China and tariffs

Discuss Spyderco's products and history.
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Re: China and tariffs

#101

Post by SF Native »

sal wrote:
Wed Nov 28, 2018 2:17 pm
I would prefer to avoid the "good or bad" politics of the tariffs in this discussion. Everyone has their own opinion based on their knowledge of the picture and there is certainly division.
thanx,
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Pretty sure he already stated how he wanted this to go.
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Re: China and tariffs

#102

Post by Ez556 »

I agree with Eli Chaps 100%. I like a number of the knives made in China and I think that the best ones will survive with any increase in tariffs. I would love to see an American made Tenacious though.
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Re: China and tariffs

#103

Post by Ankerson »

SF Native wrote:
Thu Nov 29, 2018 10:00 pm
sal wrote:
Wed Nov 28, 2018 2:17 pm
I would prefer to avoid the "good or bad" politics of the tariffs in this discussion. Everyone has their own opinion based on their knowledge of the picture and there is certainly division.
thanx,
sal
Pretty sure he already stated how he wanted this to go.

We can't really discuss the issue and stay completely out of politics, the topic is political and so are the reasons behind most of the opinions that we stated.

As long as it doesn't get ugly I am sure we can post our views and opinions on the matter.

What gets my goat about China is the US bailed them out in WW2 when the Japanese were slaughtering them.

And this is the thanks we get, really?

Same with a lot of the other Countries in Europe that crap on the US every chance they get and do I even need to go into what the US did for them in WW2? We could have stayed out of the War in Europe and let the Germans have it all, but we didn't. None of those Countries would exist today if it wasn't for the US and Russia for that matter. So maybe they need to show a little more freaking respect and gratitude.

So yeah I think the we need to put the US 1st again.
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Re: China and tariffs

#104

Post by SF Native »

Well, if we are going to talk about this, then let’s try some facts instead of this “the sky is falling” bs.
In the last 30 years, the number of manufacturing jobs in the us has dropped by about a third. In the same time, the output has doubled. Let’s hear that again... we produce twice as much stuff. This means that most of those manufacturing jobs were not lost to China (some were but not that many), they were lost to automation. Maybe sal can enlighten us about how much automation is used to make spyderco knives. My guess is as much as possible. So tariffs might put pressure on China about intellectual property, but they are not bringing jobs back. Automation brings jobs back. Look at spyderco. They didn’t make knives here until late in the game. Did Colorado create a culture of artisans and metal workers to forge these knives? No, automation caught up with spyderco’s needs enough to make a pm2 affordable.
So, let’s know what we are really getting. 401k’s are flatlined, American companies are laying off workers (like GM) because of the higher steel costs, and those jobs are not coming back.
During the industrial revolution, it took about 40 years for the work force to find its new place. We are in an automation revolution and you can look no further than Home Depot with self check out. We have 40 years to figure out where we fit in to the new economy. Tariffs or no tariffs, it’s going to be a long and painful ride. And America will do just fine either way, because we are leading the way. We are pushing automation and exporting it, not the Chinese.
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Re: China and tariffs

#105

Post by Ankerson »

SF Native wrote:
Thu Nov 29, 2018 11:24 pm
Well, if we are going to talk about this, then let’s try some facts instead of this “the sky is falling” bs.
In the last 30 years, the number of manufacturing jobs in the us has dropped by about a third. In the same time, the output has doubled. Let’s hear that again... we produce twice as much stuff. This means that most of those manufacturing jobs were not lost to China (some were but not that many), they were lost to automation. Maybe sal can enlighten us about how much automation is used to make spyderco knives. My guess is as much as possible. So tariffs might put pressure on China about intellectual property, but they are not bringing jobs back. Automation brings jobs back. Look at spyderco. They didn’t make knives here until late in the game. Did Colorado create a culture of artisans and metal workers to forge these knives? No, automation caught up with spyderco’s needs enough to make a pm2 affordable.
So, let’s know what we are really getting. 401k’s are flatlined, American companies are laying off workers (like GM) because of the higher steel costs, and those jobs are not coming back.
During the industrial revolution, it took about 40 years for the work force to find its new place. We are in an automation revolution and you can look no further than Home Depot with self check out. We have 40 years to figure out where we fit in to the new economy. Tariffs or no tariffs, it’s going to be a long and painful ride. And America will do just fine either way, because we are leading the way. We are pushing automation and exporting it, not the Chinese.

