MR. GLENN: Yes. I would agree with it. You could dive into all of the intricate details, but, in general, I would agree that the two products perform very similarly.

COMMISSIONER LANE: Okay. Perhaps one of you could explain to me how over-the-door ironing tables -- no, they are ironing boards -- how over-the-
door ironing boards compete closely with ironing tables. I would like to ask you to describe the manner in which their floor-standing ironing tables compete with over-the-door ironing boards in the marketplace.

MR. PERRY: We made this as an argument. We saw that over-the-door -- we thought this basically was a fact that over-the-door ironing tables compete. We didn't try to make this a major argument. We don't think it affects the data that much, but we just thought it's produced in the same production facilities, the same production lines. It is an ironing table. It competes against it. In that sense, it's over the door, and we thought it should be included, but that really is up to you.

COMMISSIONER LANE: Okay. Now I have a couple of other questions.

I understand the argument that -- I think it's Mr. Glenn was making about what Target wants, and Target was specifically seeking the mesh top because that would distinguish it from the product that Wal-
Mart sells. Now, does Wal-Mart also sell mesh-top tables?

MR. GLENN: Today?

COMMISSIONER LANE: Yes.

MR. GLENN: Yes. Go back in time, when Target was making this decision, Wal-Mart did not sell a mesh-top, T-leg opening price point. Today, they do.

COMMISSIONER LANE: Okay. So you're talking about when Target first started doing this.

MR. GLENN: I believe the questions in the discussion was around the decision that Target made to direct import those ironing boards.

COMMISSIONER LANE: Okay.

MR. PERRY: I also think the other thing is that, at least from what I've been told, is that when companies sell, the two companies that are selling to Wal-Mart, and this is what I've been told by my clients, HPI sells the perforated top. Whitney sells the other product, and that's the type of product that Target wanted. I think Target wanted to differentiate itself because Wal-Mart was offering two to the consumer, and they wanted to say, hey, the mesh top is better, and we sell only mesh. I think that's where they were trying to come from.

MR. GLENN: But, Bill, at the time, the testimony that we are all referring to of Ms. Brum, at the time that Target was doing that, the T-leg ironing boards at Wal-Mart were all perf. tops.

COMMISSIONER LANE: Okay. And it's been so long since I bought an ironing board, that I have forgotten what they look like when you go buy them. Is the pad on the ironing board, or is it separately?

MR. GLENN: Today, 90 percent, probably even 95 percent, of the ironing boards, on second thought, it's probably even 98 percent, of the ironing boards are sold with the cover and pad installed on the ironing boards. Mr. Deppen and I did that a few years ago.

The differentiation between the mesh top and the perf. top is only done in a photograph. The photograph on the label of the product does show, in most cases, the top surface.

COMMISSIONER LANE: Okay. My last question, then, is, has the industry done surveys of consumers as to what kind of ironing board, ironing table, people prefer or whether they know the difference?

MR. GLENN: I debated whether to bring this up, but I'll go ahead and do it. I'm going to go back, and I believe that Mr. Deppen would concur with this. When I was vice president of sales and marketing at Seymour, we did a marketing strategy to convince the buying public, not necessary the consumers but the buyers, the retail buyers, that a mesh top was better, and the reason why we did it was because, at the time, we were buying the mesh tops, not making them ourselves, and we couldn't produce mesh tops as fast as we could produce perf. tops on the automated equipment in the factory.

And to our compliment, we did a wonderful job because we convinced the entire public that mesh tops were better and that they should use the mesh tops on the higher-end boards and use the perf. tops at the low end. Frankly, it was a self-fulling prophecy because that's what we wanted. Our factory was built on the fact that we could produce perf. tops very quickly and very efficiently. Mesh tops were a slower process.

Today, it's a little bit different, I assume, in their factory because they have equipment, as they testified this morning, that they have changed. But back then, that's where it really all started was perceived value. It wasn't real value; it was perceived value.

