Is it true that.........?

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Whitey1
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Is it true that.........?

Post by Whitey1 » Sun Jul 22, 2018 2:53 pm

Kayaks, canoes paddles etc will become subject to the EU retaliatory Trump tax. Rumours of kayaks costing £1600 and who knows what else? Could be good short term for the second hand boat sales but disastrous overall. Wavesport and Pyranha should do well locally but Dagger, Jackson, etc etc.

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Re: Is it true that.........?

Post by neonbowhawk » Sun Jul 22, 2018 3:10 pm

Are a lot of dagger boats not made in the uk anyway?

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Whitey1
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Re: Is it true that.........?

Post by Whitey1 » Sun Jul 22, 2018 3:52 pm

That's the point I'm making. Are Daggers and Jacksons brought in from America going to be subject to this tax? Wavesport and Pyranha of course are manufactured in the UK so won't be subject to a retaliatory tax. You make a good point though. Some Daggers are made in the UK under licence ( Mamba I guess) but others (inc Newmads I think) are made in the USA.

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Re: Is it true that.........?

Post by neonbowhawk » Sun Jul 22, 2018 5:21 pm

I think my Axiom was uk made. So my next set of werners might be higher tax as well i suppose?

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SimonMW
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Re: Is it true that.........?

Post by SimonMW » Tue Jul 24, 2018 9:04 am

The £1600 thing isn't a rumour. It's already happening AFAIK. I'm told by some industry insiders that some US kayaking firms have had European orders cancelled as a result of the tariff situation. This is not a good situation for such a small industry. All it will serve to do it move production outside the US, the exact opposite effect that Trump was aiming for. Although they total idiot will still claim that what he did was a success and created jobs, and his imbecilic followers will believe him.

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Re: Is it true that.........?

Post by Franky » Tue Jul 24, 2018 9:58 am

Presumably there will be an import tariff in the US, not just an export tariff. So I don't think the policy will move production outside the US - because nobody in the US will be able to afford kayaks made outside it.

What will happen is that kayaks will become restricted to their home markets. We'll all be buying Pyranhas, the Americans will be buying Jacksons and Daggers, the Europeans will buy Zets and Lettmans.

That's how trade wars work. Nobody really wins, least of all the consumer. A sad situation.

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Re: Is it true that.........?

Post by KaitsuH » Tue Jul 24, 2018 10:10 am

Pyranha, Zet, Lettman, Waka, Exo, Prijon, Kober, VE etc. I think we can live without US kayaking products pretty well.

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Re: Is it true that.........?

Post by SimonMW » Tue Jul 24, 2018 10:14 am

Pyranha, Zet, Lettman, Waka, Exo, Prijon, Kober, VE etc. I think we can live without US kayaking products pretty well.
So I don't think the policy will move production outside the US - because nobody in the US will be able to afford kayaks made outside it.
Franky, it already has meant this. Corran Addison has moved his production outside the US already, but he wrote a very long piece about how these new tariffs will affect his company even though he is based in Canada.
How does Trumps new tariff war affect you as a kayaker? Let's bring this reality home as things escalate.

Soul is a good example. We are a small company, trying to break into the global market. Compared to the big guys we’re a really small player, but we have an exciting lineup of boats and that lineup is growing.

Price of final product is affected by quantity of scale. If you manufacture 2000 units of a boat for example, your costs in making the mould is divided over 2000. If you make 200 units like we do, it's divided up over only 200pc. When you order 2000 “widgets” from your supplier as part of your internal fittings, you can pay half as much for them as someone ordering 200 of them. This reality is a constant no matter what tariffs are being applied. It just makes it harder for “the small guy” to produce the “same quality product for the same price” as the big guy. So far, we have been able to produce a superior (in my opinion) quality product, for the same price. It’s why “boutique” brands are often more expensive and often better quality - since they cannot manufacture the “same quality for the same price” they opt to make the product “better quality for a more expensive price” - after all, if you’re going to be 10% more expensive you might as well be 20% more and be a better product. So far, in kayaking, for the most part the boutique brands have been able to be within range of the mass produced ones when it comes to quality and price. Cool.

Enter the tariff war.

Soul makes the aluminum moulds in China. This is because the type of mould we make costs about 30% less than in the USA. When you’re selling 1/10th of the number of units, and want to come out with new models constantly, you have to find ways of getting these mould costs down. You can get moulds that are the same quality and price as USA made ones in china (you get what you pay for), but given our smaller numbers, we don’t need that. We’re willing to accept a mould which, while it will produce the same quality kayak as an expensive mould, simply won’t last as long. It's no big deal for us - we’re not trying to make 10,000 units over the lifetime of the model - 1000 is probably all we need and for this the moulds are perfectly good. This has allowed Soul to bring to market a wide range of boats in a short time. If you’re a fan of my designs, you’re stoked on that one. However, now there is a 35% import duty on moulds into the USA from China (aluminum and steel)…. putting the cost of making moulds (either USA made or imported) and then producing in the USA completely out of reach of a company like soul. We simply could not produce the variety of models that we do now. This was a major part in the decision by Soul to move our production out of the USA (I’m all ears about how this helps the USA economy).

