The Coleman Company
FTZ Docket B-53-2015
Under the FTZ Board’s regulations (15 CFR part 400), applications requesting
production authority (15 CFR 400.23) are approved if the application is not inconsistent
with the threshold factors of 15 CFR 400.27(a) and the application demonstrates that
approval of the requested authority would result in a net positive economic effect (15
CFR 400.27(b)) and a significant public benefit(s) (15 CFR 400.27(c)). The burden of
proof is on the applicant (15 CFR 400.28(a)). If the examiner recommends not to
approve authority requested in the application, that “preliminary” recommendation of the
examiner is presented to the applicant, which may present additional evidence in
response (15 CFR 400.34(a)(5)(iv)(A)). The same provision states that public comment
may be invited on a preliminary recommendation.
Delineated below are the factors considered for the preliminary recommendation of the
examiner regarding the application requesting unrestricted FTZ authority on the use of
certain foreign-status inputs for production activity of The Coleman Company (Coleman)
at Coleman’s facility located within Subzone 119I, in Sauk Rapids, Minnesota.
The pending application requests authority for Coleman to choose the duty rates during
customs entry procedures that apply to personal flotation devices (e.g., life vests, life
belts, flotation jackets) (duty rates are 4.5% or 7.0%) and flotation cushions (6.0%)
(collectively, “PFDs”) – i.e., enable an “inverted tariff” benefit – for the following foreign status
inputs: certain nylon and polyester woven fabrics; webbing of man-made fibers;
neoprene fabrics; knit polyester fleece fabrics; and, water soluble sensing elements
(duty rates range from 5% to 17.2%). The application estimates resulting FTZ savings
of up to $255,000 per year.
The current application follows the applicant’s 2014 submission of a notification for
production authority (FTZ Board Docket B-31-2014). In that case, the FTZ Board
approved unrestricted FTZ authority for the use of imported plastic buckles, plastic
carrying bags, and PVC cellular foam but, based on concerns regarding the potential for
adverse economic impact on domestic industry, determined that further review would be
needed before the Board could potentially authorize inverted tariff benefits on foreignstatus
textile inputs (fabrics, webbing, and carry bags) used in production of PFDs for
the U.S. market (see 79 FR 43390, 7/25/2014).
OUTLINE OF ANALYSIS
After review of the primary evidence and arguments presented by Coleman and other
parties regarding the threshold factors, it does not appear that approval of the Coleman
application would be inconsistent with the threshold factors. Therefore, the examiner
assessed the evidence and arguments on the record as they pertain to whether the
applicant has demonstrated that the proposed activity would result in a net positive
economic effect and a significant public benefit(s).
Coleman produces PFDs for three separate market segments: recreational, industrial
and military. Coleman is not requesting to use unrestricted FTZ procedures on its
production for the military market segment because PFDs sold to the U.S. military are
subject to the Berry Amendment which requires the use of domestically-produced textile
materials. Coleman’s primary economic argument has been that without unrestricted
FTZ authority (inverted tariff savings on imported textiles and water soluble sensing
elements – duty rates range from 5% to 17.2%), the company would be unable to
competitively produce the PFDs (duty rates range from 4.5%-7%) for the recreational
and industrial markets in the United States. Coleman’s arguments focused primarily on
the need to lower the duty costs of imported UL certified nylon and polyester fabric,
which it indicated were not available at a competitive price from any domestic producer.
With unrestricted FTZ procedures, Coleman argued that employment and production
would increase significantly at the Sauk Rapids plant. Without unrestricted FTZ
procedures, Coleman argued that it would need to import more finished PFDs rather
than produce them domestically, and consequently cut production and employment at
the Minnesota facility. Coleman also asserted that its competitors would not likely
pursue FTZ authority – and, therefore, that there likely would be no additional industry
impact from potential approval of FTZ authority for those competitors – because its
competitors’ PFD production for the recreational market is mainly located abroad.
Coleman’s application is supported by certain elected officials, certain suppliers (Tape
Craft Corporation (webbing); ACR Electronics, Inc. (water activated rescue strobe
lights); RR Donnelley (brochures and catalogs); SPSI, Inc. (ink supplies);
Pregis, LLC (low density polyethylene foam); American Cord & Webbing Co., Inc.
