Newsletter january 2017 schoenfeld consulting

SCHOENFELD CONSULTING NEWSLETTER – JANUARY 15, 2017 – Volume 3, Issue 1
SCHOENFELD CONSULTING
NEWSLETTER JANUARY 2017
HEADLINE NEWS
New Formaldehyde Regulations from
U.S.EPA FINAL RULE
The U.S. Environmental Protection
Agency on December 12,2016 finalized
the new Federal regulation to reduce
formaldehyde emissions from composite
wood products used in furniture.The
rules and regulations were published in
the Federal Register. Starting on February
10,2017the required accreditation bodies
and Third Party Certifiers(TPC’s) can
apply to the U.S.EPA for approval.These
TPC’s are in most cases are similar to the

43 CARB TPC’s established since 2009 for
the California law for formaldehyde
emissions regulation ATCM #93120.
All regulatory provisions and
requirements take effect on December
12,2017,one year after the regulation was
published.
In summary the US EPA added Title VI to
the TSCA (Toxic Substance Control Act)to
reduce exposure to formaldehyde.This
final rule includes standards for
emissions from hardwood
plywood,medium density fiberboard,and
particle board and finished furniture
goods containing these products that
are,sold,supplied,offered for sale,or
manufactured(including imported)in the
United States.
In this final EPA rule are provisions
relating to;laminated products,products
made with NAF(no added formaldehyde

resins) ULEF(ultra low-emitting
formaldehyde resins),testing
requirements,product labeling,chain of
custody documentation and other record
keeping
requirements,enforcement,import
certification and PRODUCT INVENTORY
SELL-THROUGH PROVISIONS,including a
product stockpiling prohibition.This final
rule also establishes a third-party
certification program for composite wood
products used in furniture and includes
procedures for the accreditation of TPC’s
and general requirements for
accreditation bodies who approve the
TPC’s.
The are now over 1200 mills worldwide
producing composite wood products used
in furniture that have been approved by
the California Air Resources
Board(CARB).These mills will also be in

compliance with the new federal law.
The finals rule also establishes an EPA
Third Party Certification Program.TPC’s
already approved by CARB are eligible for
EPA TSCA Title VI recognition through
“reciprocity”,provided that they meet all
applicable requirements.Existing CARB
TPC’s and TPC’s approved by CARB
during the two year transition period may
certify composite wood products under
TSCA Title VI until December
12,2018.After that time EPA will only
recognize TPC’s ,including CARB
approved TPC’s who are accredited by
EPA recognized accredition bodies.
Between now and the December 12,2017
date when the manufacturing of
composite wood products are required to
be compliant with the new EPA Federal
law TSCA Title VI(40 CFR 770) we will be
following all final details in the new law as

it effects our furniture industry in future
issues of this newsletter.
CHINESE PLYWOOD IMPORTS
FOR U.S. FURNITURE
PRODUCERS
The U.S.International Trade Commission
and the U.S.Department of Commerce
received a petition from a group of
U.S.hardwood plywood manufacturers
known as the “Coalition for Fair Trade in
hardwood plywood” asking for increased
import duties on plywood imports from
China.Claiming that Chinese plywood
imports are being dumped at below
U.S.market value prices.They are now
asking for an increase of more than
105% duty on these imports.
Another group the American Alliance for
Hardwood Plywood(AAHP) in a
statement from Chairman Greg Simon

stated that “The same six petitioners
brought this case in 2012 and lost
unanimously by the International Trade
Commission’s ruling.Then they appealed
to federal court and lost again.Now their
solution is to use the same playbook and
bring another case in the hopes of
disrupting proven fair trade that is
fostering the production of U.S.made
goods employing tens of thousands of
U.S.workers”
How this would effect furniture costs for
U.S. furniture manufacturers is
somewhat complicated.
Looking into the history of this effort in
2012/2013 and the results:
A)Initial Petition filed on September
27,2012.
B)Dep. Of Commerce initiates CVD/AD
Investigations in November of 2012.
C)Preliminary determination announced
Import duties were assessed on Chinese

plywood imports in February of 2013 at a
CVD(countervailing Duty) rate of 22.63%.
D)-Commerce announced AD(additional
duty) rate of 22.14%,in May of 2013
combined rate was then 44.77%.
E)-September of 2013 final combined
determination announced at 73.04%
after public hearings.
F)-November 25, 2013 ITC announced
that the case was dismissed.
Then after the ITC ruled against the
institution of these duties in November of
2013 the duties already paid by the
importers of record were refunded to
these importers.HOWEVER in the
interum the producers raised prices to
cover the higher duty paid.When the
producers received the refunds they did
not lower their prices back, they simply
kept the prices at the higher levels and
kept the windfall profits.
In this case when governmental
intervention occurs, the rules of supply

and demand are disrupted and an
artificial inflationary price increase is
allowed that is not warranted by
increased costs of goods produced but is
the unintended consequensce of political
intervention.However,perhaps not so
unintended.As Mr.Simon stated this play
book is being tried again by the same six
manufacturers who benefited from their
“FAILED”effort in 2013.The costs to
furniture manufacturers in the U.S.then
has had an artificial increase in 2013 and
remains so. Any support of the “Coalition
for fair trade of hardwood plywood” is
support for higher prices for our furniture
industry products using hardwood
plywood in the supply chain and will
result in higher prices to the consumers
of furniture products.This increase is
unwarranted and should be opposed by
all,since it will occur again even if the ITC
initially rejects it again!

