Trade wars and this hobby

[Rik ShawParticipant @rikshaw]

Latest US tariff announcements on goods imported from China include machinery. I expect that the likes of Grizzly etc. are in for a hard time.>>

Hope it does not come this way!! Any comments Ketan?>>

Rik>>

Read page number 34 in following:>>

https://ustr.gov/sites/default/files/files/Press/Releases/301FRN.pdf>>

Edited By Rik Shaw on 04/04/2018 11:12:26

[Rik ShawParticipant @rikshaw]

[Jon GibbsParticipant @jongibbs59756]

While we're in the EU and in any transition phase it seems unlikely to come our way because, whatever is said about the Commission, it isn't run by a "Highly intelligent" businessman who "went to all the best schools" and thinks "trade wars are easy to win". He seems determined to really "Make America Great Again"

After we leave the EU then it depends what the department led by the "Marvellous Mr Fox" can negotiate for us

Jon

Edited By Jon Gibbs on 04/04/2018 11:16:28

[John HaineParticipant @johnhaine32865]

Well that's a relief then!

[BazyleParticipant @bazyle]

There was an interesting talk on Radio 4 yesterday at 9am about Hamilton who started the idea of tariffs for protectionism and developing local American industry in the old colonies in about 1790. Problem then for the UK was loss of sales of our manufactured goods.
This time round since we (UK) don't make much the knock-on effect may be more dumping of excess Chinese manufactured goods reducing lathe prices for us. However it is likely to be small compared to the 20% Brexit price hike.

[FMESParticipant @fmes]

I thought we already had some judging by the exorbitant import duties and Vat imposed on a recent consignment of castings from 'The States'

And I had to register as an importer.

I recall a few years ago there was a cotton embargo on goods received from The States where two T shirts commanded an additional charge of £30 from Mount Pleasant, total cost of the shirts – $18.

Regards

Lofty

[Martin DowingParticipant @martindowing58466]

I don't expect EU or UK to go on with trade war on China.

And if they do we will have trouble with puchasing shoes and panties. On the top of it we could see Russo-Chinese consolidation against EU/UK in such scenario. They may refuse to sell raw materials and natural resources in most of European countries are either insignificant or already depleted. Americans have far better situation than EU in this respect.

Nevertheless I suspect following: China will sell their goods to ASEAN countries and elsewhere, they will ad 5% surcharge and their labels and it will all go to US as usual.

Martin

[Trevor Crossman 1Participant @trevorcrossman1]

Oh dear chaps, trouble buying panties ​. Seriously though, we in UK will definitely suffer post Brexit due to many of our politicians having a preference for closer ties to USA over the EU. For many years I have bought quite a lot of items from EU countries because the same item is often cheaper from Germany France or Italy than the UK and that is even allowing for shipping, and post Brexit the total cost is very likely to rise because of import duties on goods from these countries as a Customs Union seems anathema to the government. Any substantial purchase, especially heavy stuff that has a high shipping/insurance charge from USA is already nets our Revenue a tidy sum as others have mentioned, so for the same to happen to stuff from just across the Channel is not good, and it is not very likely that government will lower import duties or VAT, and America will not do us any special favours. Our much reduced home manufacturing is going to cost the populace dearly, and government will have more taxes to squander as it wishes.

Trevor

[mark costello 1Participant @markcostello1]

One thing to be remembered, from the State side view of things……….. some seemingly outrageous things are being said. What develops may be entirely different. He seems to be doing some of the right things, just wish He would give up on posting things. He's not one to go quietly under the radar just doing things.

[not done it yetParticipant @notdoneityet]

If it is cheaper delivered from Europe, there may be a bit of a saving on low value items, unless the extra duties exceed 20%.

I believe some EC countries are already applying 22.5% VAT? Small value imported items under about £20 are currently VAT and duty free. Could all change, and any above the threshold may get a parcelforce collection charge, too.

Wait and see seems the best thing to do. Speculating will not help a great deal.

[DMBParticipant @dmb]

I note that all the above is under tooling but I think that it shouId have been moved to the tea room, since most of what's been said is political. However, that's up to the moderators.

