Import fees on wire clothes hangers from China are taking some starch out of dry-cleaning profits and emptying a little more change from the pockets of customers.
Many of the country's 30,000 or so dry cleaners are paying twice as much for hangers than they did at the beginning of the year, and they are ticking up prices to cover the mounting expenses.
In January, East Bay Cleaners was paying about 6 cents per wire hanger, or $15.50 for a box of 250. This week it shelled out almost 14 cents apiece, according to owner Kenny Yu. For a business that goes through 800 to 1,000 hangers a day, that's an extra $1,900 to $2,400 a month.
"I don't know where it's going to stop," Yu said. "Every dry cleaner is going through what I'm going through right now."
To compensate, East Bay Cleaners is charging about a dime more per piece of clothing — $2.45 a shirt and $5.35 for a pair of pants. Yu encourages clients to return their hangers, but about half of those givebacks are unusable, usually because they are bent or rusted.
The hanger industry got twisted up in recent years by a swell of cheap imports. The volume of wire hangers shipped from China more than tripled between 2004 and 2007, from 773 million to 2.7 billion units, according to the U.S. Commerce Department.
M&B Metal Products Co., an Alabama-based company and one of the last remaining U.S.-based hanger manufacturers, said the Chinese makers were undercutting U.S. factories by selling their hangers below cost, a practice known as dumping.
In a March ruling, the Commerce Department agreed with M&B, saying the Chinese hangers were being sold for one-third to about two times less than the cost of making them. Customs agents started collecting huge cash deposits and bond payments from wire importers at U.S. ports, fines meant to level the playing field for competing U.S. manufacturers. The government will decide in July whether to levy permanent tariffs.
But the wrist-slapping is too late, according to the National Cleaners Association, a New York-based trade group. Most U.S. wire makers are already out of business, so mom-and-pop dry cleaners have no choice but to pay the higher prices.
Chris Keil, owner of Chris' Cleaners in Mount Pleasant, used to see hanger prices change once a year. But as his suppliers grappled with the trade penalties, they ticked rates up six times in the past 12 months.
"With the quantities that I purchase, I kind of stay ahead of that curve a little bit and my suppliers look out for me, but that time has run out," Keil said. "All of this is happening so fast and the market's so volatile, I've yet to get a grip on my cost."
Keil is also getting burned by surging prices for propane and cleaning chemicals. And he said he sees more "price resistance" now than ever before in the 30 years he's been in the dry-cleaning industry.
"Our profit is a lot less than it's ever been, and there's definitely going to be some shaking out on the retail side," Keil said. "Who would ever think that cleaning clothes would become so darn difficult?"