China and tariffs

Discuss Spyderco's products and history.
rgrad80
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Re: China and tariffs

Postby rgrad80 » Wed Nov 28, 2018 12:19 am

95% of my Spyderco knives are Colorado knives, and I could not justify buying a Chinese one if i had to pay 25% more. The reason I buy the Chinese Spydercos is because they are the “budget” hard use ones...Like the Tenacious.
Days without buying a Spyderco: 35

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ugaarguy
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Re: China and tariffs

Postby ugaarguy » Wed Nov 28, 2018 12:29 am

Sal, to be brutally honest with you, I've not found Spyderco's Chinese knives to be all that compelling. Comparing the Byrd back locks and Tenacious, etc liner locks to similarly priced back locks, liner locks, and frame locks from other brands (most made in China, but at least one made in Taiwan, and a few made in the US) I've been more impressed with your competitor's offerings in the sub $75 range.

On the other end of the spectrum, I've also purchased four Taichung made Spyderco RILs / frame locks this year. My preference for that lock type probably puts me in the minority of Spyderco customers (educated guess since 3 of the 4 were discontinued models). So, maybe I'm not the best customer to opine on your Chinese made models.

Getting to the core of the issue, by what percentage do you expect retail prices to increase as a result of the tariff(s)? Or perhaps as an example, the little Efficient and Persistence (8Cr13MoV, China) are both a hair over $42 MAP, while the similarly sized Cat (Taiwan), with better blade steel, is exactly $10 more MAP. I know that the Persistence is a more robust knife than the Cat, but at what point does shifting production to Taiwan (or elsewhere in the world) start to make more sense than paying tariffs to keep making them in China?

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sal
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Re: China and tariffs

Postby sal » Wed Nov 28, 2018 12:41 am

Hi Ugaarguy,

I don't know what the numbers might be. We've not yet been hit with tariffs on the Chinese made pieces. I'm just getting opinions.

sal

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Tucson Tom
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Re: China and tariffs

Postby Tucson Tom » Wed Nov 28, 2018 12:42 am

sal wrote:
Wed Nov 28, 2018 12:03 am
Hi Tom,

LC is made in Europe.

sal
Aha, OK. Thanks. So are there new tariffs on stuff being made in Europe also -- or is the price of LC200N just going up for one reason or other independent of all that.

(I always like to think that a domestic steel like 20CV might have price advantages over the European M390 -- but that wanders into another topic).
Odd that there are no nitrogen steels being made in the USA, or a least I haven't heard of any -- maybe there are but not available for knife making?

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Re: China and tariffs

Postby spyderwolf » Wed Nov 28, 2018 2:17 am

It is what it is.If i really want a knife,i will buy it.
Whenever there is any doubt, there is no doubt.

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ChrisinHove
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Re: China and tariffs

Postby ChrisinHove » Wed Nov 28, 2018 7:29 am

Move some manufacturing elsewhere with low cost, perhaps India?

Rutger
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Re: China and tariffs

Postby Rutger » Wed Nov 28, 2018 7:44 am

You'll have to pass on the extra costs on to the Americans or move production.
But i don't want to see a world wide price increase so that the rest of the world is subsidizing the increased costs for the US market.

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curlyhairedboy
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Re: China and tariffs

Postby curlyhairedboy » Wed Nov 28, 2018 8:12 am

Most of the Chinese-manufactured Spyderco knives that I purchase end up as entry-level gifts to budding knife enthusiasts.

I'm always super happy to show off Golden's best work - I've never met anyone who isn't immediately impressed by the quality, fit and finish, and precision of a PM2 (and more recently the Shaman).

I would love to see some cheaper models made in the USA.

As for higher prices on the Chinese-made models, I don't think that would necessarily dissuade me from purchasing them, but if a Tenacious gets close to a Chap LW, I know which model comes with better edge retention....
EDC Rotation: PITS, Shaman, CF S90v Shaman, Ikuchi, Amalgam, CruCarta Shaman, Lil Native, Sage 5 LW, 4V Shaman, Watu, Rex 45 Shaman, Rex 45 Lil Native, S30v Endura, Swayback
Always in Pocket: Hawkbill Dragonfly 2 H1
Special and Sentimental: Southard, Smallfly G10, Squarehead LW, Ouroboros, Calendar Para 3 LW, 40th Anniversary Native
Would like to own again: Sheepsfoot Caribbean
Wishlist: CQI Kapara, Tanto PM2, Shaman Sprints!