We will continue to follow this case as we
proceed with the new petition which was
filed on November 18,2016.If the same
scenario is repeated by the ITC, the final
determination of the case will be
released in December 2017.
TIP-OVER Recalls and Prevention
Continue
After the 29 million Ikea Malm dressers
were recalled in 2016 at a cost of $50
million another large producer, Masco
has issued a voluntary recall of a variety
of its freestanding islands,vanities and
kitchen cabinets for potential tip-over
risks to consumers.About 135,000 units
were recalled.
UNIVERSAL FURNITURE offers a
Solution.

In order to prevent these tip-over
incidences Universal Furniture has
designed a new anti-tip feature in two
case pieces of its new Axis line of youth
furniture aimed to increase safety in
children’s bedrooms.The new “safe
stop” drawer mechanism allows only
one drawer of the chest to be pulled out
at a time and the dresser allows only
one drawer on either side to be opened
at a time.Preventing children from using
the drawers as a ladder to reach the
top.Also the drawer locking mechanism
limits the amount of weight of all
drawers containing clothes and other
items since they cannot all be opened
at once which can prevents tip-overs.
Gary Bocock stated that Universal plans

to offer this new mechanism on all
future “Smartstuff” youth collections.
The CPSC voluntary standard for
clothing storage units ASTM-F2057-14
should be checked to confirm if the new
collection has been approved by
compliance testing to this voluntary
standard.
We will continue to cover developments
that engineer solutions to tip-over risks
by “designing in” solutions and safety
standards before these products are
manufactured and released to
consumers.
We urge the CPSC and furniture
manufacturers worldwide to make the
voluntary standards(ASTM F2057-14)
that exist now for Tip-over prevention a

required standard for our furniture
industry.
DODD FRANK And Furniture
In 2010 Congress passed the “Dodd
Frank” legislation for U.S.Banks. In
this banking
bill(H.H.R.4173)requirements, there
is a section called the “conflict
minerals rule” which for PUBLICLY
TRADED furniture companies is
regulated by the SEC(security and
exchange commission) there is an
annual obligation to get reports from
all suppliers that ship anything
electronic.This includes power
motion,lamps,power bed bases or

anything else that uses electric
current.A list of conflict minerals
includes;
tin,tantalum,wolframite,cassiterite,
coltan,gold and tungsten.These
minerals are used in electrical
components in some furniture items
mainly in power motion recliners.
The rule is designed to prevent the
minerals sourced from the
Democratic Republic of the
Congo(DRC) from being used
because more often that not the
mineral sales profits are used to
support genocide,murder,rape and
forced labor.
The latest version for compliance by

EPA standards is level VI which
became effective on February
10,2016.Any electronic component
used must pass this standard if
shipped after February 2016.Again
this is only required for publicaly
traded furniture companies
regulated by the SEC.
Flame retardant Chemicals
The California DTSC(Department of
Toxic Substances Control) has stated
that the decline in the use of
Polybrominated Diphenyl Ethers
(PBDE’s) a common flame retardant
used in many household products

and was used in upholstered
furniture until a ban of this chemical
took effect in 2006 by California
Assembly bill AB 302.The results of
the study showed a decline of 39% in
the level of PBDE found in women’s
breast milk.Since 2006 a dozen other
States have instituted similar bans.
The DTSC study reveals the
effectiveness of their (SCP)Safer
Consumer Products program.PBDE’s
can migrate out of products,
especially upholstered furniture and
eventually settle down in the home
environment as dust.Consumers
breathing in contaminated air or
hand to mouth absorption by

children can transmits the chemical.
With the passage of Cal-117-2013 in
2014 for the flammability of
upholstered furniture, the use of any
dangerous flame retardant
chemicals were effectively
eliminated since the new regulation
changed from an open flame test
requirement(1976) to a smolder test
requirement for compliance where
these chemicals were not required to
meet the now current regulation.This
California standard is now effectively
applied to most all upholstered
furniture produced
worldwide.Thanks to the efforts of
Arlene Blum of the Green Science

Policy Institute and Said Nurbakhsh
of the California Bureau of Hone
Furnishings.

Furniture Laws & Regulations
schoenfeldrobert@comcast.net
415-290-4144
Website:
www.schoenfeldconsulting.net

Newsletter january 2017 schoenfeld consulting

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