News from Mid-West America – Retail Armageddon

I have just returned from a few weeks in America. Even having witnessed genuine fear of what might happen and a near 20% fall in savings investments, I was still shocked at developments reported to us last night.

We discussed Coolzy, our personal air-conditioners, with a buyer representing a major American retail chain serving rural communities with over 2,000 stores nationwide. The buyer is a staunch republican in a typical “red” mid-west state.

The discussion opened with a remark that our meeting was planned before the President announced the extra tariffs on Chinese imports. The buyer apologised and said that there would be no possibility of them stocking Coolzy, even though we already have stock in the USA.

He told us that the company had ships full of thousands of containers turning around and heading back to China. The company has extended terms with many factories, but has paid out advance deposits on products that now will not even reach America.

However, significant stock orders were in containers on ships that could not be turned around.

He described the situation as ‘Armageddon’ for his company and the industry. The company does not even have finance to pay the import tariffs due on the stock orders due to arrive in the next 2 -3 weeks. He was unsure what would happen, but seizure of their goods was a distinct possibility, he thought. Paying for containers to be returned to China might have been an option, but finding shipping capacity for that is proving to be difficult.

He said that he has been advised that their retail turnover could fall by more than 90% as they cannot replenish most of their retail product lines. But that’s not the only factor.

Critically for farmers, one of the companies in their group supplies a wide range of spare parts for harvesting equipment and tractors. The company has minimal stock because most parts are ordered from China as they are needed and flown in by air freight. Five to ten is a typical stock level. Already, they are running out of spare parts and the main harvesting season has not even started.

Many of their farmer customers are telling him that they may not be able sell the produce they harvest for Chinese customers. So, they are cancelling all non-essential orders and deferring paying outstanding bills.

The company president has reached out to Republican senators, but they have told him that the White House is not listening.

He closed the meeting by commenting “I have always voted Republican, but as far as I’m concerned, that ….. in the White House needs to get out now. It’s Armageddon for our business. That’s the only way I can describe it. I’m sorry, we shouldn’t be taking your time to talk politics, but you need to know what’s happening over here. I’m not even sure I will have a job in a month or two.”

Image credit: Haotian Zheng at Unsplash.com