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Bummer EH?

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Posted by selector on Thursday, August 08, 2019 6:12 PM

Doughless

 

 

The devaluation of the yuan in response to US tariffs causes a lower inflation rate for the USA and the rest of the world.  In China, their people experience a higher inflation rate.  I think that's the effect.

 

And, unless the Chinese economy is willing to charge less, it means Chinese earning X Renminbi per hour won't be able to purchase as much in their local economy. They'll need a wage increase, or prices reduced, or subsidies (AKA tariffs of their own, including on what the USA exports to them...)

Nobody wins.

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Posted by NittanyLion on Tuesday, August 13, 2019 4:37 PM

Doughless

 

 
SpringStreet

 

 In practice, importers might or might pass the currency savings along to retail customers. In the opening example, BLI could undo some of the pending price increase in light of the Chinese currency devaluation. Or it could keep the new, higher price based on the tariff (since customers have heard about that and expect an increase), and pocket the compensating savings due to the devaluation (since perhaps fewer people have heard of, or understand, that change).Time will tell....

 

 

 

Which is something that struck me when reading BL1s message.  I don't know their situation, but part of me was wondering if they simply are not just choosing to increase prices to see what the market will bear in traditional fashion and it's not really totally tariff related.

 

Apparently it was totally tariff related, in BLI's case:

Today, August 13, 2019, the USTR (Office of the United States Trade Representative) announced that toys, including model trains, are on List 4B. This means that Broadway Limited Imports' products will not be tariffed on September 1, as originally announced. Since we will not be incurring immediate additional costs of import, products will revert to their original pricing.
Items on list 4B are to be tariffed effective December 15, 2019, according to USTR. As this date draws closer, we will be in contact regarding any products that may incur the tariff at that time.
We at Broadway Limited Imports apologize for the confusion and inconvenience caused by these evolving measures. We know it is frustrating. Thank you for your continued support!
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Posted by Steven Otte on Wednesday, August 14, 2019 8:54 AM

As the issue of tariffs is inextricably related to trade policy, admins will be closely monitoring this thread. Keep discussion to the effect tariffs will or might have on model railroading, and we're all good. Resist the urge to stray into discussion of government policy, or the thread may have to be locked. Thank you. - Mgmt.

--
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sotte@kalmbach.com

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Posted by wjstix on Wednesday, August 14, 2019 9:03 AM

NittanyLion
Apparently it was totally tariff related, in BLI's case: Today, August 13, 2019, the USTR (Office of the United States Trade Representative) announced that toys, including model trains, are on List 4B. This means that Broadway Limited Imports' products will not be tariffed on September 1, as originally announced. Since we will not be incurring immediate additional costs of import, products will revert to their original pricing. Items on list 4B are to be tariffed effective December 15, 2019, according to USTR. As this date draws closer, we will be in contact regarding any products that may incur the tariff at that time.

My understanding is that a number of large retailers pressured the administration to at least postpone tariffs long enough that it wouldn't affect the 2019 Christmas buying season, which for many retailers is the difference between making a profit or not.

Stix
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Posted by MisterBeasley on Wednesday, August 14, 2019 9:58 AM

I hope this doesn't lead to a repeat of the Atlas track shortage debacle.

It takes an iron man to play with a toy iron horse. 

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Posted by NittanyLion on Wednesday, August 14, 2019 10:08 AM

wjstix

 

 
NittanyLion
Apparently it was totally tariff related, in BLI's case: Today, August 13, 2019, the USTR (Office of the United States Trade Representative) announced that toys, including model trains, are on List 4B. This means that Broadway Limited Imports' products will not be tariffed on September 1, as originally announced. Since we will not be incurring immediate additional costs of import, products will revert to their original pricing. Items on list 4B are to be tariffed effective December 15, 2019, according to USTR. As this date draws closer, we will be in contact regarding any products that may incur the tariff at that time.

 

My understanding is that a number of large retailers pressured the administration to at least postpone tariffs long enough that it wouldn't affect the 2019 Christmas buying season, which for many retailers is the difference between making a profit or not.

