Global Home Products
Westerville, Ohio  43082
September 1, 2005

The Honorable E. Clay Shaw, Jr.
Chairman, Subcommittee on Trade
Committee on Ways and Means
House of Representatives
1104 Longworth House Office Building
Washington, DC  20515

Dear Chairman Shaw:

Thank you for the opportunity to offer comments regarding the miscellaneous duty suspension bills recently introduced in the Congress.  My comments will focus on H.R. 3116, a bill “To suspend temporarily the duty on certain glass articles.”  This bill seeks to suspend the duty on tariff subheading 7013.99.90, Glass articles valued over $5 each, whether or not put up in sets, put up for mail order retail sale, and each weighing not over 4 kg together with their retail packaging, until December 31, 2008.   This bill would therefore allow glassware entered under this subheading free of duty for the next three years.  Global Home Products strongly objects to this tariff suspension and believes it will result in revenue loss and attract controversy.

I. About Us - Global Home Products and Anchor Glass

Global Home Products (GHP) is a leading designer, marketer and manufacturer of a diverse portfolio of quality consumer products across all price categories for retail, hospitality and original equipment manufacturer (OEM) customers. GHP sells its home products through its businesses Anchor Hocking®, the Burnes Group and WearEver.   

One of our premier companies is Anchor Hocking.  Anchor is a leading marketer and manufacturer of a comprehensive line of glass beverageware, candle containers, servingware, ovenware, storageware, lighting components and other glass products. Anchor sells glassware and tableware under the brand names Anchor Hocking®, Fire-King®, Toscany®, Phoenix Glass™, and

Jade-ite™.  We are the second largest supplier of consumer glassware in the United States. We manufacture substantially all of our glassware products at our manufacturing facilities in Ohio and Pennsylvania and employ approximately 1600 workers, almost 1450 of whom are unionized through the United Steelworkers of America. 

Celebrating its 100^th anniversary, Anchor Hocking has a rich American history.  Purchased in 1905 for $25,000, the Hocking Glass Company began operations near the Hocking River in Lancaster, Ohio. It survived the depression through the use of the revolutionary automatic glass press. Through various acquisitions, the company grew both in size and product lines – manufacturing glass, plastic containers, lighting, earthenware, china and commemorative plates. After the purchase of the company in 1987 by Newell Corporation, the company was reinvigorated with capital and some of the less profitable businesses were closed or sold. The company is now owned by Global Home Products LLC, an affiliate of Cerberus Capital Management LP.  Today, Anchor Hocking designs and produces a comprehensive line of glass beverageware and tableware:

• Beverageware.  Anchor produces a full line of dishwasher-safe glass beverageware featuring both traditional and contemporary designs, from small juice glasses to large coolers and oversized pitchers. Anchor markets its beverageware under the Anchor Hocking® brand.
• Candle Containers.  Anchor manufactures a variety of styles of glass accessories for taper, pillar and votive candles.  Since late 2002, Anchor has introduced over 50 new candle products. 
• Servingware.  Anchor offers an extensive line of glass servingware products ranging from a simple, cut-crystal look to festive patterns, including serving platters, salad sets, cake sets, and punch bowls in many sizes, shapes and colors. 
• Ovenware.  Anchor offers various temperature-resistant glass ovenware products with popular patterns under the brand names Anchor Hocking®, Fire-King®, Essentials®, Premium Plus® and Jade-Ite™. Anchor offers glass lids for baking, plastic lids for storing, and easy-to-grip handles. 
• Storageware.  Anchor produces an extensive line of glass storageware products, including both colored and clear glass. These products are used to accent and organize the kitchen, bath or living room, with designs ranging from modern with cylindrical, stackable jars to "nostalgic" candy jars to festive seasonal jars. 

II. Imports of Glassware and Tableware Have Increased Significantly

H.R. 3116 targets glass articles valued at over $5 each, many of which fall within the categories described above.  Statistics show that imports of glass tableware, especially from China and Turkey, have increased significantly in recent years. Over the same period, U.S. manufacturers’ market share has steadily declined.   Lower labor costs and lower natural gas prices in countries such as China and Turkey allow manufacturers in those countries to undersell American manufacturers despite the impact of freight and existing tariffs.  This threatens the ability of American manufacturers to reinvest in facilities and workers in the U.S.

The glassware industry is already experiencing significant competition from foreign competitors and imports in all glassware categories.  In tariff subheading 7013.99.90, total imports have increased 80% from 1996 to 2004, from approximately $62 million to approximately $112 million in imports.  China, one of the glassware industry’s biggest competitors, has increased its imports in this category by almost 300% from 1996 to 2004, from approximately $8.6 million to $34.4 million in imports.  China’s increase in year-to-date imports for January to June 2004 to the same period in 2005 is an additional 35.4%.   This was achieved despite little investment in automated machine manufacturing.  Between 2006 and 2008, it is estimated that two to three new fully automated tableware factories will come on line, adding significantly to China’s export capacity.