Actually the GM thing is a huge Money Grab on the part of the Board Of Directors and Corporate Management, all at the expense of American Workers.

And they need to get slapped down hard.

So screwing over American workers... IMO they shouldn't make a penny off the US ever again, We need to shut them out completely like I stated in my other post. And go after the Corporate types aggressively on top of it, shutting down their Golden Parachutes etc.

Makes me sick to my stomach even to think about what GM is going to try and pull.

There are other Auto Manufactures in the US including Honda, Toyota, BMW, Mercedes etc and Ford and Chrysler that are doing just fine and aren't screwing over the American workers for a cash grab.

GM needs to be cut off completely from the US and left with NOTHING, all US assists seized 100%.

Send them to Mexico with nothing from the US since that's were they want to go.
Last edited by Ankerson on Fri Nov 30, 2018 12:18 am, edited 8 times in total.
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Re: China and tariffs

#106

Post by God'sMyJudge »

This is why we can't have nice threads...
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Re: China and tariffs

#107

Post by Calicoast »

God'sMyJudge wrote:
Thu Nov 29, 2018 11:35 pm
This is why we can't have nice threads...
What's not nice about it?
Come on, put your hat in the ring. :)
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Re: China and tariffs

#108

Post by 500Nitro »

Ankerson

Re car industries, Australia has been in the same boat for years, Gov't "prop ups" and support.
We had 3, GM Holden, Ford, Toyota (Mazda and Mitsubishi closed down a few years ago).
Well a couple of years ago the dominos fell, one pulled the pin and the others followed because
it was a case of all 3 or none were viable.
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Re: China and tariffs

#109

Post by Ankerson »

500Nitro wrote:
Fri Nov 30, 2018 12:20 am
Ankerson

Re car industries, Australia has been in the same boat for years, Gov't "prop ups" and support.
We had 3, GM Holden, Ford, Toyota (Mazda and Mitsubishi closed down a few years ago).
Well a couple of years ago the dominos fell, one pulled the pin and the others followed because
it was a case of all 3 or none were viable.

That is a real shame and the reason why I absolutely despise large Corporations.

Despise is actually too weak of a word to express how I really feel, I doubt there is a word that strong.
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Re: China and tariffs

#110

Post by 500Nitro »

Ankerson wrote:
Fri Nov 30, 2018 12:23 am
500Nitro wrote:
Fri Nov 30, 2018 12:20 am
Ankerson

Re car industries, Australia has been in the same boat for years, Gov't "prop ups" and support.
We had 3, GM Holden, Ford, Toyota (Mazda and Mitsubishi closed down a few years ago).
Well a couple of years ago the dominos fell, one pulled the pin and the others followed because
it was a case of all 3 or none were viable.
That is a real shame and the reason why I absolutely despise large Corporations.

Despise is actually too weak of a word to express how I really feel, I doubt there is a word that strong.
The feeling is very prevalent here as well.

We have just had a couple of "Royal Commissions", (a bit like your Senate / Congress Committees where they haul executives
like Obama did with car companies, Wall Street bosses, Facebook owner etc etc and give them a serious grilling.

Our Royal Commissions were into the Banks and what bad things they have been getting away with. Believe me they have
come out of it looking really really bad.
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Re: China and tariffs

#111

Post by The Deacon »

Rutger wrote:
Thu Nov 29, 2018 5:29 pm
The Deacon wrote:
Thu Nov 29, 2018 3:07 pm
I'll admit, I'm a bit confused here. Sal seems to only be asking about the effect the steel tariffs will have on interest in knives made in China. However, if I understand the situation correctly, the 25% tariff is on steel from pretty much everywhere except Australia, South Korea, Argentina, and Brazil. If that's the case, then in addition to Spyderco models made China, won't it affect those made in Japan, Taiwan, and Italy as well as any US models made with Japanese or European steel? Or will the models from Taiwan that use blade steel from the USA be exempt? Would models made elsewhere, including China, be exempt if they switched to American steel? Won't all other knife companies that have knives made in China, Taiwan, Japan, and Europe also be affected?
You are correct, most countries/foreign steel is affected. I am not 100% into this but i think that at first the steel import tariffs were only for the raw steel product. To be used in American industry to make products. I think this is why we see less European steels in American made knives lately. More recently Trump has been expanding/increasing tariffs for specific foreign goods/finished products. Which he is mainly focusing on China.