I think they testified this morning that they said that if you took a scientific analysis of the steam process, there is a little difference. Will the steam in the ironing process, will it expel itself faster on a mesh-top board? Yes, but it's marginal.

COMMISSIONER LANE: Okay. My red light has been on for a while, so thank you.

CHAIRMAN OKUN: Commissioner Pearson?

COMMISSIONER PEARSON: Thank you, Madam Chairman.

Mr. Glenn, you described earlier the competition for sales to Wal-Mart that ended up with HPI providing ironing tables at a lower price than Whitney is providing them. Were just the two firms competing for that business, or was there some other firm also offering product?

MR. GLENN: Historically, to the best of my knowledge, Wal-Mart has not entertained parties other than ourselves to seriously look at their ironing board business. I have visited with the Wal-Mart operation in Chenzen, China, and had discussions with them, and I know they have looked at it. I know that the Chenzen office in China has presented Wal-Mart with opportunities to direct import ironing boards, but the domestic staff at Wal-Mart has chosen not to do so.

COMMISSIONER PEARSON: But you are not aware of some third party competing for Wal-Mart's business that may have encouraged HPI to reduce its offering price in this example that you cited earlier.

MR. GLENN: Well, I would assume that if that were the case, that they would not have granted us a price increase and left the business with us. If they had three people bidding for it, and the two lowest bidders, I would assume, would have taken the business. That's not the fact of what happened. They kept us and accepted a price increase that we gave them post being challenged to cut our price. Again, that's only assumptions on my part, but I think they are pretty valid.

COMMISSIONER PEARSON: Okay. Well, if there is other information, I would guess that Petitioners may provide it in the in-camera session, but thank you for that clarification.

The Petitioner maintains that U.S. demand for ironing tables has been stable or slightly increasing during the period of investigation. Would you agree with that characterization of the market?

MR. GLENN: For the most part, I think it has been pretty stable. I think the only caveat that I would put there is there has been a dramatic race to the bottom by all of the retailers. Target and Wal-
Mart and K-Mart have all been in a boxing match about who can sell two-leg ironing boards at the lowest price. It's been absolutely crazy.

I've shown Target and Wal-Mart their own POS data, their point-of-sale data, which we have access to their computers, that you cannot sell an ironing board to somebody who doesn't need one. They can run it for $6.99 and not sell anymore ironing boards than they will at $9.99. There is just no history nor indication that lower prices on an ironing board sells more product. An off-shelf display does. A consumer walks through the store, and they see an ironing board, and they think about the condition of their ironing board at home, and they will buy more. But price does not drive units.

I think Mr. Graves said this morning, people don't stock up on two or three ironing boards because they are at a cheap price. They are hard to get home. They are hard to put in your car. Most of the people who buy them are women, and they just don't enjoy schlepping those ironing boards to their car.

So I think those points, we all agree to. The only difference that I would make in terms of total units is that what's happened since the three big box retailers have driven prices is we've saturated the market. Again, if you come back to all of the testimony, I think everybody agrees, the average consumer replaces their ironing board every 15 years. Well, all of a sudden, if you're selling at some ridiculous retail prices, everybody that needs one buys one, and all of a sudden you have somewhat of a slower market trailing that, but I don't think those numbers are dramatic. I think the market is relatively flat.

COMMISSIONER PEARSON: Okay. So the market generally does seem to be stable in terms of quantity, the number of units sold.

MR. GLENN: With that caveat. Wal-Mart's overall ironing board business is down.

COMMISSIONER PEARSON: With the aggressive price that you've described, the value of total sales may actually have declined.

MR. GLENN: Yes, and I've had specific discussions with Wal-Mart where we've discussed their entire ironing board business because we know what ours is, and we have confirmed with them that basically both suppliers are seeing some diminished sales, and we both concurred that the reason for it is because of all of the low prices that have been put forward and that the market is saturated.

COMMISSIONER PEARSON: The Petitioner also has stated that the production of ironing tables is capital intensive and subject to significant economies of scale. Do you agree with that characterization?

