China & Tariffs

I just used Spyderco as an example. I understand your reasoning. We also don’t know how other knife companies will handle this increase.
 
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I'm not 100% on this, but I've been informed about certain tariffs in the past (NAFTA stuff) where different things had different tariffs related to its current state. So lets say "parts" were valued at dealer wholesale, completed units were at MSRP, used units were at "market value" etc, all the same stuff. I even heard of one supplier who had two sets of Cat. numbers for every part as under that system anything that was also sold to the US military could not be shipped over the border to Canada, so hydraulic fittings that just happen to fit the same mower that the local base bought could no longer be legally shipped once they were part of the supply chain.... I honestly don't know how big a deal this is going to make, historically higher tariffs have been applied on paper, and by the time its all said and done, no one noticed. Or at least, no consumer noticed, I'm sure they caused a bit of high blood pressure and lost sleep higher up the food chain.
 
It had to happen eventually. I'm in a job shop machine shop. We make parts for aircraft and the military so we can't use Chinese materials. But we are seeing shortages and backlogs of some materials because of more people buying U.S. made metals now.
 
I have gifted a few Chinese Spyderco and sharpened a buddy’s Tenacious. I have never owned one myself and have only violated an unofficial personal rule twice, once for the first run Megalodon and again to check out a Chinese Ferrum Forge.
I think it’s huge to see a blister packed tenacious sitting in a display case in every Walmart but I’m not sure how competitive they will be after a 25% increase. I imagine KAI and other manufacturers will have the same problem. So maybe the days of a $35-40 tenacious or Kershaw will be a thing if the past.
If this affects Taiwan knives I would probably buy significantly fewer knives. This would likely be a combination of price increase and also due to the kind of new designs that come out of Taiwan. I know that I will pick up another sprint Manix or Millie, but maybe not the next compression flipper.
 
Sal Glesser said:
As many of you know (or should now) that there are tariffs being created for many products made in China, as well as other countries. You also know that we make a number of products in China, including knives and sharpening parts. We're already experiencing these tariffs on some of the steels we import. Eventually we are going to be hit with up to 25% in tariffs for our Chinese made models. Naturally we will have to pass on those costs. I would like to know your thoughts on this?

sal
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Again Sal thank you for asking for our opinions. You make great tools but it’s stuff like this that adds a huge amount of value to your brand.
 
Not sure how this would work based on machining available in different facilities, or distribution demand to other countries, but what I've seen from limited research into the pharma industry for college is that they will setup facilities in each country to avoid regulation fees. I think the regulation costs would almost be similar to tariffs in that there's a huge cost of inspection crossing borders, generally. There's also a large up-charge to get approval into places like the US and Europe where regulation is high so running operations in less regulated nations allows them to trouble shoot the manufacturing process before bringing operations state-side, pending FDA approval.

This to say, running the Asian operations to supply Asian demand might be an interesting consideration if you're able to make such a wide range of products within the different facilities. This goes against the grain of mass production where huge numbers of similar items are made instead of smaller amounts of different things in a more agile operational layout, something we struggle with a lot in the food industry as standardization can be very tough. Change-overs is a huge point of emphasis for manufacturing performance, but making sure that happens correctly is part of the challenge I get to enjoy in QA/food safety.

I'm not sure how that is in the knife world but I know with many of the consumer packaged goods coming from overseas, you might run the same product for days, weeks, or months instead of a couple hours. Shelf-life being the other complication we deal with as building up stock can easily lead to waste.

I'll be interested to see how your company gets things working, along with other places, as I know I've had the luxury the past couple years to be more selective on what I purchase instead of having a very minimal budget shortly after college and inexpensive was the name of the game for most things.
 
Tariffs do not level any imaginary playing field. They only hurt the manufacturer and end users wallet. Free trade is the answer. Free trade has always been the answer.
 
Boxer .45 said:
Please explain how? If the competition goes up the same amount how is $12 ($62 instead of $50 for example) going to sour someone that doesn't follow higher end knives? Are they suddenly going to buy a different brand that has also gone up 25% or instead cut quality substantially to make up for the 25%?
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Any time a price increase (without any change to the product) will sour at least some customers. However, they may get used to it as time goes and/or as they see other similar products also have a price increase, which you pointed out. It is also a very possibility that 25% price increase will push some customers away to lesser/cheaper products.

To Sal, I think how competitors work this out is more important than how the people on these forums feel about a price increase although I do appreciate the owner takes his time to ask for our opinions. If there is, say, a 25% increase of prices by all other competitors for knives made in China, then it is safe for Spyderco to do the same. The more likelihood, however, will be some manufacturers increase 18%, some 23%, and some 28%, etc. Therefore, Spyderco will have to work out the actual % of price increase.
 