Thanks. That makes sense.

Rutger wrote:
Thu Nov 29, 2018 5:29 pm
Import tariffs, taxes etc is complicated business. Maybe Sal can explain it better.

Yes, it is, and do hope Sal chimes in with some further insights.

I'm among those who think that, since the end of WW II, the US government here has done far more to hurt American business than help it and that the current administration is at least trying to reverse that. If one effect of that is to make Chinese knives less desirable to American consumers by narrowing the price gap between them and knives made here, then that's a good thing.
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Re: China and tariffs

#112

Post by ChrisinHove »

Ankerson wrote:
Thu Nov 29, 2018 10:34 pm
SF Native wrote:
Thu Nov 29, 2018 10:00 pm
sal wrote:
Wed Nov 28, 2018 2:17 pm
I would prefer to avoid the "good or bad" politics of the tariffs in this discussion. Everyone has their own opinion based on their knowledge of the picture and there is certainly division.
thanx,
sal
Pretty sure he already stated how he wanted this to go.

We can't really discuss the issue and stay completely out of politics, the topic is political and so are the reasons behind most of the opinions that we stated.

As long as it doesn't get ugly I am sure we can post our views and opinions on the matter.

What gets my goat about China is the US bailed them out in WW2 when the Japanese were slaughtering them.

And this is the thanks we get, really?

Same with a lot of the other Countries in Europe that crap on the US every chance they get and do I even need to go into what the US did for them in WW2? We could have stayed out of the War in Europe and let the Germans have it all, but we didn't. None of those Countries would exist today if it wasn't for the US and Russia for that matter. So maybe they need to show a little more freaking respect and gratitude.

So yeah I think the we need to put the US 1st again.
You can’t be the big kid on the block and sit in your bedroom.

The USA assistance in WW2 wasn’t free. The US economy and businesses did very well out of it.

Don’t get me wrong, though, any trade imbalance is wrong, and strategically stupid to build up China at your expense, certainly just for the sake of keeping the price of disposable consumer goods down.

Whether a trade war is the best way of achieving a better arrangement, or just the best headlines is a different matter.

As a wise man said “ There's always an easy solution to every human problem—neat, plausible and wrong“
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Re: China and tariffs

#113

Post by Doc Dan »

Sal, what I would say is that if you decided it is smart to still do business in China, do so. However, there are a lot of other countries that would be happy to have Spyderco's business and make the knives. I think Vietnam, Laos, or Cambodia would still be cheap, and they might be willing to invest in order to bring in a company that can provide good jobs.
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Re: China and tariffs

#114

Post by sal »

Hi,

Sorry, to be absent. On the road.

As Rutger mentioned, I would prefer to keep the politics out of the discussion.

I am trying to find out your thoughts on how tariffs might affect our industry and our company. I am fairly up on Geopolitics world wide and spend a great deal of my time involved in same. We do have our plans and contingency plans in place. We still don't know where it's going to go and what countries and products will be affected. I have received a great deal of info on your thoughts and it is appreciated. From the discussion, I don't think there will be significant impact on Spyderco and we will make adjustments where necessary to keep pour company, customers and vendors secure.

sal
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Re: China and tariffs

#115

Post by ekastanis »

Ankerson wrote:
Thu Nov 29, 2018 11:32 pm
Actually the GM thing is a huge Money Grab on the part of the Board Of Directors and Corporate Management, all at the expense of American Workers.
OK, as someone who is employed in the auto industry, I'll bite.

GM, like many other auto makers, currently has excess production capacity above what they need, by about 1,000,000 vehicles per year. Compare that with annual sales of about 10,000,000 units. They have many assembly plants running only one shift per day. Needless to say, operating an assembly plant involves a lot of overhead, and it's more economical to run one plant at capacity than three plants at 1/3. Obviously they don't produce units that won't be purchased by the market.