The other alternative is to manufacture the boats offshore and import the finished kayaks to the USA. To make the kayaks to the same quality in China as in the USA or Europe, the cost is the same. There is no cost savings. Now tack on a 20% import tax into the USA of those boats… and suddenly our boats are priced out of the market. Remember, it already costs us more to make the boat as everything from the plastic, and parts to shipping costs us much more than the big guys because of quantity of scale. This makes it impossible to absorb the new tariffs. Prices have to go up, or our margins get so slim as to make the entire exercise pointless: we end up selling the kayak for the same price it costs to make it.

So whether someone like Soul makes our boats in the USA or offshore, we get stiffed by this, and the paddler gets stiffed too.

Now you could argue, that “this protects US manufacturers”. Well… to a degree yes, but is it better for the consumer? Remember Soul WAS producing in the USA, but the tariffs on aluminum and Steel make it impossible for us to make as many models as we want, AND the tariffs on the boats we export from the USA into the rest of the world prices us out of the market in areas that we depend on for survival. For the American paddler, the government is now deciding for you which boats you can and cannot buy and paddle, rather than you getting to decide. And most of the US manufacturers buy a significant amount of their accessories offshore, so their costs are going up too. Their prices might not initially go up as they absorb the initial price increases, but eventually they will. In the end, it’s the consumer thats going to pay for this.

Few of the USA manufacturers can survive without selling internationally, and they’re being hit with everything from 10% to 33% tariffs when they export, effectively pricing them out of the market when they export, also depriving people of those countries of the option to buy (at an affordable price) their preferred brand, and depriving the USA manufacturer of critical international sales.

As a kayaker, this tariff war is lose, lose and lose. There is no way, any paddler, in any way, can benefit from this. You’re either going to face increased prices on boats, reduced brands to choose from, or a reduction in the number of models available from the brands.

This is the reality of this new war from a paddlers (and paddling manufacturers) point of view. There is no winning - only losing for everyone.
The other thing that you seem to forget is that the US is a very important market to companies based outside the US such as Pyranha. WW kayak manufacturing is niche to begin with, with very low sales figures worldwide, so anything that reduces sales in any way shape or form is extremely detrimental. So I'm afraid it's rather simplistic to suggest that people will just buy kayaks made in their own countries, because those same companies absolutely depend on being able to make effective exports both outside of the US for US companies, and into the US for European countries.

Don't expect the sort of speed of development of Jackson kayaks or Liquid Logic if the only effective market that they have is their home US one. Plus thanks top tariffs on metal, the prices of those kayaks will go up anyway due to the cost of moulds etc.

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Re: Is it true that.........?

Post by waverley610 » Sat Aug 04, 2018 9:57 pm

Bad news of this story came my way today grrr

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Re: Is it true that.........?

Post by Whitey1 » Sun Aug 05, 2018 7:06 pm

waverley610 wrote:
Sat Aug 04, 2018 9:57 pm
Bad news of this story came my way today grrr
What happened?

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Re: Is it true that.........?

Post by Simon Westgarth » Wed Aug 08, 2018 7:35 am

It appears kayaks imported from the USA into the EU are subject to a new 25% tariff, as part of the on going tit for tat trade war. Those Dagger boats made in the UK are not affected by this unwelcome development. To my understanding possible solutions being consider are the borrowing of the moulding tool for a limited period of time.

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Re: Is it true that.........?

Post by Yew » Wed Aug 08, 2018 9:38 am

Simon Westgarth wrote:
Wed Aug 08, 2018 7:35 am
It appears kayaks imported from the USA into the EU are subject to a new 25% tariff, as part of the on going tit for tat trade war. Those Dagger boats made in the UK are not affected by this unwelcome development. To my understanding possible solutions being consider are the borrowing of the moulding tool for a limited period of time.
Whilst I can see this working for Dagger easily enough, Jackson and Liquid-logic may struggle somewhat

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Re: Is it true that.........?

Post by waverley610 » Wed Aug 08, 2018 9:09 pm

Whitey1 wrote:
Sun Aug 05, 2018 7:06 pm
What happened?
I'd demoed a Phantom and was blown away; went back a few weeks later for another demo only to be told they'd got rid of it as there was no point in carrying a boat that was unavailable for sale.

Then told of 25% tit for tat Trump tax as per Simon's post and that Dagger had no immediate plans to send another (i.e. a 2nd) shipment to the UK as who would want to pay an extra £250+ and where would the sellers mark up be made?

Now that is a real shame for any Phantom wanabees, I wasn't even in the market for a new boat but after that demo... boy I did want one, it was that good !

That's a clever work-around to lend the moulding tool to Dagger Europe but where's the demand going to come from if nobody else can try before they buy?

Would Werner paddles be classed as Marine also ?

Chas

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Re: Is it true that.........?

Post by ion » Thu Aug 09, 2018 3:29 am

Frankly, At 25% making duplicate tools to address the European market starts to sound cost effective.

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