 

Yeah, that's why you've got that 12/15 date in there.  Anything arriving after that point, more or less, isn't going to be around at Christmas anyhow.  When I worked retail (in the last decade), our Christmas stock started arriving in the first half of September.  Given that the tariff impacts start on the 1st....

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Posted by Doughless on Wednesday, August 14, 2019 11:10 AM

NittanyLion

 

 
wjstix

 

 
NittanyLion
Apparently it was totally tariff related, in BLI's case: Today, August 13, 2019, the USTR (Office of the United States Trade Representative) announced that toys, including model trains, are on List 4B. This means that Broadway Limited Imports' products will not be tariffed on September 1, as originally announced. Since we will not be incurring immediate additional costs of import, products will revert to their original pricing. Items on list 4B are to be tariffed effective December 15, 2019, according to USTR. As this date draws closer, we will be in contact regarding any products that may incur the tariff at that time.

 

My understanding is that a number of large retailers pressured the administration to at least postpone tariffs long enough that it wouldn't affect the 2019 Christmas buying season, which for many retailers is the difference between making a profit or not.

 

 

 

Yeah, that's why you've got that 12/15 date in there.  Anything arriving after that point, more or less, isn't going to be around at Christmas anyhow.  When I worked retail (in the last decade), our Christmas stock started arriving in the first half of September.  Given that the tariff impacts start on the 1st....

 

I think the whole message of this thread is to wait and see what actually happens.  Things have a way of not having the impact the experts think they should, so I wouldn't be concerned about having to possibly spend 10% for trains a few months from now.

Besides, the model train industry began to bring us highly detailed high fidelity models back when they moved production to China decades ago, something we wouldn't have enjoyed if production didn't move.

I can't imagine what prices would be for the same models if production stayed domestic.  In terms of labor expense, relocating production was tremendously deflationary for companies' labor costs, allowing them the money for R&D of new models and the application of details under the same MSRP. 

Having to now pay an additional 10% seems long overdue, IMO.  And it won't impact what I'll buy or the timing of when I buy.

- Douglas

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Posted by MisterBeasley on Wednesday, August 14, 2019 11:13 AM

We have been lucky to have low train prices for a decade or more, as US manufacturers moved production to Asia.  It's caught up to us.

It takes an iron man to play with a toy iron horse. 

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Posted by riogrande5761 on Wednesday, August 14, 2019 11:21 AM

MisterBeasley

We have been lucky to have low train prices for a decade or more, as US manufacturers moved production to Asia.  It's caught up to us.

Manufacturing has moved around asia for quite some time, from Japan, to South Korea to China.

LOL, prices have been catching up to us for the past decade or more.  Freight cars routinely go for $45 to 55+ or even pushing $100 (Genesis light equipped cabooses and IMRC auto racks), while salaries have stagnated and only recently have begun to creep up a bit.

 

 

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Posted by IRONROOSTER on Wednesday, August 14, 2019 12:54 PM

ATLANTIC CENTRAL

I have most of the expensive stuff I need or want.........

Like Tom, I will evaluate costs when it is time to purchase something.

Interesting sidebar, as originally written, the US Constitution only allowed the central goverment two forms of taxation, tariffs and duties - one in the same really, OR a direct apportioned tax, which works like this - there are one thousand citizens, the government has a budget that requires $10,000, each citizen pays $10.

Sheldon

 

Actually, if you look at Article 1, Section 2, Clause 3, you'll see that the apportionment applies to the states according to their population as defined below.

"Representatives and direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers, which shall be determined by adding to the whole Number of free Persons, including those bound to Service for a Term of Years, and excluding Indians not taxed, three fifths of all other Persons."

In any event this was changed by the 16th Amendment.

In the long run tariffs mean that we pay more. 

Like others have mentioned, I already have most of what I need which is fortunate since most of my S scale stuff was made in China.

Paul

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Posted by York1 on Wednesday, August 14, 2019 1:01 PM

My friend is a commercial graphic artist.  He has been swamped with businesses that are changing labels.

His most common is changing "Made in China" to "Made in Vietnam".