(plastic hardware and webbing)) and the Outdoor Industry Association. The application
is opposed by certain elected officials, certain domestic manufacturers that indicate that
they produce the type of fabric that Coleman proposes to import (Highland Industries,
Inc., Milliken & Co.); and, the American Fiber Manufacturers Association, the National
Council of Textile Organizations, and the U.S. Industrial Fabrics Institute. The parties
opposing the application expressed concerns that the effective reduction in duty rates
applicable to foreign-sourced textile inputs used to produce PFDs for the U.S. market
would place domestic producers of like textile materials at a disadvantage, leading to
increased imports of foreign textiles and subsequent losses of U.S. employment and
production at U.S. textile plants.
The Office of Textiles and Apparel (OTEXA), as the Department of Commerce’s
industry specialists for matters pertaining to the textile industry, provided assistance to
the FTZ Staff in the review of the Coleman proposal. After conducting its analysis of the
application and information on the record, OTEXA does not support approval of the
unrestricted authority requested for Coleman based on potential negative economic
impact on other domestic manufacturers. The rationale and details that underlie the
office’s findings are discussed in the attached memorandum from the Deputy Assistant
Secretary for Textiles, Consumer Goods and Materials, which has provided key input for
the examiner’s preliminary analysis.
Pursuant to the FTZ Board’s criteria for evaluation of production applications, the main
findings taken into account for the examiner’s analysis and recommendation – including
the findings presented in OTEXA’s memo – were:
• FTZ benefits do not appear to be a determinative consideration in Coleman’s global
investment decisions for PFD production.
• Potential negative effects with respect to domestic textile producers including
Highland Industries, Inc., and Milliken & Co.
• No demonstrated causal link between proposed FTZ-related cost savings and a net
positive (national) economic effect and significant public benefit(s).
Key supporting elements considered for the recommendation include:
• Domestic supply is available for the basic types of textile inputs for which Coleman
requests FTZ authority – nylon, polyester, neoprene, and polyester fleece fabrics
• Approving the FTZ (inverted tariff) authority requested by Coleman would reduce the
cost of the imported textile materials, which already have advantages due to factors
such as lower labor costs.
• Coleman has already made significant investments to produce PFDs (including for
mass market retailers ) at its Minnesota plant even in the absence of – and no
guarantee of future approval for – FTZ savings on the textile inputs. Coleman
specifically claims, “Originally manufactured offshore, Coleman made the decision to
re-shore a large portion of the Puddle Jumper [Note: a low-priced recreational life
vest for children] PFD manufacturing to the U.S. in the Sauk Rapids facility. In
addition, 2011 saw the commencement of a long-term re-shoring commitment by
Coleman of not only Puddle Jumper PFDs but also boat cushions, and other types of
PFDs, resulting in an increase of manufacturing at the Sauk Rapids facility of more
than 235%.” Industry articles on Coleman’s re-shoring efforts note, “Coleman has
been able to grow our annual output to about 3.5 million pieces… By taking so
much time out of the production process, we’ve been able to bring a large volume of
products back” [quoting Coleman Senior Vice President for Operations Jeff
Schmitt]. “As a result of the reshoring efforts that Schmitt is leading, Coleman has
expanded the Sauk Rapids factory from about 60 people in 2011 to 270 people to
date, and expects it to grow by another 100 to 150 people in the near future as it
continues to bring more business back to the plant.”
• Coleman has argued that inverted tariff savings (up to $255,000 per year over the
entire range of requested inputs, an average of 1.6% of finished product value)
would be the sole reason for future investment and production expansion. “What is
at stake here is not only whether we can continue to expand the factory and create
more U.S. manufacturing jobs, but whether this factory can survive given decreasing
labor costs in Asia, increasing costs in the U.S. and now TPP.”
In its arguments to date, Coleman has not addressed the whole range of considerations that have impacted and may continue to impact the cost of U.S. production and which could influence Coleman’s decisions to maintain or increase production and employment
in the U.S. without the use of unrestricted FTZ procedures. A number of these
considerations are listed below:
investment in automation and production efficiencies increasing the productivity
at the plant and, at the same time, increasing employment (thereby making the
Sauk Rapids plant more competitive with offshore alternatives regardless of
whether the requested FTZ authority is approved). The “Back to Shore” article
cited above includes the following: “‘The way we were able to bring product back
to the U.S. is by maximizing the benefit of reduced lead time, which results in
increased flexibility to respond to customer demand. You have to be able to have
competitive landed cost, and the way we were able to do that was by taking labor
content out of the process.’ Taking labor content out of the process does not,
Jarden Corporation, SEC 10K, for the fiscal year ended December 31, 2015
however, mean eliminating jobs. ‘We’ve actually grown jobs in the U.S.,’ Schmitt
says. ’And we’ve done that through the use of automated equipment.’”
