S&S Feeling Squeezed By Both Sides of U.S.-China Trade War

[Medusa42]

Here is a good article about the issues facing S&S as a result of the U.S.-China trade war and tariffs.  It shows the different impacts tariffs will have on future domestic and foreign projects. 

 

https://www.kuer.org/post/utah-amusement-ride-manufacturer-feeling-squeezed-both-sides-us-china-trade-war-speeds

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Utah Amusement Ride Manufacturer Feeling Squeezed By Both Sides As U.S.-China Trade War Speeds Up

By REBECCA ELLIS • MAY 23, 2019

 

The U.S.-China trade war is making for one long bumpy ride at S&S Worldwide.

 

Executives at North Logan’s S&S, one of the largest amusement park ride manufacturers in the country, say the company has had just one Chinese developer reach out to purchase a ride this year. Usually, Preston Perkes, executive director of administration, says China makes up half of the company's annual business.

 

Perkes traces the discrepancy back to last September, when Beijing imposed a retaliatory tariff on American-made ride parts, hiking up the duty from 10 to 25 percent.

 

“All of our returning customers that usually want to buy rides from us are talking to us about this,” said Perkes. “They aren’t signing contracts.”

 

S&S Worldwide has made a name for itself in the global amusement industry by churning out rides that can thrust thrill-seekers from 0 to 80 miles per hour in 2 seconds. These modern rides have proven particularly desirable in China, which industry experts say is on track to become the world’s largest theme park markets in the next few years.

 

Perkes says the boom is fueled by Chinese real estate developers, who are responding to a booming middle-class, hungry for leisure activities.

 

“They're taking an area where they’re building malls, hotels, housing and they're putting an amusement park as part of the entertainment center,” he says.

 

Now, Perkes fear the company is being locked out of the booming market, as their usual customers realize they will likely have to shell out at least $4 million in duties if they want to import a ride like S&S’s organ-jumbling Air Launch Coaster. Before September, that amount was more like $1.5 million.

 

“When our customers are having to pay more money because of a tariff they’re going to look other places,” said Perkes. “And that’s what they’ve done.”

 

Dennis Speigel, head of amusement consulting firm International Theme Park Services, said, even if these U.S. ride manufacturers do end up barred from China, he anticipates they’ll be able to find their footing in other burgeoning markets, like Eastern Europe and South America.

 

But Perkes said it’s not just the Chinese tariffs hitting their bottom line. It’s the ones imposed in their own backyard.

 

After President Donald Trump announced new duties on all steel and aluminum imports last March, Perkes said he’s watched the price of a roller coasters’ two main ingredients steadily increase.

 

“Demand went up, there was consumer uncertainty, and our pricing just started to skyrocket,” said Perkes, noting that the price of the metal parts S&S relies on has risen by as much as 70 percent.

 

Though the Trump administration walked back the tariffs with Canada and Mexico last week, Perkes said he suspects the high metal prices are here to stay for the near future.

 

This means, financially, it no longer makes sense to manufacture pieces like the steel ties that hold roller coaster tracks together and walkways for ride maintenance in-house. Since the metal tariffs were imposed, Perkes said the company has tapped manufacturers in China to make these pieces.

 

“For us to work around those tariffs, we have to change our country of origin,” he says. “We have to build things in China instead of here in the United States to help our customers with the cost.”

 

Perkes says he’s hopeful that this won’t mean a loss of jobs in the U.S. Still, ride packager Dave Tolman, one S&S’s 110 employees, says recent hikes in shipping costs and metal prices have left him concerned for the company’s future.

 

“Tariffs have never worked — ever — on either side,” he said. “All it does is hurt.”