Rutger
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Re: China and tariffs

Postby Rutger » Wed Nov 28, 2018 8:42 am

Tucson Tom wrote:
Wed Nov 28, 2018 12:42 am
Aha, OK. Thanks. So are there new tariffs on stuff being made in Europe also -- or is the price of LC200N just going up for one reason or other independent of all that.
Trump hit European steel with tariffs too (steel 25% and aluminium 10%). That has been plenty in the media over here. Though this already started back in June. Lots of high tech steel is made here for the US car industry which US makers cannot deliver. So the car makers just have to suck it up or pass on the extra costs. It has cost Ford already over 1 billion usd...

I am actually a little surprised Spyderco was not hit by the tariffs yet. Did they have plenty knives in stock the past months so that they didn't encounter them yet?

arty
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Re: China and tariffs

Postby arty » Wed Nov 28, 2018 9:03 am

Prices matter to me. When they run too high, I find myself holding back on a purchase. I am retired, but my income is sufficient to allow me to save each month, and put away money for an upcoming wedding in the family and outrageous medical bills. Funds are not unlimited. When prices start to get too high, I have to ask myself whether I would rather have another pocket knife, fixed blade, less expensive American knife, or another tool for the workshop...or something else.

I have lots of Spyderco knives, far more than any other maker. But when prices get high, I do start to consider less expensive alternatives, like putting more in savings.

I should mention that none of my knives are from China, but are from Japan, Taiwan, the U.S. or Canada. Tariffs promote inflation which prompts the Fed to push up interest rates. All of this hurts consumers and manufacturers. One strategy by large companies has been to move production to countries where there is less of an impact of tariffs, but I sure don’t know the details- especially with all the waivers.

I would like to pick up a Caly 3.5 but I hesitate to pay the price of admission. I hope to see a light-weight Caly 3.5, that is less expensive than the CF version, and still easy on the pocket (in both ways).

Rutger
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Re: China and tariffs

Postby Rutger » Wed Nov 28, 2018 9:16 am

And i assume these issues are holding up the 2019 catalog. Because Spyderco is awfully silent about when we will get that.

anteck7
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Re: China and tariffs

Postby anteck7 » Wed Nov 28, 2018 10:14 am

Sal, thanks for the feedback and this discussion. A few more thoughts

Assumptions:
*Steel and Finished Good tariffs are independent of each other.
* Steel import tariffs are increasing on raw/unfinished steel imported into the USA but produced outside of the USA.
* Finished Goods (Knife) tariffs are only expected to significantly increase on finished knives produced in China at this time.

On the low end of the market (Knife Focused):

1. The market for the Chinese (mainland) made knives are probably not heavy spyderco forum users. Many folks I know that carry a knife bought the best knife they could at the big box store, and end up deciding between one of the chinese made spydercos or something like a Buck vantage or Kershaw Blur.

2. Having a made in USA knife under <$60 might win over some of these consumers, Buck and Kershaw generally highlight "Made in USA" on packaging. This may be a deciding factor for someone when deciding between a $50 Spyderco Resilience or a $55 Kershaw Blur. Personally, this was a compelling part of how I ended up with the Kershaw Blur as my first nice knife. (Before I got into knives).

Trying to Break out the Steel Tariff vs Finished Good Tariff at the High End:

3. An increase in the tariff of Chinese made finished knives may help Spyderco better compete against ever improving knives produced by Reate, WE and Kizer vs US made spydercos using US sourced steel. It might also provide some advantage for the Taiwan/Japan produced knives.

4. This might be a compelling reason for Spyderco to move more production not utilizing US steel I.E. LC200N to Taiwan/Japan. I presume that the Taiwan plant imports steel directly ergo bypassing the US import tariffs on steel.

