irreverent, thought-provoking analysis of the industry-- with an
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The Decade's Major Influences, Pt. V: Imports
by Mike Hartnett (September 17, 2007)
(Note: To celebrate Creative Leisure News' 10th
anniversary, I've surveyed readers and chosen the people, companies,
and events of the past decade that have had the greatest influence
on our industry of today. In previous issues I wrote about the
decade's most influential category, scrapbooking; the most
influential person, Michael Rouleau; the new generation of craft
consumers; and changes in the old order – click on the headlines
in the right-hand column to read them. In future issues I'll write
about other major influences – Technology ... Media ... Investors
... Lower Margins ... Yarn and Beads ... Wal-Mart.)
There is no more complex subject than imports. They keep
inflation down, but take U.S. jobs. The ultimate conundrum: The
lower middle class family complaining about U.S. manufacturing
plants closing down – as they drive to a discount store to buy
imported products because they cost less.
Now the situation is about to become more complex: the current
and future impact of imports will be determined in part by factors
far beyond the control of vendors or retailers: international
currency fluctuations and government regulations. Some random
thoughts, in no particular order:
1. Many years ago when imports began to make a major impact
on our industry, a leading U.S. manufacturer launched a "Made
in America" campaign. I thought it somewhat ironic when I
learned that all of the machinery the company used to produce its
products was made in Germany. "Made in America"? Well,
2. One day an import company called me in a panic. A customs
official refused to allow a container-load of artificial spring
flowers to be unloaded, saying it was taking away U.S. jobs. Timing
was critical; if retailers couldn't get their order of spring
flowers in time for, well, spring, they didn't want them. The
company hired a high-priced lawyer in Washington and asked me to
write a letter. My letter said, in effect, "That container of
flowers isn't taking jobs from U.S. workers; those jobs were all
lost years ago." The flowers were unloaded.
3. I toured an industry manufacturer in Europe who was a
major vendor in the U.S. I was shocked by the working conditions,
particularly the air inside the plant. If that plant had been in the
U.S. the government would have shut it down in no time. No wonder
U.S. companies have trouble being price competitive; they have to
spend money keeping their employees healthy. What a concept.
4. A U.S. manufacturer is not worried about foreign imports
because he has invested so heavily in technology, employees' wages
are a very tiny fraction of his costs. So U.S. workers didn't lose
jobs to imports, exactly; they lost them to technology.
5. Sometimes I worry and wonder, "What will the U.S. be
like when we don't make anything?" And then I realize
that if this was 150 years ago, when thousands were abandoning farms
to work in factories, I would have wondered, "What will the
U.S. be like when we don't grow anything?"
6. A vendor recently wrote me, "Around 25% of my product
is from China now, and I would estimate that amount will move to 50%
in a few years. Sad, but the retailers have forced me to do this,
and the American worker gets punched yet again." Are the
retailers at fault, or the consumers? With the constant emphasis on
cheap, cheap, cheap, what's a retailer to do? How many retailers
have the great merchandising skills and strong reputation that
enable them to appeal to consumers on things other than price?
7. I think the majority of Chinese factories, especially
after all of the recent recalls, are trying to make products
according to U.S. safety standards. And U.S. companies check those
factories, probably now better than ever. But what about the Chinese
sub-contractor? When a busy factory farms out part of an order to
someone else, who's checking the sub-contractor?
8. A U.S. manufacturer, whose products require a very
specialized, expensive item, had for years bought that item from a
plant in Germany. Two years ago he found a Chinese manufacturer who
would make a comparable version. "Even if my sales are
flat," he told me, "I'll increase my bottom line by
9. Wal-Mart's recent cancellation of stitchery made me
realize one benefit of making your products close to home: you can
increase or slow your production much quicker than if you're
sourcing overseas. If you have a container load on the ocean bound
for a retailer who just cancelled your order, what do you do?
10. Ever since this industry began shortly after World War
II, deals between vendors and retailers have been completed at trade
shows, in buyers' offices, or in stores. Now some times the parties
involved meet in China to finalize the deal.
11. Notice I always write "U.S." rather than
"America"? I used "America" for decades, but
changed after a conversation with a subscriber in Mexico.
"Mike," he said, "we're America, too. So is
Canada." He was pointing out a fault many of us in the U.S.
have: we think we're the center of the universe.
I think China has peaked. It will remain a huge producer of goods
for the U.S., but as China's standard of living rises, so will the
cost of its products. Some vendors, in and outside our industry, are
beginning to hedge their China bets and are investigating Viet Nam,
Bangladesh, India, and Thailand.
Retailers better be careful. Their relentless drive for cheap,
cheap, cheap could easily end up with stores full of products that
are so unattractive, poorly made, or dangerous, that the consumer
won't buy them, regardless of the low price.
Some retailers, in their relentless quest for better margins, are
sourcing products themselves, eliminating the U.S. vendor/importer.
They will learn that this strategy is not the margin-booster it
appears to be. Without the U.S. supplier, retailers will have to
hire large numbers of designers and product development pros.
Chinese companies will make whatever they're told to make, but make
If a year from now there are still 130,000 U.S. troops in Iraq
and the U.S. economy has faltered, the Democrats will win the White
House and increase their control of both houses of Congress. Then
you'll see much tougher legislation on inspections of imports and
revaluing the Chinese currency.
(Note: Agree with these predictions? Disagree? Have any
that Mike missed? Email your thoughts – on or off the record –
to CLN at firstname.lastname@example.org.
To read previous articles in the series, click on the titles in the