MR. GLENN: Yes, sir, I do, because that's, frankly, the reason why we closed our facility.

COMMISSIONER PEARSON: And China is well known as having an abundance of labor, but the United States often is seen as having an advantage when it comes to capitalized production. So, in that case, what's driving the business to China? Why hasn't production expanded in the United States, taking advantage of some possibility for new investment here, for instance?

MR. BOLTUCK: One point I think James can elaborate on, but my understanding is that the manufacture of the mesh-top product is more labor intensive than the manufacture of the perforated product, which is much more highly automated, so you do get the kind of division of specialization in differentiated products that you would expect between the two countries.

And I think the other thing is that China, of course, is a labor-intensive country, but it's somewhat less so than it's been in the past. It's a rapidly industrializing country, much more prosperous on a per capita income basis, so it's a moving target when one discusses what the capital intensity of China is.

COMMISSIONER PEARSON: Any elaboration on that, or do you concur with that?

MR. GLENN: No. I think it's pretty accurate the way he described it.

COMMISSIONER PEARSON: So then perhaps by changing buyers' expectations of what makes for a good ironing board, there was the inadvertent effect of shifting the production advantage to China because there has been a shift from a more highly automated production to a production with some greater element of hand assembly.

MR. GLENN: Well, I understand your points, but I will also tell you that HPI is the one that changed Target to a mesh-top ironing board. We sold Target perf.-top ironing boards, and HPI made presentations to them that suggested that they move to a mesh-top ironing board, and we could not produce in our factory mesh-top ironing boards, so, therefore, we lost that volume to them. So I guess sometimes the hand that bites you is the one that feeds you.

MR. BOLTUCK: I just want to add one thing. With all respect to our own witnesses who have a lot of confidence in their own marketing ability, there also is the role of very well-informed and professional buyers at the various companies who think seriously on their own about this and reach a decision about positioning themselves in the market and serving their own customers, keeping their customers happy, and so on.

COMMISSIONER PEARSON: To me, this isn't a terribly important point. I found it kind of interesting, and I just raised it because it's sometimes ironic, the results that an integrated global economy produces when one thing happens in response to something else, and this may be one of those instances.

A question for Mr. Ho: What is your view of the potential for increased demand for ironing tables within China itself?

MR. HO: Well, China always has big demand on ironing tables but not on the type of ironing tables that we are now manufacturing. China demands a lot of ironing tables with wooden tops, but now because of the introduction of mesh-top ironing boards from Europe and United States manufacturers, the Chinese customer gradually feels that the mesh top is better than the wooden top.

So I would see, in the near future, the demand for the mesh-top ironing board in China will keep growing.

COMMISSIONER PEARSON: Okay. And certainly there is growth in income in China. There is an expansion in housing, so one would expect some increase in consumption --

MR. HO: Yes.

COMMISSIONER PEARSON: -- of ironing tables in China.

A final question for you, Mr. Ho: The Commerce Department has assigned a 69.59 percent antidumping duty to Harvest International Housewares. If that duty goes into effect, what would be the effect on your company? Would you be able still to compete for some sales to the United States, or would you be more or less shut out of the United States market?

MR. HO: I don't think so. I don't think we can compete with that duty.

COMMISSIONER PEARSON: Okay. Thank you very much. My time has expired.

CHAIRMAN OKUN: Thank you again to the witnesses. I think I just have a couple of things left for the open session.

One, just in terms of -- this would be for you, Mr. Perry -- you have not argued that we should exclude Whitney as a related party, and the Petitioners have not either, but you have made some comments regarding how we should evaluate capacity and other data in the market when Whitney was producing versus just HPI's data, and I think, for post-hearing, I would like some further discussion of how we do that consistent with treating the domestic industry as a whole in terms of evaluating those particular data.

And then the other thing, which we may cover in the confidential session: There were a number of questions that we posed to the panel this morning regarding comments we wanted on the pricing data, and you can look at the transcript, but I know a number of them that were raised, either by myself or by my colleagues, would be the Petitioner's request that we evaluate this premium, and I've heard some of your discussion here, but I also want that for post-
hearing, the role of direct imports and that data, and, Mr. Boltuck, you commented on that, but, again, just in terms of for the pricing comparisons, what issues there would be.