GM has 5 plants in Mexico, compared to about 35 in the US. Two of the Mexican plants produce engines and transmissions. One produces pickup trucks, and the other two produce vehicles that are loss-makers when they are produced in the US. Yes, due to higher production costs in the US, and the low prices that customers are willing to pay for these types of vehicles (e.g. Chevy Cruze), the margins are negative when these vehicles are produced in the US. Yet they still are in some cases (e.g. Chevy Sonic at Orion Assembly, not a plant that's closing btw, surprisingly). Why produce pickups, which are profitable vehicles, in Mexico vs the US? Well they do produce them in the US as well (at Flint & Pontiac, MI, Roanoke, IN and Springfield, OH), but these vehicles are also exported, and Mexico has many good trade agreements with other countries that allow GM to sell these vehicles there without paying value-destroying tariffs. GM's manufacturing footprint in Mexico is small compared to its US footprint. Moreover, these vehicles and many others that are produced outside the US are still developed largely or at least in part in the US, creating good jobs. Forcing an automaker to choose to not produce a product at all instead of producing it in the US, still costs US jobs.

For all auto makers, there is a lot of uncertainty about the future of the industry. There are a number of technology areas that require expensive investment (powertrain electrification, autonomous driving, vehicle information systems, etc.). It's not certain what ownership models and transportation systems are going to look like down the road. Like many businesses, auto manufacturing has cycles, and the peak of the current revenue cycle was reached in 2016. On the topic of tariffs, increased raw material costs have already eaten into margins at GM and other auto makers. In order to be in decent financial shape to make the investments it needs to for product development, and to prepare for the next sales downturn, GM is making difficult choices while its financial performance is still good.

As far as the effect on workers, it's always bad when people lose their jobs. Of the 14,000 people at GM in North America who will be out of work over the next few years, ~2500 of those are in Canada, so I guess you're not worried about them. Of the remainder, about 3300 are hourly workers at the 4 plants closing in the US. The other 8000 are salaried workers, engineering, marketing, communications, finance, etc, who have been offered buyouts (which aren't that great admittedly). This isn't good news but it's what the company feels it needs to do to protect its business in the face of declining market demand and future business uncertainty.

Ford hasn't announced a sudden drop of the axe like this, but cuts are coming over the next few years, you can be sure of it. FCA hasn't talked about cuts yet but is now selling parts of their business to raise money (Magnetti-Marelli for ~$7B). Anyway, this is already a long-winded post that hopefully some will find interesting and probably won't change anyone's mind, but these issues are certainly complicated and can't be boiled down to a one line synopsis.
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Re: China and tariffs

#116

Post by Ankerson »

Hi ekastanis,

Well the AUTO industry can say what they want, but $50K+ for a freaking pickup truck and $70K+ for and SUV is insane. (GM)

And we aren't taking about highline cars here like BMW, Porsche or Mercedes either.

I have a full size Truck that I bought NEW for well under 20K back in 2005 as a comparison.

My 2006 SUV I bought used and I believe that was like $30K NEW.
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Re: China and tariffs

#117

Post by sal »

Hi Ekastanis,

Thanx much for the "long winded" post. As an Auto Junky, I am always watching the industry. Good information.

Hey Jim,

We can get into the value of autos in another thread. But in my opinion, I see the knife industry as a smaller model of the auto industry with numerous parallels. Being involved in both industries, I learn and apply info where I can.

sal
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Re: China and tariffs

#118

Post by curlyhairedboy »

sal wrote:
Fri Nov 30, 2018 10:51 am
Hi Ekastanis,

Thanx much for the "long winded" post. As an Auto Junky, I am always watching the industry. Good information.

Hey Jim,

We can get into the value of autos in another thread. But in my opinion, I see the knife industry as a smaller model of the auto industry with numerous parallels. Being involved in both industries, I learn and apply info where I can.

sal
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Re: China and tariffs

#119

Post by Ankerson »

sal wrote:
Fri Nov 30, 2018 10:51 am
Hi Ekastanis,

Thanx much for the "long winded" post. As an Auto Junky, I am always watching the industry. Good information.

Hey Jim,

We can get into the value of autos in another thread. But in my opinion, I see the knife industry as a smaller model of the auto industry with numerous parallels. Being involved in both industries, I learn and apply info where I can.

sal
Hi Sal,

I think the knife industry has stayed pretty consistent as far as prices in general go, I mean a good quality knife still costs about the same now as it did what 10 years ago? Good quality knives really weren't exactly cheap even 30 years ago.

It really hasn't been that bad as far as pricing goes I think, I am not including the mid-techs in this as they will always be a lot higher price wise.

Jim
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Re: China and tariffs

#120

Post by sal »

Hi Jim,

A friend of mine once said that "a good suit will always cost about the same as a ounce of gold". I wonder if there is a standard that might apply to knives?

sal
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