I recently got a note from Aberdeen saying that they have pulled together a CPO advisory council for this year. Good for them. But the other members of the advisory board -- at least those who believe in free trade -- might consider shaming the CPO of Leggett & Platt whose organization is attempting to artificially manipulate pricing for their products in the North American market by thwarting customers and competitors from working with Chinese suppliers. According a post on Spend Matters' affiliate blog, Metal Miner, "Leggett & Platt filed an anti-dumping petition ... In their petition they took a broad swipe at covering a range of innerspring products requesting, that the term 'uncovered innersprings' include both pocketed and non-pocketed innerspring units." By way of reference, inner-springs go into traditional -- read non foam -- bedding products. If you sleep on a traditional mattress, you're sleeping on inner springs.
According to Metal Miner's analysis, prior to this anti-dumping complaint, global suppliers had been able to successfully enter the North American market and take share from Leggett & Platt by supplying products "more competitively for a number of reasons including the fact that there is still a good deal of labor content in every innerspring. In addition, the price for steel wire is not the same throughout the world. Companies have been trading semi-finished metal products globally for centuries because of price arbitrage opportunities. So it is not surprising that other countries can offer innersprings more competitively on the basis of both the raw material costs and the labor."
What's curious about Leggett & Platt's timing of their petition is how it has coincided with price increases for their products, harming American manufacturers and mattress companies. One manufacturer who commented on Metal Miner's post notes that he has "recently been shut off by my spring supplier ... he purchased springs in China. [Given this] I will have no choice but to purchase from L&P. I also heard that this is happening elsewhere. L&P also just had a double digit price increase!"
In my view, it's pretty clear that Leggett & Platt, which retains a dominant marketshare position with only a very limited number of competitors, is trying to preserve its dominance by fixing and increasing prices for its products at the same time as denying manufacturers the ability to go directly to global sources. For anyone who believes in free trade, this type of behavior should be viewed as abhorrent. I would urge Aberdeen to push L&P's CPO off of their advisory board to set an example of the type of protectionist, price-fixing behavior that procurement organizations would behoove themselves never to get involved with. Let's hope once that situation is resolved that L&P executives face their day in court for price fixing and related activities.
- Jason Busch