The following are specific examples of recent hardships that current U.S. energy policies have caused for the mattress industry:

• To remain globally competitive, the mattress industry manages inventories closely, operating on a “just-in-time” basis.  For the above reasons, U.S. petrochemical capacity has become heavily concentrated in the Gulf states, primarily Louisiana and Texas.  The hurricanes last fall damaged many of these plants, disrupting supplies of materials critical to flexible foam production.  The mattress industry suffered several months of serious foam shortages.  Even when operations were restored, storm-related railway delays prolonged the supply shortages and the prices for these inputs when available skyrocketed by up to 60%.  When foam producers could not make and ship foam, mattress producers had two choices: curtail production until supplies resumed or look elsewhere for foam or substitute materials. 
• Since the Gulf storms, the foam industry lost tremendous short-term sales volume and continues to suffer.  Post Katrina, the mattress industry’s demand for U.S.-produced foam has fallen between 10-15% as a direct result of the chemical shortages and price increases.  Customers are either purchasing some of their requirements from abroad (Mexico, South America, Europe and Asia) or are using substitute materials (such as polyester fiber padding). 
• Demand for U.S.-produced foam will not quickly return to pre-Katrina levels for several reasons:

1. New safety standards require mattress producers to test new product prototypes when they substitute one category of material for another.Some mattress producers that substituted fiber pads for foam have resisted changing back to foam unless the relative prices for foam and fiber change substantially or other factors warrant the trouble of re-qualifying the foam material.

2. Forcing mattress producers to go abroad for their foam requirements has opened new commercial relationships for foreign-produced foam that did not exist pre-Katrina.As a result, the terms of competition have changed.

3. The cost of U.S.-produced petrochemicals remains substantially higher than the cost of identical materials in the world market due to the lack of available and affordable feedstock.As a result, U.S. foam producers compete from a substantial cost disadvantage vis-à-vis their foreign competitors.

• The foam crisis has been the last straw for several U.S. foam producers.  Post Katrina, four U.S. foam plants have been shuttered, with two others in jeopardy.  These employers provided jobs to approximately 600 U.S. workers. 
• The foam shortage has also hurt mattress producers.  In the short term, mattress producers lost sales because they could not buy the inputs they needed.  Many were forced to reduce production hours (which cut their employees’ pay) because they could not acquire enough foam to run their plants. 
• This was especially unfortunate because demand for mattresses had been strong through the third quarter of 2005, with output from January to September up by nearly 9% over the preceding year.  For the fourth quarter of the year, however, a number of publicly-traded mattress producers (and furniture companies, which also use similar types of flexible foam) reported poorer financial results, citing the foam crisis as a significant cause.  This fact is also reflected in industry data, showing that mattress shipments in December 2005 actually fell by nearly 2% compared to 2004, when the earlier months of the year had been so promising.
• Like the continuing cost advantage foreign foam producers enjoy over their U.S. competitors because petrochemicals are much cheaper and more accessible overseas, the foam situation will cause long-term problems for U.S. mattress producers unless immediate action is taken to allow for more exploration and distribution.  Foreign mattress producers can buy cheaper foam than U.S. producers, and thus can sell finished mattresses in this country at lower prices.  Like the foam producers that were forced out of business as a direct result of the foam crisis, U.S. mattress producers are also at risk and a number of them have closed since Katrina.

Much of this hardship is a direct result of outdated or misguided U.S. energy policies.  Congress must enact legislation that will help increase and diversify the types of energy available to U.S. manufacturers.  Immediate action is also needed to stabilize supplies of natural gas because of its dual role as fuel and a basic building block for many consumer products, including mattresses.

Otherwise, the downward spiral of lost business and plant closures that the Gulf storms accelerated will continue.  It is time for U.S. policies to stop outsourcing U.S. jobs, plants and profits to our foreign competitors, and for Congress to implement sensible policies that will help at least the remaining manufacturers compete on a more level playing field.