Whirlpool wins ruling against foreign competitors that could help Ohio workers, but Samsung says this could drive up prices

Friday, 06 October 2017, 03:42:00 PM. Samsung and LG consistently deny they are underpricing washing machines and moving operations to evade penalties.

WASHINGTON -- Whirlpool, operating the nation's biggest washing machine factory in Northwest Ohio, won a trade panel ruling Thursday against competitors who keep moving to new countries and plants in an alleged attempt to evade trade sanctions.

The preliminary victory is against Samsung and LG, Korean companies accused of serial country-hopping. Whirlpool says the companies have violated trade laws and undercut American workers repeatedly by under-pricing their residential washers, but that the companies keep moving production to new countries to avoid nation-specific sanctions.

U.S. Sen. Sherrod Brown has referred to the practices of Samsung and LG as akin to the arcade game Whack-a-Mole -- and to the movie Groundhog Day. First they lost a trade case after being accused of unfairly undercutting Whirlpool and its 3,000 workers in Clyde, Ohio, by selling washing machines for American consumers at artificially low prices after making their machines in South Korea and Mexico.

But rather than pay the penalties or stop their unfair practices, they moved to plants in China, Whirlpool and supporting lawmakers say. Those lawmakers include Brown, a Democrat, and his Republican colleague, Sen. Rob Portman.

Then, when Whirlpool filed and won a complaint about the companies' actions in China, they moved production again, this time to Vietnam and Thailand, Whirlpool said.

Follow the washing machines, if you can

Trade penalties tend to be based on the country where a product is made and a company's cost to make it there. By moving, the companies can stay a step ahead when nation-specific penalties are assessed and keep "cheating" their way around trade laws and sanctions, Whirlpool says.

Samsung and LG have consistently denied engaging in unfair trade practices. They have said the claims they sell at artificially low prices -- a way to increase market share and harm competitors such as Whirlpool -- are based on flawed analyses of their manufacturing and other costs.

For example, it can be difficult for a company in the United States to determine actual costs for materials and industrial assemblies in non-market economies such as China, so complaints are based on extrapolations, the foreign companies say. And extrapolations can be wrong.

Furthermore, they say, they often base their prices on the likelihood that their washing machines will be sold as a part of a washer-dryer pair, and the combination can cushion the price of one. They say their focus on new technology and front-loading machines, popular with younger families, has helped them gain market share. 

"We are disappointed with the International Trade Commission's decision to find injury," Samsung said in a statement Thursday. "Restrictions on imports of Samsung washing machines will negatively affect American consumers by limiting choices, raising prices and offering less innovative washing machines."

Whirlpool accounts for about 35 percent of all residential washers sold in the United States. It would take a combination of Samsung and LG for those companies to match that share. The Heritage Foundation, a free-market think tank, says that "Whirlpool claims that this case is about losses for the domestic industry as a whole, but in reality, it is about Whirlpool feeling the pressures of innovation and competition from Samsung and LG."

But that's not what the U.S. International Trade Commission ruled. Instead, the ITC ruled 4-0 that Samsung and LG have imported washers into the United States "in such increased quantities as to be a substantial cause of serious injury to the domestic industry producing an article like or directly competitive with the imported article."

The commission, a quasi-judicial panel, next must decide by Dec. 4 on penalties, which can include tariffs, duties and quotas, and then the administration of President Donald Trump must decide if it agrees. Samsung and LG can continue fighting the case if they wish. 

"We can't let LG and Samsung get away with dumping their washers into the U.S. and hurting Ohio workers," Brown said. "The president and ITC must make a strong recommendation that provides real relief for workers in Clyde and around the U.S. who've been hurt by this surge of cheap washers."

Jeff M. Fettig, chairman of Whirlpool Corp., based in Michigan, noted that this is the third time since 2013 that the ITC has "found that Samsung and LG engaged in unlawful conduct by violating U.S. trade laws."

"This vote sets the stage for the administration to put in place an effective remedy to create a level playing field for American workers and manufacturers," Fettig said.

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