John

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Posted by riogrande5761 on Wednesday, August 14, 2019 2:00 PM

York1

My friend is a commercial graphic artist.  He has been swamped with businesses that are changing labels.

His most common is changing "Made in China" to "Made in Vietnam". 

Yeah.  I've read recently that companies that make other products have been moving out of China leaving some empty factories.  I'd have to think if that trend continues, ...

Rio Grande.  The Action Road  - Focus 1977-1983

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Posted by SeeYou190 on Wednesday, August 14, 2019 4:24 PM

York1
His most common is changing "Made in China" to "Made in Vietnam".

.

We remodeled our youngest daughter's bedroom when she started high school, and I was amazed that all her new furniture was made in Vietnam.

.

During the kitchen remodel there were options we looked at that were made in Vietnam.

.

Some parts for engines are showing up that are made there also.

.

Things are changing in Asia.

.

-Kevin

.

Wink Happily modeling my STRATTON & GILLETTE RAILROAD. A Class A line located in a personal fantasy world of semi-plausible nonsense on Tuesday, August 3rd, 1954.

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Posted by BATMAN on Wednesday, August 14, 2019 5:27 PM

SeeYou190
Things are changing in Asia.

Not just Asia, but Africa as well. In the mid nineteen-eighties the G7 leaders realized that shoveling billions of dollars to third world countries year after year in food aid was not the way to go and decided that floating all boats was better for everyone. Here are the leaders that worked hard and got the ball rolling on the plan that would take a couple of generations to come to fruition. Who knows what was discussed at the last G7 summit, anyone?

 

Core G7 members (1988)
Host state and leader are shown in bold text.MemberRepresented byTitle

CanadaCanadaBrian MulroneyPrime Minister

FranceFranceFrançois MitterrandPresident

West GermanyWest GermanyHelmut KohlChancellor

ItalyItalyCiriaco De MitaPrime Minister

 

 

JapanJapanNoboru TakeshitaPrime Minister

United KingdomUnited KingdomMargaret ThatcherPrime Minister

United StatesUnited StatesRonald ReaganPresident

European UnionEuropean CommunityJacques DelorsCommission PresidentHelmut KohlCouncil President

 

Brent

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Posted by Eilif on Wednesday, August 14, 2019 7:37 PM

Production is certainly not coming back to the states in great amounts, but has anyone heard any rumblings about production moving to other countries like Vietnam, Indonesia, etc?

China has a very good infrastructure in place but many other precision products are coming out of other asian countries.   As a bassist, I companies like Lakland, Peavey and Ibanez making some surprisingly high-end instruments in Indonesia.

I don't buy many new trains and I'm not in the high-end train market so I don't see the tarrifs affecting me much but it's an interesting situation to watch.

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Posted by azrail on Thursday, August 15, 2019 2:52 PM

The major camera makers..Nikon, Canon...source a number of their components from Vietnam. And all of the JTT scenic details come from Vietnam. Expect a lot of Chinese production to go to SE Asia if things heat up more.

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Posted by SeeYou190 on Thursday, August 15, 2019 2:59 PM

Eilif
As a bassist, I companies like Lakland, Peavey and Ibanez making some surprisingly high-end instruments in Indonesia.

.

My favorite guitar is an asian made Stratocaster. It sounds much better than my USA version. It is also finished much better, for 1/3 the price.

.

-Kevin

.

Wink Happily modeling my STRATTON & GILLETTE RAILROAD. A Class A line located in a personal fantasy world of semi-plausible nonsense on Tuesday, August 3rd, 1954.

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Posted by Eilif on Thursday, August 15, 2019 3:17 PM

azrail

 Expect a lot of Chinese production to go to SE Asia if things heat up more. 

That is my expectation as well. However, I'm not an expert in these things and  I don't know how deep the extenuating circumstances go.  Stuff like..

-Chinese companies not being able to move companies.  Kader, etc...

-Chinese subcontractors owning the tooling.

-Inability of smaller train companies to find suitable makers. 

As mentioned, my limited experience is with instruments and there, you had large companies with massive experience, setting up their own factories.  

