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
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October 8-10: 2018 AUSA Annual Meeting & Exposition, Washington, D.C., USA
October 9-12: Nonwoven Fabric Property Development and Characterization, Raleigh, N.C., USA
October 10-11: 4th International Conference on Nonwovens for High-Performance Applications, Cannes, France
October 15-19: ITMA Asia + CITME 2018, Shanghai, China
October 15-19: CAMX, Composites and Advanced Materials Expo, Dallas, Texas, USA
October 16-17: GeoDallas 2018, Dallas, Texas, USA
October 16-18: IFAI Expo 2018, Dallas, Texas, USA
Click here to view the complete technical textiles events calendar that includes show information links.
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
Fiber Publication Acquired. INDA, the Association of the Nonwoven Fabrics Industry, today announced the acquisition of two leading industry publications: International Filtration News and International Fiber News. The association purchased the publications from International Media Group, Inc., based in Tempe, Az., USA. The purchase price and terms were not disclosed. The publications each have circulations of 8,000-plus domestic and international readers and have served their readers for over three decades. Both are published six times a year in print and digital formats. The acquisitions will expand INDA’s reach and relevance in the key markets the print and digital publications serve with a particular emphasis on the filtration and separation segment as INDA launches its new FiltXpo event to be held in Chicago every 18 months starting February 26-28, 2020. Click here to read the INDA press release on the purchase. Posted October 2, 2018
On September 24, 2018, US Senator Sheldon Whitehouse and the University of Rhode Island Business Engagement Center helped to launch the Rhode Island Textile Innovation Network (RITIN). The event was held in Pawtucket, R.I., US, at the Slater Mill Museum. RITIN is a trade group formed with the objective to guide the growth of the state's textile industry in the 21st century. "The Rhode Island Textiles Innovation Network is an innovative business partnership to help Rhode Island stay at the forefront of advanced textile manufacturing," said US Congressman David Cicilline. 14 companies of the state's textile industry participated in the meeting including American Cord & Webbing, Cooley Group, and Kenyon Industries. Click here to view a video of the opening address by Lori Urso, Director of Slater Mill Museum. [Note: The original post reported an incorrect the date of the meeting.] Posted September 28, 2018
Automotive Manufacturing Leading End Market for Technical Textiles Shipped to Mexico.
The United States and Mexico have reached a preliminary agreement that covers a substantial revision of the North American Free Trade Agreement (NAFTA); specifically, the rules of origin for automotive parts. It is expected to incentivize billions annually in additional US vehicle and auto parts production.
To qualify for zero tariffs under NAFTA, the current rule of origin requires 62.5% of the automotive parts must be made in NAFTA countries (Mexico, Canada and US). The new agreement increases to 75% for the parts to avoid the tariff. What's intriguing is that we don't know if the countries still include Canada, a substantial manufacturer of vehicles and automotive parts. Regardless, this will most certainly be a boon for US technical textile manufacturers as almost 50% of US technical textiles exports goes to Mexico and automotive fabrics are the leading destination end-product segment in making products such as airbags, headliners and seating.
Sobering Thought. Despite the "first glance" optimism, there may well be concern this revision could backfire on the US and Mexico. As I previously noted in my 2018 State of the US Technical Textiles Industry (March/April 2018, Textile World), increasing the percentage of automotive component parts (plus a new requirement that 40-45% of the auto content be made by workers earning at least $16 per hour) could end up pricing Mexican-made vehicles out of the very competitive global marketplace. Mexico currently makes 3.4 million cars annually for the world market.
Mea Culpa. In my same article noted above, I honestly thought revisions to NAFTA would not get done in 2018 because of the elections going on in Mexico, Canada and the US. I underestimated the dodged determination of the Trump Administration to push this trade issue forward. Why Mexico has acted on it without Canada's input is still to be understood.
Click here to read the entire statement posted by the US Trade Representative.
Posted August 28, 2018
In a message to BeaverLake6 Report, JEC Group President Frédérique Mutel has confirmed she has stepped down at the leader of the composite trade organization that she has led since 1997. At the head of JEC since its creation, Ms. Frederique Mutel fully committed to the expansion of composites, was instrumental in the establishment of JEC as provider of high value knowledge and networking services. At the same time, conducting a strong international development. No replace has been announced.
On July 13, 2018, Ms. Mutel was promoted to the rank of Officer in the Order of the Legion of Honour by decree of the President of the France. A very deserving honor for a key leader in the development of the composites industry. Posted July 25, 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. Posted June 18, 2018
I am pleased to announce the second part of my report 2018 State of the U.S.Technical Textiles Industry has been published by Textile World magazine.