The Petitioners were asked to comment on what you had recommended in combining the products together, and they did that both in open session, and we'll do it afterwards.

The other portion of that which, I think, relates a little bit to the pricing data and also the lost sales/lost revenue as they relate to the auctions is whether and how the Commission should evaluate where there was a weighted average price where there was more than one product and what that says or doesn't say about price competition in these particular products.

So those are all things that I will be looking for in the post-hearing, and with that, let me turn to Vice Chairman Hillman.

VICE CHAIRMAN HILLMAN: Thank you.

Mr. Ho, if I could ask you just a couple of questions to make sure I understand your sense of it, you mentioned, in response to Commissioner Koplan's questions, that you are selling product in the Chinese market, in the U.S. market, and in other export markets. Are the products that you're selling in all three of those markets the same?

MR. HO: Yes.

VICE CHAIRMAN HILLMAN: And how would you describe the relative prices as between the Chinese market, the U.S. market, and other export markets?

MR. HO: Well, I would say that for European markets they can pay a little bit higher because their quantity is smaller. Domestic market, they pay less because of the purchasing power of the local Chinese people.

VICE CHAIRMAN HILLMAN: Okay. So exact same ironing board, cheapest prices are in China. Next is U.S. and then Europe.

MR. HO: Yes, yes.

VICE CHAIRMAN HILLMAN: Now, you mentioned other Asian markets, Australia.

MR. HO: Yes. We also ship to southeast Asian market and Hong Kong market.

VICE CHAIRMAN HILLMAN: And how do they rate in terms of prices?

MR. HO: Well, southeast Asia and also Hong Kong market has a little higher price. It has the best price because of smaller quantity.

VICE CHAIRMAN HILLMAN: Okay. I appreciate that.

Obviously, we are struggling, Mr. Perry, as you know, in terms of trying to figure out how to look at the total capacity of the Chinese market, in part because of the lack of questionnaire responses.

Mr. Glenn, I know you stated that you purchase almost entirely through Sense, is it? It's my understanding that we have not received any questionnaire response in the final from them.

MR. PERRY: Yes. I think you probably won't. We just heard the final margins from Commerce, and if I'm correct, they are still the big winner with 6 percent, so they are hoping you go affirmative, and then they will take over. So they have no interest.

But you do have a questionnaire from them that they submitted at the preliminary stage which has a lot of their data, and so you do have a questionnaire, at least, from them, but it is from the preliminary stage.

I just might mention because Mr. Pearson -- Harvest is unfortunate because they got their own margin, but they didn't get their own margin. There were two companies that Commerce looked at as mandataries. One was Sense; the other one was Wire King, which got a very high margin, and all of the other companies just got the average, and that's what he got, is the average. He doesn't have his own individual market.

VICE CHAIRMAN HILLMAN: Obviously, you've argued that a surge in imports is unlikely in the future, and yet I'm trying to square that with what data we have and figure out what we do about the data that we're missing. So if there is anything that you want to add in terms of how we should look at this, given that we do not have a complete data set on the Chinese side, I would ask you to do that in terms of a post-hearing.

MR. BOLTUCK: You don't have a complete data set on Chinese producers principally because of Sense, but you do know something about their operations. On the other hand, you come very close to having a full data set on imports from China through the importers that we heard today. There are defects in that which are not, in any respect, more severe than you often encounter in questionnaire responses from importers, purchasers, or U.S. producers, in fact, probably less so.

VICE CHAIRMAN HILLMAN: Mr. Ho, on the issue of your product, you're saying is the same, whether it's sold in China or elsewhere; it's the same ironing boards. Do you have a sense whether that's true for other Chinese producers? Are there producers that are producing a product specifically for the U.S. market or specifically for the Chinese market?

