Editor's note: This column appeared first in the December issue of Bicycle Retailer and Industry News.
Making Asia Great Again: Tariffs are a great way to teach geography, as well as a smattering of international economics. Maps of China and Southeast Asia haven't been in such demand since World War II. Executives everywhere and in every industry have pinned them to corporate conference room walls — tracing supply chains from Chinese factories, sketching ocean freight routes and seaside ports, while calculating the cost of moving production somewhere else. Mostly somewhere else. Not the USA.
But first, let me state for the record that China has sinned grievously over the years. It has taken advantage of the West, which includes North America (not just the U.S.), Europe and any other country that failed to pay attention to its pernicious trade demands. China joined the World Trade Organization in December 2001 and immediately began cheating on WTO rules. And doing business in China, always a fraught affair, got worse. To sell Western-branded goods, China forced some companies to transfer technology to its manufacturers. It stole and continues to steal intellectual property. It failed to play nice when it came to reciprocal trade rules. And it pumped massive amounts of dollars into its state-owned factories and is doing so again.
Enter the Trump administration. And so let us give credit where some credit is due. Trump is right to take a hard line with China, to focus our collective attention on what has become a lopsided playing field. And more importantly to acknowledge the damage done to millions of Americans who saw their jobs shift to China and elsewhere. Of course, corporate America, unhinged by arrogance and greed, aided and abetted that massive 20-year-plus job shift. But let's not let American consumers off the hook either. We apparently love to buy all that stuff Made in China, making its way over the vast Pacific in 40-foot cargo containers, all so we can save a buck or two at Walmart. And, yes, we're still shopping like there's no tomorrow.
Making Asia Great Again II: Keeping track of the latest trade bluster from the Trump administration is a slow walk through the Land of Oz. And it's fair to say no one really has any idea what Trump will do as his two China hawks, Peter Navarro and Robert Lighthizer, battle with Trump's so-called China doves, Treasury Secretary Steven Mnuchin and Larry Kudlow, Economic Council director. Each faction is seeking first-mover status in Trump's ear. B
ut anyone who wants to get a handle on the tit-for-tat imposition of tariffs between the U.S. and China should Google "Bloomberg Timeline" and go back to January, when Trump decided putting tariffs on solar panels and washing machines would MAGA. That was followed a few weeks later in February with his imposition of 25 percent duties on steel and 10 percent on aluminum. That was less MAGA than perhaps Trump figured as the nation's manufacturing sector began to tally the costs. And squawk. Loudly. Browsing Bloomberg's Timeline is akin to watching a slow-moving fistfight between a couple of pudgy geezers — Trump and Xi. None of this bodes well for the future.
Making Asia Great Again III: Anyone in the bicycle industry who thinks this trade stuff is just a bunch of hooey, and chooses to ignore it, is making a mistake. The Trump administration has imposed a collective tariff, punitive in its impact, on manufacturers, suppliers, retailers and, yes, our customers. How costly this trade war is and could get for the overall economy is anyone's guess. But serious economists have voiced concerns and the stock market has hopped up and down like a kangaroo with hot feet in part over tariffs and rising costs. All of this helps drive inflation, making it more difficult for wages to keep pace. It goes on and on. For the bicycle industry, expenses have grown while sales remain relatively stagnant.
Company executives, particularly at the major brands that have some manufacturing in China, continue to review various scenarios for production changes, shipping and freight costs, personnel time, employee relocation, travel and a host of other niggling costs such as visas if they want to visit Vietnam, Cambodia or other countries (Taiwan is visa-free). How much all this could affect consumer prices at local IBDs is a good question, and no one really knows. Therein lies the problem: uncertainty. That's a word that Trump and his advisers seem inclined to ignore. Business abhors uncertainty just as we abhor uncertainty in our personal lives. Uncertainty festers. It makes key decisions more problematic. "Is this the right move? What if ..." And that's where we are. Uncertain.
An amusing Facebook post: Rick Vosper, whom I've known for years and like, is a certified "pot stirrer." And in mid-November he tossed some spice into his bubbling pot with a Facebook post suggesting that the Bicycle Product Suppliers Association was privately pondering a move to take over PeopleForBikes. Think of it as an inside coup d'état. All this transpired on Vosper's Cycling Industry Forum, a private, mostly, group of "approved" participants numbering around 100 or so. It's an interesting list. But back to the alleged coup d'état in the works. No sooner had Rick posted that unsourced speculation than I received an irate email suggesting Rick was off his rocker. Well ... if a coup d'état isn't in the works, and I doubt it is, having an open and frank discussion about such a merger would be a good thing.
Skip Hess, a former BPSA president, noted in a post the obvious: "Consolidation is needed and priorities redefined. There simply won't be enough to fund, staff and organize multiple efforts." I'd say Skip knows a thing or two about the subject. And such consolidation has been suggested in this column before. After all, the cross-membership between the two boards of directors is stunning. Some might say incestuous. All the big brands have a seat at both tables. And all are paying varying amounts in dues for their assorted memberships. So talking about a merger — even if one is skeptical about Rick's post and the various comments it prompted — isn't exactly nonsense. Perhaps one day we could all see the following headline in BRAIN: "BPSA leads industry coup, dethrones PFP leadership." Now that would make an interesting article for all to read.
