Testimony of Andrew Eich at United States International Trade Commission

MR. EICH: Okay, thank you. Good morning, my name is Andrew Eich. I am President and Chief Operating Officer for Cambria Company, LLC and I'm responsible for managing the company sales, finances, marketing and operations. I have firsthand knowledge of how imports have negatively impacted Cambria and the broader domestic industry. I appreciate the opportunity to share this knowledge with the Commission. I would like to begin my statement first by explaining how Cambria goes to market with our quartz surface products. Cambria manufactures 100 percent of our quartz surfaces in LeSueur, Minnesota where we employ more than 800 hardworking men and women to produce our products. We then sell and ship these products through a variety of channels including our own distribution centers, Cambria-owned fabrication facilities or direct to our fabrication customers. Through these channels our products are sold to contractors for large commercial projects, to home builders, kitchen and bath designers and retailers. We also sell our product through large home centers like Home Depot. So in short, our products are sold through various distribution channels to all possible types of customers.

When Cambria first entered this industry in 2000 we were the only U.S. manufacturer of quartz surfaces. Over the years Cambria has invested millions of dollars in marketing, sales, R&D, and most importantly production capacity to serve the growing quartz category. These investments benefited not only Cambria but also the domestic industry as a whole as we drove demand for our innovative products. Increased demand led to multiple competitors building quartz plants in the United States including LX, Caesarstone, Dal-Tile, USA Quartz and Guidoni. Even one of the largest U.S. importers, MSI, International, built a plant in South Carolina. More recently, the Spanish producer Cosentino also announced plans to build a plant in Jacksonville, Florida. We welcome this fair competition.

Cambria also saw increased competition in imports from other foreign suppliers. Some level of foreign competition is to be expected. However, the level of imports in our industry has been simply astounding. First came the huge and sudden wave of Chinese imports that only receded after anti-dumping and countervailing duties were ordered. Duty orders were imposed in 2019. Then came a second wave of imports beginning with India and Turkey and then joined by Malaysia, Vietnam, Thailand and others. Over the last five years imports have increased over 78 percent from 131 million square feet to 234 million square feet. This is a staggering volume of quartz surfaces. The surge in imports over the last five years has had a dramatic impact on Cambria's operations and its financial performance. Historically, before imports attacked our market, Cambria's production and sales volumes grew every year by percentages ranging from 15 to 35 percent. This rate of growth was in line with the growth in demand that we saw and we continue to invest in additional capacity to serve the growing demand. However, imports have grown faster than market demand. These products were being offered at rock bottom pricing, rapidly taking share from Cambria and its domestic competitors.

Due to these reduced orders, Cambria has also reduced our active capacity at our plant. We cut production shifts from seven day per week target to four to five days a week. Our capacity utilization today is stuck at 60 percent. This strains the financial performance of the company. Importantly, it limits our ability to invest in the future. The equipment and facility used to produce quartz surfaces requires large capital investments and therefore a large portion of our overhead is fixed. 

In fact, we have made hundreds of millions of dollars in capital investments at our production facility in Le Sueur as Marty spoke about. The reduction of our operations by 40 percent means that we had fixed overhead spread over a lower volume and that directly impacts our bottom line in a very negative way. For our business to sustain itself we need to earn an acceptable return on our capital invested. We have therefore held the line of pricing despite intense downward market price pressure from imports. 

This has resulted in a substantial loss of volume and sales despite having a broad pallet of designs at different prices across that pallet targeting every type of customer. We continue to market and sell across our various channels working hard to differentiate our product. However, we are not simply willing to drop our pricing down to the level of imports, even when many of those products that are being imported are look-alike designs. The result is that many end consumers have and will continue to trade down to these significantly lower prices thus leading to ever eroding and declining sales. This dynamic strains our financial position and negatively impacts our ability to invest in the company.

Before the surge of imports we believed we would have enough sales growth to justify expanding our production capacity. We started investing in two new production lines and other equipment. This investment would have easily involved well over 100 million in capital expenditures and the hiring of more than 200 people. Because of imports we have since canceled those plans. It simply makes no sense to make such large investments when imports are denying us the opportunity to participate in the growth of the quartz market in the U.S. 

Over the last five years Cambria has built out distribution centers around the United States to get as close to the market as possible and stage our product for our customers. These are yet additional examples of investments we have stopped making. We've stopped expanding our distribution network because of these low-priced imports. And I will close my remarks by emphasizing that this issue does not simply impact Cambria nor does it only impact the companies represented at these tables. It impacts the entire domestic supply chain serving the quartz industry. This includes raw material suppliers who have also made significant investments to meet domestic production needs. It impacts our maintenance contractors, our logistic providers and the local businesses who all support the domestic manufacturing industry.

Lastly, this will ultimately and negatively impact on our downstream fabrication partners. We see an ever-growing amount of prefabricated quartz products also being imported into the U.S. at non-economic prices. These products impact the slab manufacturers like Cambria. They also impact the fabricators who have no chance to compete for the service for the same reasons that we cannot. For all of these reasons, I respectfully ask that you find that the domestic industry in the United States has been injured by these imports. Thank you.

MR. MEISNER: Thank you, Mr. Eich. Roy Viana, the Director for Slab Products is the next witness in our Panel.