MR. HO: I would say that most of the factories that are now making ironing boards, they mostly catered for European markets because the type of ironing boards that are manufactured in China belong to the higher end. So the original styles also is from Europe, so most of the manufacturers there are making boards for the European markets. There are some Chinese manufacturers that mostly cater to the local sale, domestic sale, but quality may be lower end.

VICE CHAIRMAN HILLMAN: And what would you say has been the impact of just the preliminary phase of this investigation in terms of shipments to the U.S. market? Have you cut back, or have others that you know of changed their behavior in the U.S. market as a result of just the pendency of this investigation?

MR. HO: I think most of the manufacturers in China in ironing boards, they have cut back their shipments to the United States.

VICE CHAIRMAN HILLMAN: They have cut back.

MR. HO: Yes.

VICE CHAIRMAN HILLMAN: Again, I'm trying to make sure we have a way to look at what has happened to the market in first quarter 2004 and how we figure out the effect of the pendency of the investigation.

MR. PERRY: Remember again that Sense is the largest exporter by far. It supplies a lot of the companies here, and they haven't been affected really at all.

VICE CHAIRMAN HILLMAN: Okay. I appreciate those answers. Thank you very much.

CHAIRMAN OKUN: Commissioner Miller?

COMMISSIONER MILLER: I have no further questions for this session. I was interested in the related-party question that the chairman already posed to you, and I'll be interested in your post-hearing submission on that; otherwise, I'll hold further questions for the in-camera session. Thank you for all your testimony, the industry witnesses, thank you.

CHAIRMAN OKUN: Commissioner Koplan?

COMMISSIONER KOPLAN: Thank you, Madam Chairman. I just have a couple.

You have a session on every day pricing in your brief. On pages 29 and 30 of your prehearing brief, you give an example, bracketed in part, of HPI's driving the importer's price down in a 2003 transaction, and you describe it as a reverse-loss sale. Your point is that if HPI has the power to force Whitney's price down to Petitioner's lower U.S. prices, then "neither Whitney nor other Chinese imports can be considered the cause of threat of material injury." It's on page 30.

What I'm trying to understand is, moving on from that, who was the price leader for ironing tables in the U.S. market between 1997 and 2001, when Chinese penetration was small? Is there any evidence that you can give us of who that was?

MR. PERRY: Yes, sir. First, there is substantial evidence that has been put on the record at the preliminary and in our prehearing brief in the appendices about that movement in prices before the Chinese entered. We've already put a lot of evidence on the record. We can put more on the record.

COMMISSIONER KOPLAN: How about during the period?

MR. PERRY: During the period, too.

COMMISSIONER KOPLAN: The examples you're talking about are as specific as the one you have on these two pages of your prehearing brief.

MR. BOLTUCK: Yes. There was a focus of evidence in the preliminary staff conference, much of which we've replicated or elaborated on here, plus appendices, yes.

COMMISSIONER KOPLAN: Okay. Thank you. I will go back to that.

To the extent that you can in this session, is your share of U.S. shipments the same as that when you were a domestic producer of ironing tables? In other words, did your share of the U.S. market change once you became an importer, Mr. Glenn, of the product? And if your share has declined, has there been a net increase in subject imports as a result?

MR. GLENN: Would you repeat the last part?

COMMISSIONER KOPLAN: If there has been a decline in your share of the U.S. market, was it simply transferred to subject imports? In other words, did they pick up as a result?

MR. GLENN: Our market shares have declined, but it's been driven by --

COMMISSIONER KOPLAN: U.S. shipments have declined.

MR. GLENN: Pardon?

COMMISSIONER KOPLAN: You're saying your U.S. shipments have declined.

MR. GLENN: Our market share has declined in the ironing board category. Specifically, has it declined since we began importing? The answer is yes, and the most dramatic has been the event of May 1st, which I've made in my opening comment.

MR. PERRY: In other words, that share didn't go to Chinese; it went to the Petitioner.

COMMISSIONER KOPLAN: It went where?

MR. PERRY: To HPI.

