Since tariffs on Chinese imports went into effect last fall there were two postponements before the inevitable additional hike this spring. Many assumed domestic manufacturers’ business would see an immediate boost. Has that happened? The answer is complicated.
The declaration of tariffs took nearly everyone off guard last fall, forcing the industry into overdrive — some manufacturers immediately raised prices, others began searching for factories in unaffected countries; some swallowed the initial price increases, and others adopted a wait-and-see position. Even domestic manufacturers were concerned, since many rely on components and materials from China. And in the cutthroat retail world of relentless price wars fought between online and brick-and-mortar stores, everyone braced for consumer backlash.
So, how effective have the tariffs been in bolstering domestic manufacturing? After interviewing American-made lighting companies, I’ve found the results aren’t so easy to quantify.
“As we are often specified on projects one or two years in advance, we are not immediately realizing the shift of business from off-shore to American-made, but may in the future,” comments Barbara Restin, Vice President of Ultralights in Arizona. “I think there is a general effort to ‘Buy American’ and in addition to people truly wanting to support American manufacturing, there seems to be some cachet in doing so,” she continues. “I think our increased business may be due to the national conversation, not the punitive tariffs.”
“We find that the market seems volatile overall,” notes Cinnamon Alvarez, founder & CEO of A19 in California. “We don’t connect tariffs with an increase in business, but we are working on finding customers who promote American-made artisan products. We are seeing a few older customers supporting us more and have partnered with a few new customers. With the return/increase from existing customers, I expect the increase is more a result of our focused sales efforts than the tariffs.”
Bo Graham, President of Fourteenth Colony in Memphis, agrees. “While our business has increased since the tariffs were announced, I really don’t feel the increase is due to tariffs but due to a strong economy and different routes of distribution.”
Ross Kirshenbaum, President of American Brass & Crystal in New Jersey, estimates his company’s boost has come from 70 percent existing clientele and 30 percent from new customers.
In addition to its long history of manufacturing lighting fixtures in a wide variety of styles for any room in the home at its Upstate New York factory, Meyda Lighting has focused a lot on custom ironwork for the hospitality market, especially in the years since it acquired fellow American-made lighting manufacturer 2nd Avenue.
“For the most part, our business continues to grow, and as a domestic manufacturer our sales have increased accordingly,” notes Robert Cohen, President. “Many customers enjoy working with American suppliers as we can maintain stringent control over quality and lead times than overseas competitors. We are a vertical operation with a complete engineering staff and nearly every manufacturing process under one roof.”
Like Kirshenbaum, Cohen has found repeat clients make up the lion’s share of orders; however, “New customers are definitely a key element for increased sales on the domestic side of our business,” he comments, adding, “We continue to expand our business through all channels.”
Growth for Hanover Lantern has been 100 percent, but that’s because last year at this time the company did not exist (technically). Hanover Lantern had been founded as a domestic manufacturer in 1970, but was acquired by Genlyte and then Philips, which moved manufacturing to China. After Philips closed the company in 2016, two former employees with a combined 39 years at Hanover Lantern – Tim Raubenstine and Keith Fogle – reopened the business under the name Hanover Outdoor Products in November 2018 and resumed operations as a domestic manufacturer in its original city of Hanover, Pa., hiring back many of its former local workers. In February 2019, Hanover Lantern shipped its first orders to an appreciative customer base, many of whom have enjoyed a long history with the brand.
“Most of the business has been coming from the excitement of having Hanover Lantern back,” says Tim Raubenstine, President & CEO. “We have not seen a big impact of the recent pressure of increasing tariffs [due to timing] but I believe that once the tariffs are in effect that it may push more sales towards USA companies. Most of our current customers have been past Hanover customers.”
For Utah-based Hammerton, the tariffs have provided “a tremendous incremental sales opportunity,” according to Bill Shott, CEO. “As a relatively young showroom brand, [our] Hammerton Studio [division] continues to see strong growth both in terms of new distribution and same store sales. There’s no question that the tariff situation is accelerating that growth on both fronts.”
For 114-year-old Chicago-based manufacturer Framburg – part of American Lighting Brands, which also has factories in California for Arroyo Craftsman’s outdoor lighting and Vermont for House of Troy’s portables and picture lights – there has been double-digit growth due to American Lighting Brands’ partnership with the industry cooperative Lighting One to offer exclusive Made in America products to Lighting One’s membership. The program also includes a printed catalog featuring lifestyle images of the products, which are only available online to Lighting One showrooms.
“Framburg in particular has had a definite uptick in sales, due to last summer’s launch with Lighting One,” notes Bill Brown, President of House of Troy, one of American Lighting Brands’ companies. The initial launch, unveiled at last year’s Lighting One convention, consisted of 12 collections (36 SKUs) and were created with the guidance of a specially appointed Lighting One Advisory Council coordinated by Angie Prost, Lighting One’s Supplier & Product Manager.
“With the success of the 2018 launch, this year we expanded the Lighting One exclusive Made in America line with 14 new collections (34 SKUs),” Prost says. “With the guidance of the Lighting One Advisory Council, which is made up of nine member showrooms, we collaborated with American Lighting Brands to create what we believe will be another successful product launch. We are excited about the new products – which now include outdoor lighting and picture lights – that debuted last month at convention.”