As an example: Cor-Tek (Cort instruments, etc) made alot of instruments for many companies in their Korean factory.  As cost of production went up, they opened factories in Indonesia and China.  They had the the expertiese for this and presumeably they were even able to move some tooling.  They still make "Premium" and domestic instruments in Korea, but their (and many other companies) lower and middle quality instruments are being made in China and Indonesia.  Could this be a model for Chinese companies?  I'm not sure who has the werewithal to relocate to a new country. 

If it did happen, it could have some long-term positive effect on prices, but there would still be:

-The need to keep production going in China for now with the accompanying higher prices.

-Lower investment in US facilities and US employees (fewer hirings, raises, bonuses, etc) as the resources are redirected toward new facilities. 

 

 

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Posted by IRONROOSTER on Thursday, August 15, 2019 4:39 PM

Eilif
anyone heard any rumblings about production moving to other countries like Vietnam, Indonesia, etc?

Bachmann is owned by a Chinese company, Kader.  Possibly other companies are also owned as well. Kader is described as one of the largest makers of maodel trains.  It's hard to see them moving.

Kader also manufactures many products for other companies.  I don't know all the in and outs, but about 10 years ago when there were some manufacturing problems in China, some American companies had trouble moving their tooling to a new company or getting their tooling back to the U.S.  Don't know what the current situation is, but I doubt the Chinese governement is going to be real helpful about it. 

And of course with a lot of companies potentially moving, how fast can other places like Vietnam ramp up factories, workers, etc.

Short term I think we're mostly stuck with prices increases if these tariffs get imposed.

Paul

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Posted by riogrande5761 on Friday, August 16, 2019 7:00 AM

SeeYou190
My favorite guitar is an asian made Stratocaster. It sounds much better than my USA version

 

That is likely to poke some "make it in America" bears.  You just threw your own country under the buss.  Gratz!  Laugh

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Posted by SeeYou190 on Friday, August 16, 2019 7:07 AM

riogrande5761
That is likely to poke some "make it in America" bears.  You just threw your own country under the buss.  Gratz!

.

That was not the inention at all, it is the truth, and I have no way of knowing if my experience with these instruments is typical or not.

.

-Kevin

.

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Posted by Doughless on Friday, August 16, 2019 8:16 AM

I would think that companies moving productions to lower costing and developing countries in Asia is a good thing.  Breaking up any monopolies that exist from having all products made in one country would seem to be in my best interest, as well as being able to negotiate many independent terms and play different countries off one another.  I'm usually for what is in my best interest and not necessarily someone else's and short term price fluctuations in trains isn't that big of a deal since I'm never in a short term hurry to buy anything.

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Posted by tommymr on Friday, August 16, 2019 9:08 AM

Knowing not much about tariffs, is the tariff levied against the manufacturer based on the MSRP? or the price they sell to dealers at?  If the MSRP was lowered, would that have any effect on any potential price increases?

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Posted by Tinplate Toddler on Friday, August 16, 2019 9:15 AM

Custom tariffs are levied on the purchase value (landed cost) and not on the sales value an importer aims at selling the item.

Just a remark for those who think of developing new manufacturing resources outside of China - it took over 10 years to develop the Chinese makers into a reliable resource, delivering the quality the discerning and paying customer expects to get. Going back to square one by moving manufacturing to Vietnam, Brazil or even Africa may not be the smartest solution.

Happy times!

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Posted by Doughless on Friday, August 16, 2019 9:30 AM

Tinplate Toddler

Custom tariffs are levied on the purchase value (landed cost) and not on the sales value an importer aims at selling the item.

Just a remark for those who think of developing new manufacturing resources outside of China - it took over 10 years to develop the Chines makers into a reliable resource, delivering the quality the discerning and paying customer expects to get. Going back to square one by moving manufacturing to Vietnam, Brazil or even Africa may not be the smartest solution.

 

10 years is fine with me, there is always ebay and my modeling skills to supplement any new item I may want to buy, and good for my kids if they get into the hobby. 