Isn' it funny how so many negative points have been raised here and in the Press, by anti-Brexiteers as if they are trying to discourage the Brexiteers. Yet many negative "results" have so far not happened and if anything, the reverse has happened. I just wish both sides would stop putting forward their opinions couched in a style which makes them sound like fact and wait and see what actually happens, when and if..

[Trevor Crossman 1Participant @trevorcrossman1]

It is a fact DMB​ that trade wars which is what this thread is all about, is political​, and will not do this hobby any favours whether one is pro Bexit or anti Brexit or doesn't even care. Increasing any tariff just makes imports more expensive and is resorted to by politicians to bolster domestic status, and since we metal bashing hobbyists are probably economically insignificant, officialdom would take no notice of our opinion. It is already very difficult to obtain many of the less commonly used materials in UK due to the disappearance of much of our small manufacturing, and material importer/stockholders in this country are not interested is small retail supply, hence my reason for buying from the EU whenever that is the cheapest source for a particular item after all shipping and vat ( which may be much higher than UK rate) is taken into account. Trade wars will only make small scale supply to hobbyists more expensive and ulimately less available.

Trevor

[Mick HenshallParticipant @mickhenshall99321]

If I was a younger man given the UK's current position I would be seriously looking at the opportunity to start manufacturing, there are plenty of things we could make for ourselves and for exports, there are a lot of the skills in this country of ours and we have a proud history of invention and innovation, lets be optimistic

Mick

[Sam Longley 1Participant @samlongley1]

Posted by Trevor Crossman 1 on 04/04/2018 21:32:43:

It is already very difficult to obtain many of the less commonly used materials in UK due to the disappearance of much of our small manufacturing, and material importer/stockholders in this country are not interested is small retail supply, hence my reason for buying from the EU whenever that is the cheapest source for a particular item after all shipping and vat ( which may be much higher than UK rate) is taken into account. Trade wars will only make small scale supply to hobbyists more expensive and ulimately less available.

Has it not occurred to you that the reason that our small manufacturers have disappeared is because you are buying from abroad? Presumably because they are cheaper & will always be so now you have decimated our industries by buying foreign. Has it not crossed your mind that if we placed tariffs on the items that are being "Dumped" on us these goods you buy would not be cheaper than home grown?

But of course due to EU regulation we can only apply EU governed tariffs can we not?

But by leaving the EU one would hope that we would not be so restricted. However, the remoaners, & that includes Mrs May, seem certain to keep us aligned if they can

[Ketan SwaliParticipant @ketanswali79440]

Posted by Rik Shaw on 04/04/2018 10:42:47:

Latest US tariff announcements on goods imported from China include machinery. I expect that the likes of Grizzly etc. are in for a hard time.>>

Hope it does not come this way!! Any comments Ketan?>>

Rik>>

Read page number 34 in following:>>

**LINK**>>

Edited By Rik Shaw on 04/04/2018 11:12:26

Hi Rik,

In my mind, Trump is a businessman first, and a politician second. In this particular situation, I believe that he is playing a good game, starting from a hard line strong position of making everyone outside U.S. pay for the privilege of getting trade entry into the U.S., as U.S. is the biggest buyer. I am guessing that over time, his team will reach a compromise over taxes the U.S. imposes over the imports. Probably a good strategy. In many respects, I agree with his idea on this issue, especially if I were one of the many unemployed, living in the U.S..

In our industry, rest of the world 'piggy-backs' on the volume of orders placed by the U.S. importers. Where a U.S. importer buys 100pcs. of 'model A' machine, the whole of Europe, including U.K. just about manages to buy 100 machines of 'model A' machine, split over say three to four main importers. This has raised a serious concern for Chinese manufacturers, as well as Indian manufacturers of accessories.

In my opinion, the E.U. politicians do not really have a business brain. Most of the E.U. politicians heads are stuck well and truly up certain corporates black holes… to include Amazon and eBay, in my opinion. The threat to E.U. businesses is more likely to come from such organisations, rather than any thought of trade wars, especially when I see local councils and no hoper universities sucking up to the Chinese and main government sucking up to the Indians 'part of the Commonwealth – good show and all that', working closely with the super giants of that nation, offering them incentives (can't really call them bribes in the West). I guess that this is the only thing the politicians know about doing business, but I could be grossly wrong, and I always hope for and enjoy pleasant surprises, if and when they come. I am enjoying the crazy unpredictability of Mr.Trump, but I am sure there will be some pain for us somewhere.