in order to maintain and expand its U.S. production focus on meeting demands
from mass retailers to reduce prices on low cost and low margin PFDs, such as
PuddleJumpers. However, there are programs by mass retailers that encourage
a broader view of cost reduction in their supply chains such as the “Made in
America” program of Walmart, one of Coleman’s key customers. “Walmart has
specifically cited Coleman’s U.S.-made PFDs as one of its “Made in America”
manufacturing flexibility to shift its U.S. production easily between types of PFDs,
which could include FTZ production of higher value PFDs, including those sold to
the specialty retail and industrial markets. Such an approach may support a
global supply strategy that would in any case (with or without FTZ procedures)
involve at least some imports of low-cost PFDs while focusing U.S. production on
higher-value PFDs. “The company also recently made a sizeable investment in
direct printing on fabric, allowing it to print fabrics ‘on the fly’ right onto a cutter
and automated sewing machines. ‘That’s going to be the future – highly flexible,
highly customizable manufacturing that is direct to consumer,’ says Schmitt.”
The Newell Group, which recently purchased Coleman, has indicated that Coleman will be "going upscale.”
• Approving the FTZ (inverted tariff) authority requested by Coleman would present a
real potential for greater imports of textiles since other PFD producers could want to
follow Coleman’s “FTZ model”. There are PFD producers which manufacture at
least a portion of their supply needs in the U.S.11 In fact, it would appear that U.S.-
manufactured PFDs comprise most of the U.S. market (85% in 2014), based on
Coleman’s estimates of imports.
SUMMARY AND CONCLUSIONS
Although the record contains some evidence supporting a positive impact for Coleman
from its requested unrestricted authority on the use of the foreign-status inputs in
question, the record also, in particular, contains evidence of clear reasons for Coleman
to conduct PFD production at the Sauk Rapids plant (regardless of whether the
requested FTZ authority is approved). In that context, the effective duty reduction on
imported textiles that would result from approval of Coleman’s requested authority could
create an additional incentive for the company to purchase such materials from foreign
sources to use in production at the Sauk Rapids plant – rather than from U.S. producers
that have the ability to supply such materials (thereby potentially having a negative
effect on production and employment at those producers’ U.S. plants). As such, the
case record indicates that there are potential negative effects and does not demonstrate
that such potential negative effects would be outweighed by potential positive effects
claimed by Coleman. In total, at this time, the case record does not indicate that the
applicant has met its burden of proof to demonstrate that that approval of unrestricted
FTZ authority for use of the foreign-status inputs in question would result in a net
positive economic effect and a significant public benefit(s). Therefore, the examiner
cannot recommend approval of the unrestricted authority requested by Coleman.
Attachment: Memorandum from Deputy Assistant Secretary for Textiles, Consumer
Goods and Materials
 Coleman Application, p. 17.
 “The Age of Automation”, Barb Ernster, December 1, 2015, http://specialtyfabricsreview.com/
 “Back to Shore”, Sigrid Tornquist, January 1, 2016, http://specialtyfabricsreview.com/2016/01/01/backto-shore/
 Coleman Hearing Transcript, p. 10-11.
 Jarden Corporation, SEC 10K, for the fiscal year ended December 31, 2016
 “Back to Shore”, Sigrid Tornquist, January 1, 2016, http://specialtyfabricsreview.com/2016/01/01/backto-shore/
 See e.g., “How Walmart Plans to Bring Back ‘Made in America’ ”, Bill Saporito,
 “Walmart U.S. Manufacturing FAQs”,
 The Age of Automation”, Barb Ernster, December 1, 2015,
 Highland noted that it was supplying the same fabrics to Coleman’s competitors which were producing in both the U.S. and abroad and these customers would seek similar cost advantages with FTZ status, Coleman Hearing Transcript, p. 17, and The U.S. Coast Guard cites 66 U.S. PFD producers, Final Rule, “PFD Labeling and Standards”, U.S. Coast Guard, 79 FR 56491-56500, 9/22/2014, and Mustang Survival (now owned by The Safariland Group), named by Coleman as a main competitor, has a plant in Jacksonville, Florida, “U.S. firm buys Mustang Survival, Burnaby-based company that pioneered marine safety gear”, Tracy Sherlock, Vancouver Sun, 03/26/2013, and Kent Sporting Goods, which apparently is another major competitor to Coleman, reportedly manufactures over 1 million life vests a year in Tyler, Texas, “Kent Sporting Goods adds warehouse and distribution space, more brands”, Tyler Morning Telegraph, November 17, 2016
 Coleman Application, pp. 16-17
Click here to view the complete technical textiles events calendar that includes show information links.
