|Caskets--where China has made limited inroads into the US market.|
By importing from China, [Las Vegas-based entrepreneur Jim] Malamas has followed a well-worn outsourcing playbook that’s upended markets for American-made goods from electronics to bedroom furniture. Working with four factories outside Shanghai, he imports 40-foot containers holding 64 caskets apiece and sells them to funeral homes and regional distributors for a fraction of the price. There is plenty of potential: In the U.S., caskets are a $1.6 billion business.The Big Three of US-made coffins--Hillenbrand, Matthews and Aurora AKA "Big Casket"--have done their dardnest to frustrate the entry of China-made coffins:
[But] Chinese casket imports haven’t gone as planned—for Malamas or anyone else. His revenue has stumbled. Where almost every other American manufacturer has failed to keep Chinese exports at bay, the casket industry has succeeded. Through aggressive litigation against importers, xenophobic admonitions to consumers, and good old-fashioned palm-greasing of funeral directors, Big Casket has made sure that 9 out of 10 Americans go into the ground in boxes made in the USA.
“The funeral industry has had a goddamn easy ride for the last 150 years,” says Joshua Slocum, the co-author of Final Rights: Reclaiming the American Way of Death and executive director of the Funeral Consumers Alliance, a Vermont nonprofit. “Why aren’t as many caskets imported as Chinese dishware? It defies all known rules of supply and demand.”
To keep business, Big Three reps visit homes, meet families, and buy steak dinners. Funeral directors are often induced to sign nondisclosure agreements in exchange for discounts and goodies, such as the installation of casket showrooms.Efforts to put Jim Malamas have included (bogus) mounting legal cases against him:
Some funeral directors feel a patriotic duty to stick with the Big Three, analysts say. The industry still supports more than 3,300 U.S. workers, according to IBISWorld, an Australian market-research company. But protectionist instincts have their limits. Isard of Foresight Cos. tells the story of a funeral home client in North Carolina. A community built on manufacturing hardwood furniture, the area had itself been devastated by Chinese imports and was struggling with a 12 percent unemployment rate. Isard’s client began carrying Chinese caskets, displaying them on the left of its showroom, with American models on the right. The former were a third to half the price. After six months, 70 percent of families were choosing imported. “When given the choice, it’s just a box with a quilt,” Isard says.
When Malamas entered the market, Big Casket moved quickly to defend its turf. In 2006 a Matthews subsidiary filed suit, alleging that ACE and its Chinese supplier were copying its designs. Matthews also sent letters to funeral homes and distributors, threatening to sue if they continued to buy from Malamas.
As the litigation dragged on, early customers bailed. Malamas had $2 million in legal fees. A judge almost detained him in Texas. Malamas says financial worries led his wife to divorce him.
“It was a nonsense lawsuit,” says Isard, who’s interviewed Malamas on his podcast at FuneralRadio.com. “But it slowed him down. The Big Three made their money back on legal fees many times over,” he says, by keeping in the fold funeral home clients who might have switched to Chinese caskets.Apparently, the playing field is not yet level in all manufacturing industries in 2015.