Here is the letter we are sending all customers with a quote on file with us. It is good information for anyone looking to purchase cabinets in the near future…

2018 has been a wild ride for us all. Political unrest, trade wars, and a fluctuating stock market have all of us a little weary right now…and it appears that the ride is not yet over. After years of fairly stable pricing, the lumber market has been hit hard with rising prices for over 100 weeks in a row and in 2018, Conestoga was forced to react by raising some of their wood species pricing. Conestoga had not raised prices in years, so this all came as a bit of a shock when the increases went into effect in January. Now a new specter has arisen in our industry….Plywood pricing. Read on to see what we now face and how it affects your quote for Conestoga Cabinets.

As you may have heard, plywood anti-dumping regulations have been a hot topic for several years. The article links at the bottom of this email will paint a much clearer picture for you, but suffice it to say China has been producing plywoods at a fraction of the cost of US plywoods for many years now, mainly because their government has been subsidizing their plywood plants. The result to American plywood producers was a loss of over 50,000 jobs and many plywood plants closing since 2014.  In late 2017, the ITC (International Trade Commission) finally agreed with the American plywood suppliers that substantial harm was being done to their industry and they reacted by levying tariffs of up to 190% on imported plywood sheet goods. This has driven up prices across the board as demand has shifted back to the US producers who have raised prices in response to demand.

Needless to say, Conestoga (and anyone else who builds cabinets or case goods out of plywood) have been adversely affected. Conestoga has absorbed these increases for several months now as they sought to establish new sources of plywood supply, but they have finally been forced to react. To offset these raw material increases, they are raising their prices on their cabinet line on Sept 4th, 2018. While it is impossible to determine the price impact on every job, our sample kitchen pricing seems to indicate that an increase of 4-6% on a kitchen project is to be expected. Some jobs may see little to no increase while others may see a much bigger increase. The increase a job may see depends entirely on how much of the affected plywood is being used and how complex the job is (things that also impact price such as complex finishes or door designs will result in the plywood increase having less of an impact in percentage terms). Basically, the less complex the job, the bigger the percentage increase would be.

If you have requested a quotation for Conestoga products and this job is still in process with us, please be aware that any order needs to be placed on or before Sept 4th in order to lock in current pricing! Since the increase is entirely outside of our control, we can do nothing to stretch this date for you, so please plan accordingly! Also realize that we will be dealing with dozens, if not hundreds of customers who will all be trying to beat this increase. We only have 8 sales reps who are all pressing very hard to service their customers, so we can only handle every job on a first come/first served basis. If you wait until the last minute to request revisions or finalize your job, your sales rep may not have time to work on your project as well as dozens of others and you could miss the cut off date. Please be diligent and finalize your project as soon as possible! Be sure to speak with your sales rep to work out a schedule for your project.

Here are some things to keep in mind about the plywood price increase:

  1. Every manufacturer of cabinetry in the US is or will be affected by these increases, including all brands you will find in your local dealership or home center. This issue is not limited to Conestoga and is a huge issue for them as well as every cabinet manufacturer. They have been meeting with the industry’s largest players to determine the best strategies for moving forward.
  2. Ironically, the tariffs apply only to sheet goods laid up in Chinese mills, but the tariffs do not affect the flat-packed cabinetry and furniture made in and shipped from China (ironically, all which use this very same plywood). Obviously, this is very frustrating to anyone building cabinets in the USA, but we never really intended to compete with ‘stocked’ Chinese cabinetry anyway. We still maintain that, even with this price increase, Conestoga’s huge product offering, custom size cabinets at no charge, vast wood species selection and the flexibility/customization of their product make it the best value you will find in an RTA cabinet. Be mindful of suppliers who claim their cabinets are ‘made in the USA’ but in reality are only assembled in the USA. Their cabinet parts are still machined in China and shipped as flat packed cabinet kits, thereby skirting these tariffs. Our industry is trying to address this cruel loophole/disparity with the ITC and we are hoping for a change in the ruling so that US manufacturers such as Conestoga are not unfairly burdened by these tariffs.
  3. Be aware that this situation is very fluid. We have met with Conestoga on this situation and are being told that further increases may be coming as the plywood supply/pricing situation works towards an equilibrium. Like you, we hope this is the end of it, but we cannot promise it and have no control over the situation.

We are all admittedly frustrated by the shifting footing we find ourselves in regarding these tariffs. As you know, countless other industries have also been affected in recent months and we are simply being forced to respond to market changes. We encourage you to read the articles using the links in this below. There is a lot of other information on this topic available on the web as well. By researching the issue yourself, you will gain a much better picture of what our industry is dealing with and you can then enter into any buying relationship with us as an educated consumer. We thank you for your patience and look forward to working with you on your cabinetry project!

For more information, feel free to read the following articles…

Lancaster Online Article:  Contains an Interview Chris Watson, COO of Conestoga Wood Specialties

Woodworking Network’s Article

Furniture Today Article

 

4 thoughts on “Price Increase on RTA Cabinets Sept 4th Due To Plywood Tariffs

  1. How about sourcing plywood from someone here in the united States? Or is the only way you can make money is to purchase wood from a country that undercuts American companies that make competing products?

    1. These kinds of statements are actually healthy to respond to because they can be helpful to others in understanding the truth.