I'd think that Atlas, Athearn, IM, etc would appreciate having multiple outlets and locations with which to shop their production.

Kind of like a business here in the US having access to NS and CSX and not being captive to just one.  The idea of avoiding monopolies or captive situations is sort of what regulations are supposed to consider, if the people making such decisions are executing them correctly. 

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Posted by Tinplate Toddler on Friday, August 16, 2019 9:48 AM

Doughless
The idea of avoiding monopolies or captive situations is sort of what regulations are supposed to consider, if the people making such decisions are executing them correctly.

It was the lure of higher profit margins that facilitated the move to Chinese manufacturing and the decline of local resources - not only in the model railroading business. Whatever the intention of the imposed duties is, it won´t bring back the jobs lost to China, or to Vietnam, or any other country in the world.

Happy times!

Ulrich (aka The Tin Man)

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Posted by NittanyLion on Friday, August 16, 2019 9:52 AM

Tinplate Toddler

Custom tariffs are levied on the purchase value (landed cost) and not on the sales value an importer aims at selling the item.

Just a remark for those who think of developing new manufacturing resources outside of China - it took over 10 years to develop the Chines makers into a reliable resource, delivering the quality the discerning and paying customer expects to get. Going back to square one by moving manufacturing to Vietnam, Brazil or even Africa may not be the smartest solution.

 

Vietnam and Brazil already possess mature manufacturing, so there's already workforce with technical skill in place. Samsung makes half of their smartphones in Vietnam. Brazil exports $6b in commercial aircraft every year (Russia, for instance, is just $460m).  These guys aren't exactly new to making things. 

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Posted by Doughless on Friday, August 16, 2019 11:25 AM

Tinplate Toddler

 

 
Doughless
The idea of avoiding monopolies or captive situations is sort of what regulations are supposed to consider, if the people making such decisions are executing them correctly.

 

It was the lure of higher profit margins that facilitated the move to Chinese manufacturing and the decline of local resources - not only in the model railroading business. Whatever the intention of the imposed duties is, it won´t bring back the jobs lost to China, or to Vietnam, or any other country in the world.

 

That's a different discussion centering around politics.  Frankly, I don't think anybody at a high level of politics cares much about bringing toy manufacturing back to the USA.  If my highly detailed RTR train items get caught up in the geopolitical wash, then I guess I''ll go back to acquiring Athearn BB or Accurail kits and run them with plastic wheels again.  We'll still have Kadee.

The only things I need to buy immediately, ever, is food, clean water, gasoline, and HVAC, which are all affordable mainly by the abundance of land and energy. 

As some have said, the moving of train jobs to oversees may have improved profit margins, but what it did for us consumers is give us highly detailed RTR models.  If tariffs continue, that party may be over, but maybe Athearn, Atlas Branchline, and Accurail will benefit.  Don't know where those molds will be located, here or somewhere else. 

 

- Douglas

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Posted by Tinplate Toddler on Friday, August 16, 2019 11:37 AM

Without intending to trod over the treacherous ground of politics - a number of toy manufacturers in my country have moved their production back to Germany and other Europen countries. China has just become too expensive - and that without any duties imposed.

Happy times!

Ulrich (aka The Tin Man)

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Posted by drgwcs on Friday, August 16, 2019 1:47 PM

In a bit of a stranger take on tarriffs- About two months ago I stepped into a hobby shop in a different city. (This place kind of looked like a hoarding problem with a hobby shop but I digress.) I had been in there once or twice before when I had been in the area. I picked up a car in a box near the front to look at it and started to ask the price. He said that was part of a bunch of stuff he had just bought and that he was waiting to price everything until he heard what was going on with the tarriffs. (Mind you the other two times I had been in there it looked just as much of a mess with stuff like this) The car I had picked up had been made in the 60's in the US mind you- wow. Looked around a few minutes and found everything way overpriced. All the while I heard a speel about all of the hobby shops closing and how tarrifs were affecting everything. (Most of the stuff he had sure wasn't going to be affected by tarrifs except track etc.) Can you guess how much I bought- Zero Zilch Nada

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