5. Point 4 above assumes that the Import Tariff for the finished knives from Taiwan/Japan does not increase as well

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Hopweaver
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Re: China and tariffs

Postby Hopweaver » Wed Nov 28, 2018 11:10 am

The tariffs are out of your control, but passing on the costs to consumers is not. That said, I don't see how you cannot pass them on. It is just the cost of doing business. I will continue to buy Spyderco Products even if they go up in price.
:spyder: Make time for the important things in life, and learn to enjoy the little things more. :spyder:

Dornbox
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Re: China and tariffs

Postby Dornbox » Wed Nov 28, 2018 11:31 am

While 25% sounds huge it's only 25% on one small piece of the whole product when you think of all the labor shipping electricity etc. American made costs more because we have a great standard of living here. While I've just recently been bit by the Spyderco bug, I can't imagine this having nearly the effect on my purchases as new steels and new colors of G-10.
Too many Military family variants... and yet not enough.
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Bill1170
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Re: China and tariffs

Postby Bill1170 » Wed Nov 28, 2018 12:25 pm

zhyla wrote:
Tue Nov 27, 2018 11:01 pm
Vivi wrote:
Tue Nov 27, 2018 9:49 pm
Many, if not most chinese folders labelled D2, are not D2. Just like when Sal started making Byrds and chinese makers claimed to be working with 440C, it was not 440C.
Sal May have some concrete facts, but my understanding is D2 is a tool steel with fairly large ranges of alloy content and the Chinese D2 probably meets the criteria just fine. Consensus seems to be that D2 as marketed by reputable Chinese manufacturers performs well.

Last time I brought this up Sal countered that he’d rather step up to CTS-XHP than D2. I don’t know if that costs a lot or a little.
CTS-XHP is worth more to this user, if only for the stain resistance. I also trust Carpenter more than a faceless Chinese foundry to ship a consistent, high quality product. Provenance really does matter.

cbrstar
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Re: China and tariffs

Postby cbrstar » Wed Nov 28, 2018 12:45 pm

Companies like Buck, and even Gerber can make a USA made knife for the same price if not cheaper then many Chinese made knives. For example a buck 110 here is $65 Cad. Where as a Spyderco Alcyone is $85 Cad.

But the kicker is Buck uses a extremely inexpensive steel. Which because of their heat treat performs well, but at least in my eyes hurts the image of the company to be honest.

I don't see why Spyderco couldn't do the same and use an Americain made steel like CTS BD1. (Or possibly ctsbd1n?) For an economy model.

My only concern is a sub $100 US economy model could effect the premium image of the much more expensive US models. A company that tried something simular was Gibson guitars and they shot themselves in the foot with it.

JDWY
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Re: China and tariffs

Postby JDWY » Wed Nov 28, 2018 12:49 pm

I'm sure no authority on international economics, but I sure don't agree with the tariff deal. Factory reps from agricultural tractors on down are preaching against the tariffs. A month or so back a person high up in the UNITED STATES steel industry was pitching a fit because he said something like 99% of the stainless steel the US uses comes from China. They all plead a pretty good case IMO. Also, 30+/- years ago the US steel industry priced themselves right out of the business. Where I worked we used quite a lot of angle iron, channel iron, etc, etc, and even the semi driver that delivered it from our local steel outlet complained about the out of control prices.

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Danno44
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Re: China and tariffs

Postby Danno44 » Wed Nov 28, 2018 1:02 pm

The tariff is another line in the COGS calculation. It’s 25% of the steel cost (my understanding at least).
Only that line item (as mentioned by others already) within the COGS increases.
It’s not a 25% increase on entire cost of knife to distributors or for the MSRP (at least it shouldn’t).
Based on rough guidelines, a $60 USD knife affected by the tariff will likely have a new price of around $65.00.
Back to Sal’s original question, it won’t affect me personally because I only buy US made pocket knives.

SF Native
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Re: China and tariffs

Postby SF Native » Wed Nov 28, 2018 1:30 pm

cbrstar wrote:
Wed Nov 28, 2018 12:45 pm
My only concern is a sub $100 US economy model could effect the premium image of the much more expensive US models. A company that tried something simular was Gibson guitars and they shot themselves in the foot with it.
Is the $55 US made UK penknife in BD1N steel hurting the sales and image of the para 3? I don’t think so.

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sal
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Re: China and tariffs

Postby sal » Wed Nov 28, 2018 2:17 pm

Hi JDWY,

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


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