COMMISSIONER KOPLAN: To HPI. Okay. Thank you. I have nothing further.

MR. GLENN: Just to add, I cannot give you an example where we have lost market share to a Chinese importer.

COMMISSIONER KOPLAN: All right. Thank you.

CHAIRMAN OKUN: Commissioner Lane?

COMMISSIONER LANE: Thank you.

You indicate that steel prices in China are increasing as a result of import relief. What is the nature and extent of this relief, and is the safeguard action undertaken by China on steel still in effect?

MR. PERRY: I can check on that, but I don't think it's so much the import relief in China that's causing prices to rise. It's the tremendous demand surge in China. One comment was it had to do with the Beijing Olympics, but all of a sudden U.S. steel producers are shipping record amounts to China at very, very high prices. I've even heard that the price for steel in China may be getting close to the U.S. price, if not higher. It's really happening.

MR. BOLTUCK: This is all up and down the steel supply chain. It isn't just steel. It's also cement and other construction materials. China is getting much wealthier very fast with its high growth rate, its huge population base that it thrives on, and there is a lot of urbanization going on, people moving from the country to the city, a lot of apartments being built, office space, a lot of basic infrastructure that wealthier countries should have, one could ask, you know, in the case of Europe or the U.S., a lot of that was built over a 30- or 40-year period as our areas industrialized, but the Chinese are more ambitious and are trying to achieve a lot of that construction in a much shorter period of time.

So with this huge surge in demand, a lot of primary materials, and steel is just, you know, the archetypical example, a lot of primary materials are at record or near-record prices now. It's a worldwide phenomenon, as you heard from the HPI testimony, because they are world markets, but it's especially severe in China as the source of all of that surging demand and an inability in some cases to handle the huge flow through of the product in the country.

But it's really pressing Chinese producers who have traditionally used those supplies because there are now spot shortages. Even though the volumes are, in total, bigger than they were, but they are all going into construction of infrastructure. And prices are high, just exceptionally high, you know, up by -- you've heard 40 to 70 percent from various sources.

COMMISSIONER LANE: Okay. Thank you. That's all the questions I have.

CHAIRMAN OKUN: Commissioner Pearson?

I'll see if there are any other questions from my colleagues. Seeing none, let me turn to staff to see if staff has questions of this panel.

MR. CORKRAN: Douglas Corkran, Office of Investigations. Thank you, Madam Chairman. The staff has no additional questions.

CHAIRMAN OKUN: Thank you.

Do Petitioners have questions for this panel?

For the court reporter, let the record reflect that Mr. Ikenson has indicated they have no questions for this panel.

Well, before we turn to the in-camera session, let me take this opportunity to thank all of the witnesses for being here. We appreciate your participation and all of the answers you've given this afternoon to our questions.

Madam Secretary, we will now take a few moments to clear the room, and we will come back for the closed session.

(Whereupon, at 3:16 p.m., a brief recess was taken to prepare for the in-camera session which follows.)

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P U B L I C R E C O R D

CHAIRMAN OKUN: Madam Secretary, before we turn to our closing statements, rebuttal and closing statements, can I ask if there are any other procedural matters that we need to take care of.

MS. ABBOTT: Yes. Mr. Ikenson asked that the ironing tables from this morning be entered into the record.

CHAIRMAN OKUN: Without objection, it will be done.

Let me review the time remaining. The Petitioners have a total of 17 minutes remaining, including five minutes for closing. The Respondents have a total of 30 minutes remaining, which includes five minutes for closing. Mr. Ikenson, you may proceed and you may either come forward or use the -- or you can stay there, if you'd like.

MR. IKENSON: With your permission, Dr. Bradley will give the summation.

CHAIRMAN OKUN: Very well. Mr. Bradley?

MR. BRADLEY: I would, again, thank you for your attention today. We worked a lot of hard issues and I was very impressed with the questions that the Commissioners asked and I think really go to the heart of the key issues in this case. I do think, in summarizing and thinking about it, there really are some pretty compelling numbers here, in terms of some of the things I presented this morning, the basic facts. And I think if you review the data on the record, it really does show indeed a large surge in imports that competed away business from the domestic industry and that domestic industry, as a result, classically was injured with lost volume, lost sales, lost profits, and so on and so forth.