As far as GB is concerned, pre or post Brexit, we are a trading nation. Regardless of what the politicians do or don't, regardless of the good, bad, rubbish reported in the media, businessmen will always find a way to deal with things, as they have for generations. Sometimes such decisions/gamble taken by businesses work and sometimes they fail.

Continued…

[Ketan SwaliParticipant @ketanswali79440]

Over the past 18 odd months, the Chinese have been dealing with several problems of their own, having to deal with environmental issues. This has led to many factories in our industry closing down permanently, and some factories being ordered to shut down until certain investment guarantees were given and executed, to include SIEG. All machine and accessories manufacturers were and continue to be effected in some way. main polluters being heat treatment plants – high percentage of them have been shut. One of our main suppliers has invested over two million dollars in this particular part of their plant, and SIEG has invested heavily in their paint workshop. Similar events have taken place all over China, for the factories which have survived the slaughter. This in turn has led to price rises of between 15% to 25% over the past year across machines and accessories, to include additional cost increase due to exchange rates.

Similarly, the Indian manufacturers in our industry continue to face new taxation challenges imposed on them by the far right socialist government currently in power in their country. At times, the costs are simply idiotic and unbelievable. Again, this has resulted in real price increases of between 5% to 10%, at present, subject to the Indian government fulfilling the promises they have made to Indian manufacturers/exporters, and a lot of the cowboys/back door and rejected stuff are still turning up on well known sites. If the Indian government pleads poverty and refuses to refund taxes paid by export houses as it did for a few months because it was 'bankrupt', then their idiot government would expect the exporters to recover the tax – 18% from 'us importers', who have already told the exporters where to stick it. If that happens, there will be more fun and games to come.

So, looking at the current situation of U.S. trade war + them being the biggest buyers in our industry, combined with the problems which both the Chinese and Indians face in their own countries, they are basically 'stuck' between a rock and a hard place. If the U.S. demand drops – which is uncertain and based on how quickly the U.S. home grown can really satisfy the U.S. demand, and if the U.S. fail to reach a negotiated settlement with the Chinese, Indians, etc., then short term more factories in China, and less in India could suffer, or shut, or prices could increase further. If prices increase further, it will come down to what the rest of the world customers in our industry are prepared to pay. Only time will tell.

During June 2017, ARC took a decision to invest heavily in stock, after the previous round of cost increases in 2016. We took this idea from a German company who had taken a similar decision in 2016. At the time, I considered that decision by the German company to be mad. But over time, I realised that that was possibly a better idea. So we too took the gamble, and I hope this was the right business decision. Again, only time will tell.

Based on above factors, ARC has taken a good hit on profit, and so far only passed on about 7% to 8% of the cost increases. As we go forward, depending on various factors, more prices rises are expected to come. Reasons for this are to do with the above, and nothing to do with any trade wars. Outcome of trade war will be a different story.

Side effect of investing heavily in stock was a friendly investigation visit by the HMRC – VAT department, as we had more purchases than sales over the past two quarters – ending December 2017, resulting in heavy VAT refunds. As HMRC had to pay us, they wanted to know why, came for a visit, saw, spent four hours, were happy, and went on their merry way after hearing my rant – few words of wisdom and enlightenment about Amazon, eBay, under-invoicing by overseas companies trading on such platforms,function/role of HMRC and the lovely politicians. Full refund released a week later. … I was advised that HMRC are hearing similar rants from many businesses they are visiting, but what they can do is something which only time will tell.

Today we have been advised of price increases for the cardboard packaging – boxes we use, by 10%.. and so it goes on. I hear timber prices are are set to rise soon by a similar %.

Ketan at ARC.

[IanTParticipant @iant]

Well said Mick.