This first part features a general industry overview, plus an evaluation of the status and impact of US trade positions.
The second part, featured in the April/May issue will cover major end markets for technical textiles such as automotive and military.
Click here to go to the Textile World website to download a copy.
Steve Warner, Publisher
The joint owners of the ITMA Asia + CITME 2018 textile machinery exhibition have announced new dates for the 6th combined showcase to be held at the National Exhibition and Convention Centre in Shanghai, China. The new dates are October 15-19, 2018. According to show owners CEMATEX and Chinese partners, the Sub-Council of Textile Industry, CCPIT (CCPIT-Tex), China Textile Machinery Association (CTMA) and China Exhibition Centre Group Corporation (CIEC), the shift in the exhibition dates is due to a new national initiative, which affected the scheduling of all events at the exhibition center in October. [Note: BeaverLake6 Report is an industry media partner for the show.] Posted February 11, 2018
In October at the IFAI Expo 2017, I had the opportunity to sit down with -- at the time -- incoming Glen Raven CEO Leib Oehmig for an interview that has now been posted on the Textile World website and will also be in their printed November/December issue.
I've known Mr. Oehmig for probably more than 20 years and have watched his steady management progression within the Glen Raven organization. During the interview, he was very gracious with his time at a busy show and transparent in answering questions on a far-ranging number of topics including the management transition from Alan Gant, Jr., to Mr. Oehmig, the first non-Gant family member to lead Glen Raven. Click here to read the interview and learn more about the thoughts of one of our industry leaders.
As the saying goes "Politics make strange bedfellows." Today we find more than one-third of the Senate Democrats urging the inclusion of key amendments in the US FY 2018 National Defense Authorization Act (2018 NDAA) that would strengthen the US government's "Buy American" policies.
Versions of the NDAA were recently passed by both the Senate and House and a joint committee is working out a single bill. The submitted Senate version, however, left out proposed key amendments designed to prevent the weakening of domestic sourcing for the US military. One amendment included the prevention for lifting of the restrictions in place for domestic sourcing of wearable electronic products and another amendment prevents certain exceptions to the Berry Amendment which would allow non-domestic sourcing through memoranda of agreement with foreign governments.
What's the "strange bedfellows" aspect? Well, "Buy American" is also one of the key positions taken by the Trump administration. So, we have both the Democrats and the Trump administration on the same side, trying to keep strong the US domestic capability for supplying the military. Strange bedfellows given the current political animosity in Washington...but still the cooperation is vital for the US domestic textile industry.
Posted November 3, 2017
Since last August, the US Navy has been planning to phase out its iconic traditional wool peacoat in favor of a less expensive, synthetic cold weather parka which is lighter in weight and more versatile in types of inclement weather. It actually replaces two types of coats and the seabag the wool coat is stored.
The wool coat, however, has some powerful friends in the US Congress. Companies such as Northwest Woolen Mills in Woonsocket, R.I. and Sterlingware in Boston, Mass. Altogether, the supply chain involved in the manufacture of these woolen peacoats -- including sheep farmers -- is estimated to account for 400 jobs in the Northeast. Add to the drama that the new parka, made by the long-time military supplier Propper, is expected to be manufactured in Puerto Rico, a perceived feeling the new coat will be made by non-American workers.
June 29. 2017
The Office of the U.S. Trade Representative (USTR) has released President Trump's 2017 Trade Policy Agenda. The document, officially called 2017 Trade Policy Agenda and 2016 Annual Report of the President of the United States on the Trade Agreements Program, outlines the new Administration’s four trade priorities:
BeaverLake6 Report has created a special page within this website and placed the first chapter of the 336-page document which summarizes the policy. Click here to read it. Posted March 2, 2017
Back on March 24, 2016, I was one of the first to predict the Trans-Pacific Partnership (TPP) agreement was a dead deal. In fact, I said that I wouldn’t be surprised that, if Donald Trump became President, the agreement is shredded on day one of his new administration. Well, I was off by three days. Yesterday, President Trump signed an Executive Order, officially withdrawing the United States from the TPP agreement. Now the question is can the National Council of Textile Organizations put together a comprehensive plan for the domestic textile industry in a post-TPP era? Click here to read the rest. Posted January 25, 2017
In 2015, I posted more than 425 items of interest for our industry on the BeaverLake6 Report website. In reviewing it all last week, it got me to thinking about putting together a list of influential events, news and trends that I observed during the past year. I have focused primarily on the US marketplace but each of “the things that mattered” to me has global implications.
So, here go my thoughts in no particular order of importance. Let me know if you agree or if I have missed some. Click here to read the list.
Posted January 17, 2016
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