Statement of David Page Vice President Dimensions, Inc. 641 McKnight Street Reading, PA 19601 For the Subcommittee on Trade of the House Ways and Means Committee May 26, 1982
Mr. Chairman: My name is David Page and I am the Vice President and partowner of Dimensions Inc., in Reading, Pennsylvania. Dimensions is a manufacturer of needlecraft kits which are marketed and sold to retail establishments and catalog houses nationwide, in Canada and in Great Britain. Dimensions has been in business just under six years and presently employs 189 persons. We have 23 sales representatives across the country, advertise nationally through women's magazines and trade journals, exhibit at eight regional trade shows and mail full color brochures semi-annually to approximately 3,800 accounts. Our business is seasonal and very much like the fashion industry in that we design approximately 100 new designs twice a year. We have contracts with 18 independent designers throughout the country whose artwork is then transferred into a needlecraft kit by our in-house design staff. We are not a vertical company and require all material components to be purchased from approximately 50 outside suppliers, all of whom are dependent in varying degress on our business growth. We inventory approximately 2,500 components and 800 finished kits and display models. We have a problem. Dimensions and others in our industry are facing a no-win situation and it is this situation to which I want to address my testimony. Never before have I felt a need for interaction between small business, government, the economy, unions, politics and international affairs, and never before did I think these entities would mean so much to me personally.
The needlecraft industry has grown over the years, but is now coming to a screaming halt, due in part to the state of the national economy, but more specifically because of an inability to place display models in a retail store. A display model in a store can increase kit sales three to five times over the number sold at a store that does not have a display model. A display model is a finished piece of needlecraft that a retailer will purchase to promote the sales of kits. Although the pictorial graphics of our kits are good, they cannot take the place of a finished item in catching the consumers' eye and making her want to purchase the kit. Our problem is the high cost of these display models to the retailer. It has increased considerably over the past few years and there has developed a great resistance to purchasing these display models. This is seriously affecting kit sales, our only business. Display models can only be hand-made and thus are labor intensive. A 16 x 20 inch picture can take 40 to 60 hours of stitching time. Therefore, no manufacturer has them made in the United States. Our display models are hand-made in Haiti where we pay a basic labor rate of around 70^ an hour. On top of this, we pay an average of 25 percent duty on this labor, and another 25 percent finishing costs to mount, mat and frame these models when they return to the United States. In the past five years we have had two Haitian labor increases, imposed by their government, in excess of 20 percent. We have done everything possible to negotiate the best price from our Haitian contractors and reduce our finishing costs in the United States.
Dimensions has always sold display models at a loss of around 20 percent just to get the placement in the retail store. We have even been giving the retailers a free kit with each model sale to entice the purchase of a display model. We are willing to continue these practices, but require still more help and ask that the proposed bill to suspend import duties be passed so that we can lower model costs and induce kit sales. We urge you to take into account the following considerations: 1) By taking these articles out of the textile tariff categories and suspending the duties, will the textile industry be affected? Yes, in a positive way. We will be able to increase kit sales, thus purchasing more textile products. 75 percent of our component costs is made up of yarn and woven fabrics. 2) Will we be affecting American jobs? Kit manufacturing involves a relatively large labor force. Increased kit sales will increase American jobs. 3) What effect will a duty suspension have on third world developing countries? More models would be purchased, increasing job opportunities for the Haitian labor force, which is now suffering from an 85 percent unemployment rate. It will also put the money directly into the Haitian people's hands. Isn't this the prime concern of the Administration's Caribbean Basin Initiative? 4) Are display models made in the United States? They are not and never will be made in the United States, because it is simply cost prohibitive. This is an unusual situation
where the greater the level of imports, the healthier our American industry becomes. They should therefore not be restricted with import duties. 5) In urging consideration, we have already experienced a declining model sales which has reduced Haitian employment. By the end of June, I fully expect to lay off two of my ten people in the United States because of declining model sales. The key point here is that we do not only want to increase our growth, but maintain what we have. In the interest of fair competition, I have excluded specific figures as they apply to Dimensions in this public testimony, but would be more than willing to provide them privately if necessary. I strongly urge full consideration and approval of the bill H.R. 6396. Respectfully submitted, David L. Page