Whilst I'm sure that European countries produce some excellent/quality products Trevor – the reality is that I don't recall buying too many of them. Most of my 'new' purchases have been manufactured in the Far East/China – that is the truth of the matter. We have been fortunate (?) to live through a time when imports from far away places have often been cheaper than the cost of raw materials here. Let's accept the fact that folk in those distant places want (and deserve) a better standard of living than they have now – and that they will eventually get it. So it's not a matter of tariffs – simply a question of hourly labour rates and simple fairness…

Eventually, the 'luxury' of buying cheap imports must disappear and the cost of "stuff" will start to go up alarmingly I suspect. I'm pretty sure that being in or out of the 'Union' will be neither here not there when that happens. Many people (countries?) seem to be living well beyond their means. Maybe we will all have to go back to a new reality (austerity?) which in ME terms might mean making all those things that we can currently buy for peanuts because some poor sod (far away) is only paid peanuts to produce them…

Hopefully, by then – we will still remember how to make (and grow) what we really need – and perhaps we will even get back to a time when we are not so dependent on the 'kindness' of others – which is always an unfortunate & precarious situation to find yourself in…

Regards,

IanT

PS I have a shed called 'Tardis' which can take me back in time (to when we still made things' ) – unfortunately it's smaller on the inside than it appears on the outside – a mystery I haven't managed to solve yet…

Edited By IanT on 04/04/2018 23:15:10

[IanTParticipant @iant]

Ah – VAT inspections Ketan! I remember them well

Many moons ago we had the first of a few such visits. The VAT Lady refused all offers of Tea and Biscuits on arrival and went straight to work. After about three hours an offer of Tea was grudgingly accepted (but absolutely no Biscuits!). After five hours, the Lady announced that she had found one discrepancy (a member of staff had claimed for laundering a shirt whilst working away – and erroneously included the VAT) and that we therefore owed the VAT man 63 pence – for which (with some relief) a cheque was written on the spot.

That's about 12p per hour I guess – plus the cost of Tea of course

Regards,

IanT

[DMBParticipant @dmb]

Sam,

Quite agree. Wifey is strong believer in Mrs May and thinks she is genuinely anxious to carry out result of the referendum. I say Mrs M.voted to remain, which makes me doubtful.Time will prove which of us is right.

As regards engineering supplies, South East England and Brighton, especially, is a desert. A hobbies that I am working on, calls for a small lump of common black mild steel,which I have searched for, for a long time at clubs, second hand toolshops. Given up as now urgent, so sent off to advertiser on here/mags.. Searched all the usual advertisers and M-machine supplied by return of post, much cheaper than the rest. Unfortunately, due to what it was and therefore, the weight, cost of postage more than doubled the bottom line.

[DMBParticipant @dmb]

Trevor,

Agree with what you said. I don't care about skin colours, nationalities, religions or other peoples particular sexual leanings, all that really matters is are they capable and willing to do the job for which they are being paid and therefore pulling their weight? The simple fact is this is only a tiny country compared with certain others and surely common sense should prevail and strict control be maintained over immigration. As a matter of interest,I understand that there are more French people in London than any other city outside of Paris. I wonder why?

The UK has a USP from a tourism point of view, which no other country has; our unique Royal Family. This is something else that is likely to be at least marginalised if not destroyed by the Republican loving united(?) /Federal states of Europe. The foregoing are the main reasons why so many voted to get out of the EU and allow us to control our future without so much external interferance from faceless unelected gravy train riders with no idea of, or control of, their budget. EU accounts not signed off by auditors for years due to major discrepancies.

Edited By DMB on 05/04/2018 00:26:13

[Martin DowingParticipant @martindowing58466]

Posted by Sam Longley 1 on 04/04/2018 22:45:39:

Posted by Trevor Crossman 1 on 04/04/2018 21:32:43:

It is already very difficult to obtain many of the less commonly used materials in UK due to the disappearance of much of our small manufacturing, and material importer/stockholders in this country are not interested is small retail supply, hence my reason for buying from the EU whenever that is the cheapest source for a particular item after all shipping and vat ( which may be much higher than UK rate) is taken into account. Trade wars will only make small scale supply to hobbyists more expensive and ulimately less available.