Would the 25% increase be only applied to the portion of a knife's production costs associated with acquisition of affected raw materials, or would that be a 25% increase in MSRP/MAP?

There would be a big difference between those things. If as Sal Glesser Sal Glesser said a high-end steel could account for 25% of the cost of a knife, then it's the difference between a 6.25% net price increase and a 25% net price increase.

I think relatively few of us here are in the primary market for the Chinese Spyderco lines. I think a lot of goodwill could be generated if the prices were increased (and maybe production reduced) on the Chinese knives to account for the tariffs, and the the prices reduced should the tariffs be discontinued.
 
Boxer .45 said:
Sal didn't clarify if it was a 25% increase to manufactured cost or final MSRP. I was assuming he meant on the MSRP. He said "as much as 25% on expensive steels".

He brought it up for an open discussion with Spyderco owners (which he didn't have to do [how many others do you see doing it]). I actually appreciate the candid and general transparency of it myself.
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You're right it's very honest and open of Sal to ask. I'm a little dyslexic so if the tone of what I wrote sounds condemning I apologise. My whole point of my post was that I felt people would be more able to except a small increase at MSRP, then a full 25% increase at MRSP.

I like all knives but Spyderco is my fav brand. And I love seeing people get excited about their Spydercos. I gave a Tenacious to my Father as a work knife and he loves it.
So bad news about a price increase like this just worries me a little bit.

I havn't been into knives as long as many of you here. I just remember being new and looking at two knives and not really understanding why one costs double then the other. So price to me was very important, as if one looked cool and was $10 cheaper that's the one I bought.

I think the internet has made people more thrifty then ever. I've seen people go to great lentghs to save a buck.
 
tsiloics said:
My interest in Spyderco is primarily focused on US-made knives. I'd generally be happy to pay more for them, and would have no problem at all with Spyderco moving these products up-market.

If you're talking about paying $38 instead of $30 for a Double Stuff, NBD.
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This is pretty much were I am at.
 
So part two of this discussion should hinge on what knife steels are available in the US without a tariff.

Sounds like some of the real favorite exotics have to be imported?
 
the underhanded way to it is to import chinese-mades through a country with lower tariffs and then buy them from that country, but I guess the US is too smart for that. Another is to load up before the tariffs take force. overall, this sort of thing is always a risk if manufacturing is done away from the demand center.
 
Sal Glesser said:
As many of you know (or should now) that there are tariffs being created for many products made in China, as well as other countries. You also know that we make a number of products in China, including knives and sharpening parts. We're already experiencing these tariffs on some of the steels we import. Eventually we are going to be hit with up to 25% in tariffs for our Chinese made models. Naturally we will have to pass on those costs. I would like to know your thoughts on this?

sal
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Do the tariffs apply to Taiwan the same? If not, then hopefully the Taiwan plant can go into mass production overdrive and circumvent the tariffs and produce knives that carry less stigma than those made in china while costing about the same in the end.
 
Don W said:
Tariffs do not level any imaginary playing field. They only hurt the manufacturer and end users wallet. Free trade is the answer. Free trade has always been the answer.
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So you like the chinese government subsidizing the companies that dump products into America at a loss in order to put American companies out of business?
 
Sal Glesser Sal Glesser

How do the free trade zones work in this regard? How hard would it be for them to relocate to a free trade zone where the tariffs on China don't apply?
 
Someone1 said:
So you like the chinese government subsidizing the companies that dump products into America at a loss in order to put American companies out of business?
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That is a ridiculous assumption.
 
Don W said:
That is a ridiculous assumption.
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No it’s not. Exactly right. It’s not a “free market” when the government subsidies manufacturers, artificially control they money value/exchanges etc and etc.
I spent the last 10 years of my career traveling to and dealing with manufacturing there.
It’s not just the USA this affects but globally. I’m going to stop there before it crosses lines on what can be discussed.
 
Don W said:
That is a ridiculous assumption.
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Trade without rules leads to monopoly and predatory practices. I'm an advocate of a lot of libertarian ideas but there are a lot of libertarian ideas that only work when everyone is good and moral. Unrestricted and totally free trade is one of those things. These tariffs are meant to put a stop to predatory practices of China and other countries. I support them. If China and the companies in China weren't predatory to their own people and the world, really, then I'd say the tariffs are overkill.

Honestly i believe we should go back to funding the federal government totally on tariffs and corporate taxes and remove any income taxes for individuals. Or at least a low, maybe 3%, flat tax for individuals, capped by a constitutional amendment. In order to do that all products crossing the US border would need to have tariffs levied on them.
 
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