With that brief conclusion, I just say, thank you, very much.

CHAIRMAN OKUN: Thank you. Mr. Perry and Mr. Boltuck?

MR. BOLTUCK: Richard Boltuck. I think of the 35 remaining minutes, we will only use a very small percentage of that, and I'm sure that will be universally welcome by -- but, the key points, look at HPI's performance, ask yourself, remind yourself why there was a hesitation to find present injury, even a reasonable indication last year. Recognize that production costs, we're not talking about the DOC preliminary determination in February; but, just legitimately, production costs in China are up sharply.

So with no antidumping order in place, the Chinese producers are destined to be less competitive going forward. It's not a small amount. It's a major land shift here, in terms of electricity, steel, and freight. There is something different about the world now than there was one year or two years ago, in that respect, and it's been getting a lot of attention, as you know. Recognize, also, that it's -- that, as you know, as we discussed in the in camera session, the pricing trends do not indicate a nexus or connection between HPI's pricing performance and the import pricing trends, and that that's essential to the logic of the Petitioner's argument.

And, finally, recognize that there is a lot of granularity in understanding the volume data. This is not some big blob of ironing tables, but it's a complex market. There are ironing tables. There are tables that were brought into use the brand capital of one U.S. producer that went out of business, because it could not sell profitably using its old equipment in the United States. And regardless of whether that producer had decided to import from China, it would have gone out of business. It was going to lose money the way it was. And recognize, also, that a large transaction that you're familiar with and we discussed in the in camera session, there is more to it than meets the eye. And there is direct testimony that would have to be ignored or discredited, when there's no particular reason to believe that you were told anything but the true about the nature of that transaction.

I think when all of this is taken into consideration, the case looks very different than the one that HPI is asking you to accept. There just simply is more to it. And I know you've got your -- digging in and getting your hands dirty and trying to figure it all out. We, certainly, very much, appreciate that.

CHAIRMAN OKUN: Thank you. Post-hearing briefs, statements responsive to questions, requests of the Commission, corrections to the transcript must be filed by June 23, 2004. The closing of the record and final release of data to parties is July 9, 2004. Final comments are due July 13, 2004. You've made me work very hard on my last day as Chairman here, but I appreciate all of your participation today, to all of you. With that, this hearing is adjourned.

(Whereupon, at 4:57 p.m., the hearing was concluded.)

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CERTIFICATION OF TRANSCRIPTION

TITLE:	Ironing Tables and Certain Parts Thereof from China

INVESTIGATION NO.:	731-TA-1047 (Final)

HEARING DATE:	June 16, 2004

LOCATION:	Washington, D.C.

NATURE OF HEARING:	Hearing

I hereby certify that the foregoing/attached transcript is a true, correct and complete record of the above-referenced proceeding(s) of the U.S. International Trade Commission.

DATE:	June 16, 2004

SIGNED:	LaShonne Robinson

Signature of the Contractor or the

Authorized Contractor's Representative

1220 L Street, N.W. - Suite 600

Washington, D.C. 20005

I hereby certify that I am not the Court Reporter and that I have proofread the above-referenced transcript of the proceeding(s) of the U.S. International Trade Commission, against the aforementioned Court Reporter's notes and recordings, for accuracy in transcription in the spelling, hyphenation, punctuation and speaker-
identification, and did not make any changes of a substantive nature. The foregoing/attached transcript is a true, correct and complete transcription of the proceeding(s).

SIGNED:	Carlos Gamez

Signature of Proofreader

I hereby certify that I reported the above-
referenced proceeding(s) of the U.S. International Trade Commission and caused to be prepared from my tapes and notes of the proceedings a true, correct and complete verbatim recording of the proceeding(s).

SIGNED:	Mason Edwards

Signature of Court Reporter