The need for speed
Price shopping may be all you hear about when it comes to consumer demands, but there’s another factor gaining importance. “The internet has trained people to get things right away,” Brown explains. “This even happens on custom orders; it’s an ‘I want it now’ mentality,” he states.
In fact one domestic manufacturer cited an example where the company created and delivered an assortment of custom pieces for a project within four weeks and the customer expressed disappointment that it couldn’t be faster.
“There are three factors that go into the decision-making process when choosing ABC over one of our competitors: Price, Quality/Custom, and Lead Times,” Kirshenbaum remarks. “When we lose [to an overseas manufacturer], it’s always been based on price,” he notes, adding that the narrowing price-point due to the tariffs has made ABC’s prices more competitive.
“One of the most important costs to control as an importer is inventory,” Kirshenbaum states. “That cost just got 25 percent more expensive. Mitigating that risk and carrying less inventory is a prudent business decision. We’ve heard that our competitors are carrying less and less inventory, thusly not being able to hit customers’ project deadlines. As a result, we are winning more projects, even though we were above the budget.”
Graham at Fourteenth Colony has also noticed the growing importance of delivery speed. “Lead time is currently a larger issue than price with our customers,” he comments.
Meyda’s Cohen adds, “When it comes to custom manufacturing, although price can be an issue, most are focused on quality fixtures, superior design, engineering, and meeting our shipping deadlines.”
Ultralights’ Restin concurs. “There are a lot of factors that go into purchasing, such as choice, quality, customer service, dependability, and lead times,” she says. “I think the combination of all of these is what drives Ultralights’ growth. Our customers are, in fact, concerned with lead times — which may or may not be the determining factor for their choice, but it is an important consideration.”
At A19, however, price and shipping can make or break the decision to buy. “We find that our customers are more concerned about price than ever,” Alvarez notes. “Lead time and shipping are also a concern as our distributors attempt to compete with Amazon.”
Speed is what matters most to Hanover customers. “For us, it is currently about lead time and shipping. Price has always been a concern with Hanover products because we have tried to source most of our raw materials within the USA,” Raubenstine comments.
Benefits at retail
Another discerning difference between selling American-made versus imported product is the more comprehensive sales conversation that is necessary to justify the higher price.
“Historically, cheap offshore product simplified the job of the lighting retailer, since it doesn’t take much training or product knowledge to sell on price,” Shott explains. “Without the price card to play, retailers have had to uplevel their sales approach, and many are discovering that taking more of a solution focus to their sales efforts yields dramatically higher margin returns. That is playing to the advantage of companies like Hammerton.”
Alvarez at A19 would like to see more support for domestic manufacturers at the retail level. “What’s interesting is that it still seems like the retail community is prioritizing carrying fewer lines that support their bottom line versus diversifying their product offering, promoting American Made products, and offering customization,” she says. “We understand that it’s a lot of work to have an educated sales team and offer it all, but [as a domestic manufacturer we have found] convincing the typical retail showroom that it’s advantageous for them to carry a specialty line that is Made in America and has custom capabilities can be challenging.”
Poised for continued growth
With no end to the tariffs on the radar, American factories gear up for more business and ramp up their publicity efforts. “We get the word out about our capabilities through digital and print advertising, assertive e-marketing, comprehensive public relations, updated websites, participation in trade shows and other industry events, relying on a national sales force, and supplying expansive catalogs and other literature,” Meyda’s Cohen states.
“We go into any direction that calls,” Cohen comments. “We service the lighting industry — lighting showrooms and distributors, the hospitality and entertainment industries, private residential homes, theaters, senior living facilities, etc. There is no order that we won’t entertain. We quote every job that comes our way.”
To keep up with demand, Cohen invested in a new state-of-the-art laser cutter that has allowed Meyda to enter new markets. “We can now manufacture more contemporary products that entail clean, straight thin lines in architectural-looking fixtures,” says Production Manager Chester Cohen. “The laser cutter has taken our company to the next level. It helps us meet tight lead times because we aren’t fighting with parts once they have been cut or having to clean and rework them.” In addition, Meyda expanded its powder-coating production area by more than 50 percent to accommodate customers’ rapidly changing finishing demands and is designed to accommodate large-scale fixtures.
Hanover Lantern has gotten the word out about its return to domestic manufacturing through its rep force. “We have a great team of representatives in place,” Raubenstine notes. “Many of our sales agencies have sold Hanover for many years and understand our capabilities.” Since opening its facility in November with five employees, the company has grown to 17 with the intention of bringing on approximately two to four more. “We are in a 13,000-sq.-ft. building and we are running out of room for warehousing raw materials,” he adds. Moving to a larger location in the future is on the horizon.
There have been some furniture and upholstery manufacturers returning the U.S. to start up production; however, those numbers are still quite small. As many of the manufacturers interviewed point out, making products here often requires using components that are imported (with tariffs) from China and those costs get added onto the final price. If lead times and shipping are a customer’s priority, then seeking out domestic resources might mitigate the higher cost.
It would seem the best course of action for distributors is to establish relationships with manufacturers whose factories are in the U.S. as well as those with operations overseas in order to satisfy customers’ needs. For customers desiring faster delivery for more commodity or lower-priced goods, it behooves a distributor to carry more inventory in those categories than in years past to reduce the customer’s wait time for overseas shipping.