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samael RichardCunningham's article
Aug 10, 2018 at 15:32
Aug 10, 2018
Industry Weighs in on the Latest Round of US Tariffs on Chinese Mountain Bike Imports
@tsheep: Yup, and with Yeti, you're paying a "name" premium too. Was the same with Intense before they changed their business model. Scale does matter though. GG is a small outfit that produces high end products in relatively limited numbers, being hand made, maybe a couple thousand a year. Specialised is one of the largest bike manufacturers in the world making bikes in all ranges and disciples from garbage bikes to ultra high end. They probably manufactures 100s of thousands of bikes per year, maybe millions. Giant's factory in Taiwan, which Trek uses, cranks out over 6 million bikes a year. Creating that kind of operation in the US would incur massive costs. It can't really be compared to the type of operation GG runs, it just doesn't scale. I'm not saying it can't be done and remain profitable, but profit margins would surely shrink, something large corporations typically frown upon. Now whether the tariffs or creating operations on US soil is more expensive is something only they can tell. My gut says they will leave it in China an raise the cost to match the tariff, which will ultimately be good for smaller companies, like GG, with the exception of the tariff Trump has placed on raw materials...that one will affect GG. One thing that is for sure, bike manufacturers using Chinese plant are all likely looking at their options and Giant is probably considering a plant expansion. :) Disclaimer: I haven't confirmed Specialised uses Chinese plants. I only picked them as an example of a large well known maker. They could be using Giant's plant in Taiwan, like Trek, and would be less affected.
samael RichardCunningham's article
Aug 10, 2018 at 12:39
Aug 10, 2018
Industry Weighs in on the Latest Round of US Tariffs on Chinese Mountain Bike Imports
@tsheep: I said, "generally", and I admit I didn't look that closely since most large companies are public...so my bad. Doesn't really change the dynamics though, rather than share-holders, they have to answer to a board of directors...6 of 1... I never said I was opposed to on-shoring, or that I agree with them off-shoring, where did I say that? I also never said that I wasn't willing to pay more, only pointing out the obvious, that if companies on-shore their manufacturing, it will cost more and that cost will be passed to the consumers, so, typically companies look for the cheapest options. Off-shoring makes sense from a business perspective. You're putting words in my mouth. Manufacturing always comes at a cost of pollution and while China is worse, to be sure, on-shoring it in the US will increase pollution on this side of the pond as well. Just to be sure, you do know that the US and Canada share the largest boarder in the world right? There's not some magic barrier that keeps all our pollution out the US and vice versa. An increase in pollution there affects us as well. I may not be American, but I'm also not an idiot and realise, decisions made by major trade partners, like the US, or even the EU tend to affect Canada, so I make it a habit to stay informed when it comes to things such as trade and copyright. I don't have a political point of view, I don't care who's in power as I consider all politicians to be inherently corrupt, and am not trying to score brownie points anywhere. I care about trade and copyright and tend follow those topics closely. I used to actually buy lots from the US, but much of what Trump is proposing and doing makes makes less and less feasible and that hurts American retailers, not me. I buy way more local or from CRC than I do from Jensen or Pricepoint now.
Aug 9, 2018 at 15:27
Aug 9, 2018
samael RichardCunningham's article
Aug 9, 2018 at 14:42
Aug 9, 2018
Industry Weighs in on the Latest Round of US Tariffs on Chinese Mountain Bike Imports
@sherbet: Trek only makes the carbon fiber frames in the US, well, most of them, everything else, which would make up the bulk of their sales and profit, is made in Asia. Still though, it's impressive they bother to keep it in the US at all when they could improve their profit without sacrificing quality by moving it to Taiwan. So, hat's off to Trek. :)
samael RichardCunningham's article
Aug 9, 2018 at 13:33
Aug 9, 2018
Industry Weighs in on the Latest Round of US Tariffs on Chinese Mountain Bike Imports
@sherbet: My apologies...I apparently misunderstood your comment. I totally agree with you and think that tariffs hurt pretty much everyone except those at the top. I read it to mean that you were saying large scale US based manufacturing could be competitive with overseas. Small scale, such as GG can compete with foreign build prices, but I don't think large scale could compete. Where do we do differ though, is that I do think the US and Canadian markets, other than in some niche areas, have become primarily consumer economies.
