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If you're going to jump into bed with the Chinese to produce wood or laminate flooring, make sure you've got a spy in place to check what they're doing.
I hate to be the one that said, ‘I told you so,’ but I really did. The Chinese have been up to no good again, but his time with our American friends in the lumber business. The one billion dollar a year Nasdaq listed wooden floor company ‘Lumber Liquidators’ saw its stock fall by a dramatic 43% over the past week after a CBS news report claimed that the company had been selling wooden flooring with ‘higher levels of formaldehyde (a cancer causing chemical) than permitted under California health and safety standards’. So what did Lumber Liquidators have to say? They released a press statement claiming that a group of investors had been short selling the stock in order to lower its price. If that’s true, then it’s a dirty trick, and I certainly wouldn’t put anything past the American Hedge Fund corporate hooligans. But if it’s not true, and the company have been involved in a health and safety scandal, then the seven bells of hell will be ringing around their ears until the real liquidators turn up to retire them from the lumber business forever.
But why didn’t they just follow the traditional American route and offer a fake apology like –
‘We had no idea this was going on, and ask the American people, and God, for forgiveness. At this time we are doing everything we can with our Chinese partners to rectify the situation.’ Or they could follow the other traditional American route and just send in an F16 to bomb the hell out of the factory. It’s what the Americans do best, after all.
So, what is formaldehyde? Well, formaldehyde is a colourless chemical used in things like particleboard and glues to name but a few, and if you’ve never smelt it, take it from me, it stinks to high heaven.
But is it dangerous, or are the Americans just being over-sensitive? As far as I can tell, it’s an irritant, and may cause you to suffer from a sore throat, cough or even nose bleeds. However, there are also suggestions of links to cancer. So obviously our American friends don’t want to hear about products being made using high levels of the stuff.
As I’ve said before, the lumber business can be a dirty business when it comes to illegal logging, but not nearly as dirty as selling dodgy laminate/wooden flooring to an unsuspecting public. I don’t know if using formaldehyde is a cheaper way of producing laminate flooring, or if the Chinese just want to poison the Americans, slowly. Or maybe the Americans want to make it look like the Chinese want to poison them, slowly? But it’s unlikely.
Whichever way, if you’re a company as big as Lumber Liquidators, then corporate governance in your house is crucial, especially if you’re going to jump into bed on such a big scale with the Chinese. So, whatever your theory, we know one thing’s for certain.