Do you wish to be added to our subscriber list? It's easy and it's free. Click here and write "Subscribe" in the message box.
Posted January 7, 2020
The historic political fight in Washington may actually benefit the US technical textiles industry in 2020.
In more "normal" times, even with bipartisan support of trade deals and building legislation, it's a slow process to get something done in Washington. In a funny way, under the current polar vortex called impeachment, things may actually get done faster. President Donald Trump wants to show he is still able to carry out his campaign promises and impeachment is not hindering his ability to administer. The Democrats, fearful of a bogged down impeachment process that could wear down their public support, are eager to show they can also get something done and avoid a blame they are only consumed with getting rid of the president.
Thus, you see both sides touting what's in the United States/Mexico/Canada Agreement (USMCA). The National Council of Textile Organizations (NCTO) is focused on the impact of what the agreement means in terms of fiber and yarn sourcing; however, I am more interested in the end product markets that benefit from the trade agreement. In the USMCA, the amount of material made in North America that goes into a vehicle increases significantly. The largest single end-market for technical textiles is the automotive industry. The USMCA means more products like headliner material, airbags and seatbelts, acoustical and vibration dampening, carpeting, composites and industrial hoses will be needed. USMCA is a terrific win for the many smaller technical textile parts makers in the US.
As for infrastructure, the current authorization, the Fixing America's Surface Transportation (FAST) Act of 2015, expires at the end of 2020. President Trump wants more than $1 trillion to help fix the country's roads and bridges. There is a bipartisan support for the new legislation because it's passage will benefit so many states. The winners for us? It would hands-down be the geosynthetics industry, as well as those who make construction-used products like tarps and protective covers, and personal protection gear.
So, expect to see some things getting accomplished in Washington in 2020. It is an election year and never underestimate the self-preservation instincts of a politician.
Posted January 7, 2020
December 3, 2019
Thanks to the BeaverLake6 Report's arrangements with China Textile magazine and the China Nonwoven & Industrial Textile Association (CNITA), we have received the report "A Brief Analysis of Economic Operation of the Industrial Textile Industry in the First Half of 2019" writtened by CNITA's market research department.
In the first half of 2019, China's economy faced a complicated development environment. Issues such as the downturn in automotive demand and the US/China trade dispute are having an impact. Production is still growing but the markets are relatively flat. Click here to read the entire report in the China section. Posted
November 24, 2019
The second edition of the Eurasian Geosynthetics Symposium (EAGS 2019) was held November 18-19, 2019 in Beijing, China. Many of the leading experts in geosynthetics delivered presentations. Ms. Flora Zhao, the director of the editorial department for China Textile magazine, has given us an extensive review of the symposium program. Click here to go to our China section to read her report.
The IFAI Expo 2019 was held last week in Orlando, Fla., USA. The exhibition was a smaller event than in years past but it still remains a powerful showcase of industry products. In the Special Report section, you will find analysis of the show, plus news that comes from the Industrial Fabrics Association International's Annual Meeting and the winners of the International Achievement Awards. Click here to read the articles. Posted October 10, 2019
In 2018, China's industrial textile industry maintained a relatively rapid growth. The year, though, also found more complex challenges for the industry, including the tariff issues with the US. Thanks to BeaverLake6 Reports' exclusive arrangement with China Textile magazine, we are presenting the English-translated version of the final 2018 report written by the China Nonwovens & Industrial Textile Association (CNITA). The report included information on fiber and material production, plus selected large end-product markets. Click here to read the report. Posted September 3, 2019
NCTO Members Testifying at US International Trade Commission. Surprisingly, there appears to be a little worry the announced new US tariffs on China (Section 301) may be reaching too far with its scope. The National Council of Textile Organizations (NCTO), which has been firmly behind most of the textile-tariffs against China over the last year, is expressing concern the new Tranche Four retaliatory tariffs may affect US imports on products needed by the US domestic textile industry.
