U.S. surfboard makers not so stoked about China tariffs

[August 16, 2019]  By Lisa Baertlein

LOS ANGELES (Reuters) - President Donald Trump's decision to slap 10% tariffs on imported surfboards convinced surf executive Sue Bowers to move factory jobs out of China - but not back to the United States, which was one goal of Trump's tariffs.

Strict environmental rules and steep labor costs have sent scores of Southern California surfboard manufacturers to China. Now, the tariffs have Bowers and other executives searching for factories in places such as Thailand and Vietnam.

"This was Surf City," said Bowers, general manager of Southern California Sports Industries in Orange County.

"I would like to have our production back here," said Bowers, whose office/warehouse is decorated with surf legend Mike Doyle's artwork and filled with surfboards bearing his name.

Instead, Bowers - not a surfer herself but who learned the ins-and-outs of surfboard construction from Doyle - is joining the growing list of U.S. manufacturers and retailers reconfiguring supply chains in the wake of the Trump's bitter trade war with China.

She was among a half dozen U.S. surf company executives who told Reuters they support using trade policy to shelter their homegrown industry from a daunting wave of international competition.

They are skeptical, however, about the President's latest round of tariffs, which on Sept. 1 will levy the first U.S. import taxes on surfboards.

"There are way too many things that need to change before we can bring jobs back," said Bowers, referring to U.S. labor costs and anti-pollution rules governing the use of materials to make surfboards.

Trump delayed putting the 10% duty on cellphones, laptops and other consumer goods in hopes of blunting their impact on U.S. holiday sales. But surfboards and many other products did not win a reprieve.

FORCES OF GLOBALIZATION

Southern California was surfing's epicenter in the late 1950s and early 1960s, spawning a billion-dollar international business around surfing's relaxed, sun-soaked lifestyle.

The forces of globalization that have eroded the industry were well underway by the turn of the century and the continuing manufacturing exodus threatens to wipe out domestic production.

Doyle surfboards manufactured in China are shown at the company's warehouse in Lake Forest, California, U.S., August 7, 2019. Picture taken August 7, 2019. REUTERS/Mike Blake

"If something doesn't happen over the next 10 years (the industry) could cease to be here," said Shea Weber, chief executive of Dewey Weber International, a surfboard company started by his father - a famous long board "hot-dogger" who appeared in the classic surf documentary "Endless Summer." Dewey Weber still has a factory in San Clemente, California's "surfboard alley."

2018 surfboard imports hit 916,246, up from 102,850 in 2004, when the U.S. Census Bureau started collecting that trade data. Those imported surfboards now account for upwards of 90% of sales in the small and slow-growing domestic market, experts said.

China accounted for 67 percent of the surfboards that hit U.S. shores last year. Critics of Trump's tariffs say that focusing on just one country encourages manufacturers to move jobs to other Asian countries.

Countries like Thailand and Vietnam were already carving out niches on the high and low ends of the market with hourly factory wages that, according to Euromonitor International data, are roughly half that of China and as much as 19 times lower than in the United States.

California-based Firewire, backed by surf superstar Kelly Slater, moved production of its $500 to $1,000-plus surfboards to Thailand after shuttering U.S. manufacturing in 2008.

Taiwan has also edged into the market, building a cult following for its own Wavestorm surfboards that sell at Costco Warehouse Inc <COST.O> and other mass-market stores for as little as $99 - a price far below what U.S. producers can match.

Nicole Adams, who was testing a borrowed $200 Wavestorm on a recent Sunday in Venice Beach, is part of a new generation of surfers learning on those wide, soft boards.

"It floats like a boat," Adams said.

(Reporting by Lisa Baertlein; Additional reporting by Omar Younis in Malibu and Mike Blake in San Diego; editing by Bill Tarrant and Nick Zieminski)

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