Page 24 - Lighting Magazine November 2018

The Tariff Tango
were heartened by the position taken by the manufacturer regarding the tari increase.
“We are taking a strong stance to support our dealers,” the company said in an announcement. “Primarily we decided against a general price increase in favor of sharing the cost of this new tax with you in the form of a reduced surcharge [taking e ect October 16]. Our intention is to mini- mize disruption to your business and the real cost of the tari that would be further compounded to your customers under a price increase. Here’s the hard truth: Percentage margins don’t mean anything if we sell less.”
Addressing the new construction market, WAC’s statement read, “There is limited amount of money available for construction and we all have to recognize that project budgets are not likely to grow proportionally to the taxes imposed...There is an opportunity for us to work together to keep the dollars needed to buy a light as reasonably as possible and sell more lights.”
The stance taken by these manufacturers has hit a chord with retailers; they appreciate the ef- forts of vendors who are trying to help mitigate the
The onus will be on the smaller distributor, who may have no choice but to pass the increase onto the consumer or take a loss by matching the online price.
damage of tari s to their bo om line. However, there is much discussion in the showroom com- munity as to handle even the slightest of increases when they have already been losing margin to low- ball internet pricing.
One concern is whether manufacturers will in- crease their IMAP pricing (to re ect the tari ) to help level the playing eld for the brick-and-mor- tar showrooms. Many believe the internet giants will absorb the increase with li le complaint and that the onus will be on the smaller distributor, who may have no choice but to pass the increase onto the consumer or take a loss by matching the online price. Others hope the national a ention on the tari s will be in the consumers’ mind when the price conversation occurs on the selling oor.
The controversial tari s haven’t been bad news to everyone, however. None of the domestic light- ing manufacturers interviewed anticipate a drop in sales for 2019, and many are hoping for an uptick due to the tari s.
“We have an advantage, tari s or no tari s, especially when it comes to commercial proj- ects,” notes Jeanne-Marie Gand, VP/Marketing of Hubbardton Forge in Vermont. “As an American manufacturer, we’re able to create custom prod- ucts with a very reasonable lead time and can ensure a reliable delivery date.”
According to Malcolm Tripp, President of Ameri- can Lighting Brands (which includes domestic manufacturing for Framburg, House of Troy, Arroyo Cra sman, Thumprints, and Scatchard Stone- ware), estimating how deeply the tari s will a ect his lighting business is complicated.
“About 30 percent of House of Troy’s and 50 percent of Thumprints’ sales derive from nished goods that are imported, while Framburg, Arroyo Cra sman, and Scatchard Stoneware are all made in the USA,” he explains. “To what extent any of the product lines are a ected by the tari s is very di cult to predict because there are many countervailing factors including – but not limited to – the fact that other inputs may be a ected re- gardless of the country of origin. We do not know the price inelasticity of lighting products relative to other competition for disposable income, and, at least in the short run, the uncertainty created may dilute or outweigh the intended bene ts.”
For the hospitality and custom market, Tripp believes there will be li le impact. “Given the type of projects we target, I believe that most of our
22 enLIGHTenment Magazine | noveMber 2018
www.enlightenmentmag.com