Has it not occurred to you that the reason that our small manufacturers have disappeared is because you are buying from abroad? Presumably because they are cheaper & will always be so now you have decimated our industries by buying foreign. Has it not crossed your mind that if we placed tariffs on the items that are being "Dumped" on us these goods you buy would not be cheaper than home grown?

But of course due to EU regulation we can only apply EU governed tariffs can we not?

But by leaving the EU one would hope that we would not be so restricted. However, the remoaners, & that includes Mrs May, seem certain to keep us aligned if they can

Did you ever think *why* goods produced in the UK are more expensive than Far Eastern counterparts?

Here is the hint: red tape, taxes, welfare programs, workers rights etc.

Toxic legal environmet have made UK companies uncompetitive. There is no "dumping" from Far East. All what we can see is that better managed economies are succeeding and those overregulated are getting bust.

Bans or tarrifs on imports will *not* make UK companies competitive again. There is a concept known as "marginal utility". If you cannot produce something below certain price, you cannot sell it either. Too expensive items are simply not purchased at all – hence manufacturers protected only by tarrifs who cannot produce cheap enough will not succeed.

So introducing tarrifs without laxing local regulations making manufacturing uncompetitive in the first place will achieve nothing and only contribute to progress of technological retardation.

Martin

[richardandtracyParticipant @richardandtracy]

There was one job the company I work for bid on, it was a BIG spacecraft transport box for Japan. Just the sort of thing we are capable of & specialise in.

A Chinese company got the contract. Their total price was 90% of the UK material cost we had calculated, ignoring labour & manufacturing cost. Suspecting dirty dealing and subsidies being involved, we did a bit of research into the Chinese company's environment; local raw material prices, labour prices etc. And, to our surprise, came to the conclusion their price was perfectly legitimate, and indicated an expected labour input similar to what we had expected to do it ourselves..

Then we looked at importing the materials from there so we could benefit from the same prices. And found that transport costs, low quantity premiums, import duties etc bumped the material prices up to 90% of those found in the UK, and when the 3 month transport lead time risk was added in, an accountant would probably say it'd be more expensive.

The UK is simply too small and too expensive to be a good place to manufacture stuff in these days.

We are facing a skills shortage in the SE of the UK too. Trying to get sub-contract designers is becoming a major task in itself.

Regards,

Richard.

[DMBParticipant @dmb]

Martin,

That is part of the EU problem, far too much red tape spewed out of Brussells. The bigger the organisation so the more controls need to be issued to enable the extra management to maintain a grip on everything that goes on within that organisation. This applies to large companies, "local" government as well as central govt. Even worse with regional govt like the EU. I was taught in Economics studies that bigger orgs. enjoy the economies of scale. Maybe, but I say that the economies in one direction are squandered in another, e.g., more and more tiers of management with all their employment benefits packages. I suspect that is also the achilles heel of our NHS, the largest single UK employer which I call the 2nd Civil Service. People voted to get out of EU to bring Govt back to their area with local electoral representatives anwerable to local voters.

John

[Martin DowingParticipant @martindowing58466]

DMB & others,

I am not a fan of EU at all. In the past it was great as free market agreement but now it is no more than troubled and failing social engineering project. The faster it goes to dustbin of history, the better. However I would still support former formula, eg free trade agreement.

One way or another countries belonging to so called Western civilization must realize that they no longer have a global influence like used to be in the past. They have constructed defunct socialist/liberal systems no longer competitive on global scene. At the moment it is only a threat of military force, which prevents other nations from grabbing most of wealth and influence but superiority of this military force is already questioned. It was easy enough to bully Iraq, Afghanistan, Libya or Serbs but really nothing lasting was achieved and a lot of money gone wasted

Syria is the first place where Americans have suffered conclusive defeat in this century, North Korea seems to be a non starter, Iran too. Relations with Turkey are turning more and more disastrous.

It seems that "democracy", "freedom", "women rights", "gay rights" or any other BS no longer can be exported elsewhere. Interests of huge foreign powers are under threat and further efforts in this direction will only result in trade wars, economic collapse and who knows, maybe even atomic war.

Martin

[Jeff DaymanParticipant @jeffdayman43397]

Boy, this is a happy Model Engineering hobby thread.

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