      So by your comment, I am to assume that the computer or phone you wrote it from is 100% made in America, not a single component of it being sourced elsewhere (including China)? Fact is, 90% of the materials and components in every cell phone or computer made are sourced overseas, usually China. What about your clothes? Your shoes? Your car? How about your electronics at home? What about the pen you write with? Your tools? The toy you bought your kid for Christmas? The fact is, unless you are lucky enough to make EVERYTHING you use in your daily life yourself, you are buying Chinese product. And if you buy ANYTHING that has Chinese made components in it and then criticize others about your ‘buy American’ values, it just comes across for what it is…hypocrisy.

      Conestoga (nor we, selling their cabinets) are happy about this, but we did not create the competitive climate we find ourselves in. We are all simply forced to be competitive in our pricing or go out of business. I prize my business and its necessary survival in order to positively impact the lives of our 14 employees far more than I value my pride in making sure every last piece of the cabinet we sell is made in the US. I wish it were, I really do. But it is not a realistic expectation. Conestoga sources only plywood from China and even then not all of it. They still source most of their plywood and all their other components (hardwoods, hardware, finishing materials, etc) from US factories. In fact, less than 10% of their raw materials come from overseas, a far cry better percentage than pretty much anything else in your home or car. They are one of the last companies to source things overseas and if you do some reading, you will see that the vast majority of cabinet companies in the US are buying plywood from China or from a plywood supplier that has their plywood laid up there. It is an unavoidable fact unless you are in the upper crust of the industry where the client is wealthy enough that price is not a deciding factor. Unfortunately, we do not live in that market. Our customers care very much about the final price of the kitchen they buy.

      So, while we are proud of Conestoga for sourcing so much of their product from the US, we give them a pass for being forced to play by the rules others set long ago by making Chinese imported product an inextricable part of all our daily lives. Once you can tell me, with a straight face, nothing you use in your daily life comes from China, I will say you have a great point (and our product, nor most any other, is clearly not for you). Otherwise, you are simply spewing misleading hypocrisy, no different than someone who spouts off about how we need to save the animals, yet wears leather shoes or belts. Or someone who vitriolically claims we are killing the climate with fossil fuels, but continues to drive a car or truck.

      1. Perfect reply.
        The ignorance of how the world economy works is amazing.
        It is truly sad that everyone wants us to use inferior and/or more expensive products because of a misplaced fear of another country.
        Can you imagine using the this type of argument between the states?

        Joe Smith started the day early having set his alarm clock ( MADE IN GEORGIA ) for 6 am. While his coffeepot ( MADE IN SOUTH CAROLINA ) was perking, he shaved with his electric razor (MADE IN TEXAS ). He put on a dress shirt ( MADE IN NEW YORK ), designer jeans ( MADE IN OHIO ) and tennis shoes ( MADE IN KENTUCKY ). After cooking his breakfast in his new electric skillet ( MADE IN NEBRASKA ) he sat down with his calculator ( MADE IN CALIFORNIA ) to see how much he could spend today. After setting his watch ( MADE IN FLORIDA) to the radio ( MADE IN WISCONSIN ) he got in his car ( MADE IN MICHIGAN ) filled it with GAS from LOUISIANA and continued his search for a good paying ALABAMA JOB At the end of yet another discouraging and fruitless day checking his Computer (Made In ARIZONA), Joe decide to relax for a while. He put on his sandals ( MADE IN TENNESSEE ) poured himself a glass of wine ( MADE IN NORTH CAROLINA.! ) and turned on his TV MADE IN INDIANA ), and then wondered why he can’t find a good paying job in … ALABAMA…..

        Sounds silly, yes, but remember that the states were originally all very separate entities. When we came up with the Interstate Commerce Clause in the Constitution, it freed the state economies to flourish. Imagine what would happen if we did the same to out national economies. When an economy matures, it doesn’t produce as many cheap labor intensive goods. It produces something much more valuable: KNOWLEDGE and INFORMATION. Unfortunately, the people who put out disinformation have neither.

        1. It’s only 12:00 and I have already used your ‘states’ example 2 or three times with colleagues. Great example of a situation many in the USA seem to fail to grasp as they stand atop their soapboxes. Thanks for your brilliant and enlightening response. While we and Conestoga fully support buying from US suppliers for as much of a product as possible, it is simply not a reality in our current economic environment. Buyers seem to fail to realize that any company can lead in one or two of three areas, but never all three: Price, Quality or Service. Apple Computer obviously chose to chase product quality and service at the expense of being the ‘price leader’. People know they will have to pay more for a computer with a retina screen and a solid aluminum chassis that is backed by one of the most supportive companies in the industry. What about Motel 6 (‘we’ll leave the light on for ya’)? You will always get the cheapest price in an area compared to any other motel chain, but you know you will get a hard mattress, paper thin walls and no amenities. When people realize this marketing reality, they stop holding companies (like Conestoga) hostage to impure and unrealistic ideals. Every company, Conestoga included, is in a constant battle to bring their very best of all three of these elements to bear for their customers and making a 100% USA materials cabinet box would price them out of their market. They choose to focus on an incredible cabinet box assembly/quality, the broadest offering in the industry, ‘never miss’ lead times, and a super-lenient replacement policy. To get all that, something has to give and if all that ‘gives’ is sourcing some of their plywood in places other than the USA, I applaud them. They are forced to play the game according to the rules that were set by others. Again, thanks for the great reply. It’s obvious you are a very educated individual.

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