Turkey’s imports (in dollars) in this category have increased 130% from 1996 to 2004.  Imports from Turkey (in dollars) have increased an additional 63.5% from year-to-date 2004 to 2005.  At this pace, even without changes to tariff rates, imports from China and Turkey will exceed Anchor’s annual sales in three to five years.  These increases are unsustainable in the current U.S. glass tableware market which is growing at less than 1% annually.  These countries do not need additional help within this category to remain competitive.

Increases in these proportions also have a devastating affect on U.S. jobs.  In 2003, the Glass Manufacturing Industry Council estimated a 30% decline in domestic glass plants from 1980 (232) to 2000 (166).  Anchor Container Glass estimates that the number of glass container plants in the United States has been reduced from 98 to 55 (44%) in the last 15 years.  Employment in this high-wage manufacturing sector was down 4.4% from April 2004-April 2005  (Source: Working For America Institute).  From 1975-2000, the number of U.S. Glass Tableware Industry union memberships declined 47%.  Almost all of Anchor’s employees are unionized through the United Steelworker’s Association.

Compounding this problem, the World Bank reports that China is set to emerge as the world’s largest trading partner in the next 15 years. (Source: International Trade Daily).  International Trade Daily also reports that China’s exports continued to outpace imports in July 2005, bringing the total trade surplus for January to July 2005 to nearly $50 billion.  China continues to export at an alarming pace.  The availability of cheap labor and inexpensive natural gas, the two major inputs for glassmaking, also ensures more cost-efficient pricing.

III. The Glassware Industry Is Already the Target of Reduced And/Or Eliminated Tariffs Due To a Proliferation of Trade Negotiations.

As you know, the Doha Round is an ongoing round of multilateral negotiations of the World Trade Organization (WTO) designed to reduce barriers to global trade. The members of the WTO set a goal of completing the Round by the end of 2006.  As part of the Doha Round, WTO members are negotiating improved market access and tariff reduction. A major component of the Doha Round, negotiations on non-agricultural market access (NAMA), involves tariffs affecting the glassware industry. USTR is also negotiating tariff reductions that affect the glassware industry in a variety of Free Trade Agreements (FTAs).

The U.S. government has historically treated glass tableware and dinnerware classified under HTS 7013 as import-sensitive products accorded preferential treatment.  For example, under NAFTA, glassware received a 15-year phase-out period and some product categories were completely exempted from tariff reductions. Tariffs on other products were either eliminated immediately or phased out over 5-10 years.  We are now told that the longest phase-out period possible will be 10 years.  If true, this accelerated schedule will significantly impact our business.

Global Home Products hopes to secure longer phase-outs or product specific exemptions during the Doha Round and other FTA negotiations.  Nevertheless, with tariff reductions looming on the horizon for this U.S. industry, it hardly needs accelerated reductions from miscellaneous tariff bills.  Such reductions will chip away at our profit base even further, force reductions in capital spending for maintenance and equipment, lead to more lay-offs and potentially a plant closure.  As it is, Anchor Glass sells some of its glassware and tableware below cost to remain competitive in this industry.  In addition, Anchor Glass has had to lay-off more than 400 workers during the past three years, yet has been only marginally profitable during this period.

IV. Foreign Competitors Are Growing at an Alarming Rate

The U.S. Industry has several major foreign competitors.  One of those competitors is Pasabahce, headquartered in Turkey.  Pasabahce has grown enormously in recent years, and currently has over 13,000 employees and a broad product base.  One of Pasabahce’s stated goals is to increase its foreign sales – this statement is on the front page of its website.  Our estimates show that Pasabahce has made the U.S. a major market focus.  They are now competing aggressively in foodservice glassware sales, are adding a distribution center in the U.S. and currently supply glassware to Wal*Mart, Bed Bath and Beyond and Linens n’ Things, three of the leading housewares retailers in the U.S. Another major competitor is Gibsons Overseas, headquartered in China.  Gibsons has increased its size and breadth significantly over the last 3-5 years by adding glass beverageware, serveware and storage items to its exports.  Gibsons, despite the increases achieved to date, have yet to gain major glassware placements at Wal*Mart, Bed Bath and Beyond, and other retailers.  However, we believe this will occur in due course giving them a substantial increase in export volume in the next few years.   These are only examples of the competition the U.S. glass industry is facing.

For these reasons, we strongly object to H.R. 3116.  We believe that the elimination of the tariff on these glass items will result in a revenue loss for the United States and for the domestic glass manufacturing industry.  For this reason, it also attracts controversy within the U.S. glass industry, as it will increase the likelihood of lost jobs and plant closings.  Thank you for the opportunity to provide our opposition to this bill, and we look forward to your response.

George E. Hamilton
Chief Executive Officer