samael RichardCunningham's article
Aug 9, 2018 at 13:10
Aug 9, 2018
Industry Weighs in on the Latest Round of US Tariffs on Chinese Mountain Bike Imports
@tsheep: I'm not saying it's ideal, but these companies are generally publicly owned and have to do what their shareholders say and that will typically be what makes them the most money. Moving operations to the US and doing their own manufacturing will not improve profit margins. Shareholders are concerned about the profit margin, with moving operations to US, the only way to protect that profit margin is to pass it on to the consumer. I'm sure Donald Trump has pollution and runaway greenhouse gasses in mind. LOL
samael RichardCunningham's article
Aug 9, 2018 at 12:00
Aug 9, 2018
Industry Weighs in on the Latest Round of US Tariffs on Chinese Mountain Bike Imports
@sbrdude1: You have to look at the bigger picture. The US represents only 14% of Chinese export trade, much of which are manufactured goods that can't be gotten elsewhere, so the US will still buy them with the inflated prices (And pass the losses on to the consumers), where China represents 16% of US export trade, much of which will be food (America's last great export), but food can be gotten from other global markets. That said, nearly 50% of US exports go to only 3 countries, all of which Trump has picked a fight with (China, Canada, Mexico). China's trade portfolio, while the US may be their largest single partner, is far more diverse with, understandably, over 50% of their trade being with other Asian countries. The way I see it, China has a better hand here and will not fold. China simply has more options and more avenues to absorb some of the trade loss with the US.
samael RichardCunningham's article
Aug 9, 2018 at 10:51
Aug 9, 2018
Industry Weighs in on the Latest Round of US Tariffs on Chinese Mountain Bike Imports
@sbrdude1: To think China will submit to these bullying tactics is both stupid and arrogant. Submitting would bring shame and dishonor upon them, concepts important in their culture. They will continue to match tariffs dollar for dollar, or compensate for losses with either their own tariffs on US goods, by devaluing their currency, or finding other trade partners for goods they were getting from the US. Their economy is also larger than the US and while they are each-other's largest trading partners, China's national debt is near a 5th of what the US is ($4.3T vs $21T), so they have far more capacity to absorb any losses caused by these tariffs. China's economy is also built on manufacturing and exports, giving them more flexibility than the US, which typically imports far more than it exports. As for US based companies that use Chinese facilities, most will stay put, some may move out of China, most of those to another cheap labor market not affected by these tariffs, but few will move to US soil. In all scenarios, the cost WILL be passed to the consumer.
samael RichardCunningham's article
Aug 9, 2018 at 9:47
Aug 9, 2018
Industry Weighs in on the Latest Round of US Tariffs on Chinese Mountain Bike Imports
But it won't be 450 billion dollars of additional tax revenue since China has vowed to match US tariffs dollar for dollar. So, it'll be, more or less, a net wash since while the US will be taxing more, they will also be paying more. Like you say, this benefits only top tier income brackets in the US while many things, including bikes, will become more expensive for consumers.
samael RichardCunningham's article
Aug 9, 2018 at 9:27
Aug 9, 2018
Industry Weighs in on the Latest Round of US Tariffs on Chinese Mountain Bike Imports
@MikeGruhler: Process automation, industrial instrumentation, robots and their programming are typically more white collar jobs that requires years of expensive schooling. This is more than simple retooling and not a feasible option for many. I'll give you installation and maintenance though. Automation doesn't help Joe Blue line worker much more than having the operation overseas. Their job is replaced by either robots or cheap foreign labor. They need to retool and need new avenues for their skills, but for the government to try and force the global market like this and getting in to a pissing match with their largest trading partners (China, Canada, Mexico), can only cause more harm than good. They might be able to bully Canada and Mexico, to an extent, but to think they can bully China is just arrogant and stupid.
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