[Read the rest of my editorial that takes NCTO to task for its hypocritical "moral" argument supporting the proposed additional products but excluding its industry's suppliers by clicking here.]
Posted June 17, 2019
Despite the increasingly complex industry demands, the Chinese technical textiles market was relatively stable. Nonwovens output increased over last year. Key specific markets such as tire cord also increased in 2018 over 2017. Overall operating income for industrial textiles used in China reached $34 billion. Click here to read the complete summary provided to BeaverLake6 Report by China Textile magazine through our exclusive relationship. Posted February 15, 2019
INDA, the Association of the Nonwovens Fabrics Industry, has issued its final report on IDEA19. The event held March 25-27, 2019 in Miami Beach, Fla., USA, attracted 6,500+ participants and 509 exhibiting companies from 75 countries. Show floor space was a record 168,600 square feet, a 9% increase over the previous show.
Surprisingly, the people and exhibitor participation figures are not record numbers. The IDEA16 show in Boston, Mass., USA, attracted 7000+ and 555 exhibitors.
So, why was participation down this year from IDEA16? I think an explanation for the decline is the South Florida location of IDEA19. Click here to read more.
BeaverLake6 Report is pleased to provide an exclusive interview with Li Lingshen, Ph.D., Vice President of the China National Textile and Apparel Council, and President of the China Nonwovens & Industrial Textiles Association, the overseeing organization for the technical textiles industry in China. Click here to read the interview.
Positive Reviews but Still Uncertainty. On November 16, 2018, two of the US textile industry associations testified before the US International Trade Commission (ITC) in a special hearing to determine the economic impact of the proposed United States-Mexico-Canada Agreement (USMCA). The leaders of the American Apparel & Footwear Association (AAFA) and the National Council of Textile Organizations (NCTO) provided statements on how they feel the new agreement will affect their member companies.
The two organizations clearly have different biases; however, in looking over the AAFA and NCTO statements, it appears to me that while the organizations both clearly said they were not offering an endorsement yet of the agreement, they gave general overall approval for USMCA, acknowledging the 1992 North American Free Trade Agreement (NAFTA) needed updating. Both organizations are taking a wait-and-see attitude to more fully look at how the agreement impacts the complex supply chain of textiles and apparel. Click here to read more.
NAFTA Replacement Agreement Negotiated. On October 1, President Donald Trump announced the US, Mexico and Canada had reached an agreement whichreplaces the North American Free Trade Agreement (NAFTA) that went into effect in 1994. The new United States-Mexico-Canada Agreement (USMCA) contains provisions and language that has an impact on the technical textiles industry; the most important are 1) a special section covering textiles and apparel and 2) rules of origin that will require 75% of automotive content (under NAFTA 62.5%) be made in North America. Mexico and Canada are the two largest importers of US made technical textiles and the automotive industry is the largest intended end market of these technical textiles. Click here to go to the United States Trade Representative's website and read the "Textiles and Apparel Goods" chapter. Posted October 3, 2018
Are you looking for a quick understanding of the China technical textiles industry? Through our special relationship with China Nonwovens & Industrial Textiles Association (CNITA) and their China Textile publication, BeaverLake6 Report is pleased to post the English-translation of the recently issued "Status Quo of China's Nonwovens and Industrial Textiles Industry, 2017." The report covers the different levels of the industry, geographic export demographics, and forecast the needs in the major end market applications. Click here to read the report in our China Textile website section.
“BeaverLake6 Report is one of the ‘go-to’ websites that I use. New contributors and innovative products are regularly featured, which to me, is the lifeblood of the industry.”
Ricky Richards (Sales) Pty Ltd.
Come back often during the week. We update BeaverLake6 Report almost every day with the latest industry information.
Success in our industry is all about knowledge, integrity and developing relationships. BeaverLake6 Group, LLC, publisher of BeaverLake6 Report, is a management consulting firm focused on helping businesses understand the complex global technical textiles industry.
Please click here to view testimonials about Steve Warner, President/CEO of BeaverLake6 Group, LLC.
Connect with Steve Warner, publisher of BeaverLake6 Report, at LinkedIn.