Page 23 - Lighting Magazine November 2018

Despite the best e orts of the Ameri- can Lighting Association (ALA) to appeal the inclusion of the lighting category, the Trump Administration nalized List 3 and imposed a 10-
percent tari on products imported from China as of September 24. That percentage will increase to 25 percent at the start of 2019 unless there is a stunning reversal.
Furniture and lighting manufacturers whose fac- tories are located in other parts of the world (i.e. Indonesia, South America, Mexico, Thailand, and the Philippines) and those who manufacture their goods in the U.S. are not a ected by the ruling.
For an industry already beleaguered by compe- tition from multiple channels – most speci cally online dealers – the price increase caused by the tari s is a devastating blow. How well vendors re- acted to the news is up for debate among retailers.
Some manufacturers immediately announced unilateral price increases as of October 1; others held back on raising prices for the remainder of the year, deciding to absorb the cost rather than further hamper their distributors’ pro tability.
For companies like Varaluz, which makes most – but not all – of its products in the Philippines, the rst round of tari s is relatively manageable. “However, when the 25-percent increase occurs, that [number] is a lot harder for manufacturers to take on,” notes Ron Henderson, President. Varaluz did not raise prices a er the initial tari , but Hen- derson admits that the company will have to take a closer look as the new year draws closer.
Other companies have behaved similarly. Light bulb/source provider MaxLite, which relies heavily on Chinese production, made a commitment to its dealers to hold prices through December 31.
“MaxLite will continue to work to mitigate the e ects of tari s on its prices and will not imple- ment a general increase, as some competitors have done, in response to the tari s imposed on goods imported from China,” the company told its customers. “[We] will continue to closely monitor the tari situation and its impact on the lighting industry, and will keep customers informed if, and when, speci c pricing adjustments need to occur.”
The timing of the tari s taking e ect was particularly painful for those manufacturers exhib- iting at the Fall High Point Market in October, an important show for order-writing. For that reason, ELK Group International made the decision to not
The Tariff Tango “When the 25-percent
increase occurs, that [number] is a lot harder for manufacturers to take on.”
—Ron Henderson, President, Varaluz
raise prices until November 1.
“We have developed a plan to so en the impact
to you while being mindful of the additional costs to our business, which also include rising raw ma- terial prices,” a notice from ELK to its customers read. “October High Point a endees will be able to place orders at the show without the impact of the new price adjustments.” ELK added that it would subsidize the increase by o ering “pre-tari pricing” for the month of October.
Mac Cooper, President of U ermost – which has two showrooms in High Point – released a similar statement ahead of the Fall market. “The 10-percent tari is painful to all of us, but we in- tend to do all we can to minimize the burden to our customers. In a nutshell, we’ll absorb the tari cost through October, and then add a 2-percent surcharge starting in November to help with the tari cost. This 2-percent will go away if the tari is li ed, but will be adjusted if it goes to 25 per- cent next year.”
Another company willing to absorb the extra cost for now is Maxim. “We understand the impact price increases have on your business and your ability to o er your customers the best possible value. It is for this reason that Maxim-ET2 has decided to absorb the additional costs associated with this tari .
“In August Maxim had a small adjustment to our pricing along with the release of our new catalog; however, this adjustment was solely due to in- creases in material and labor costs from the past year and went into e ect September 15, before any tari s were put into place. Maxim will not be instituting any additional price increases this year to pay for the costs of the 10-percent tari .”
WAC/Modern Forms customers in particular
noveMber 2018 | enLIGHTenment Magazine 21