SIA News 6.0
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THE RISING COST OF PRODUCTION IN CHINA
China’s days as the low-cost manufacturing center of the world are over. Increased production and shipping costs are increasing the price of producing goods destined for export from China. Those increasing costs must be passed on to American (and other export markets’) consumers already strapped economically by slow recovery. The “Great Recession,” that began in December 2007, is still resulting in unemployment levels hovering at 10%, low consumer confidence and reduced sales across all wholesale and retail markets. Additionally, these factors may result in production and shipping delays as labor shortages and shipping capacity are stretched to the limit.
There are several major factors at work in the rising costs of Chinese production including:
- The China Contract Labor Law enacted in 2008
- Shortage of highly skilled Chinese labor
- Domestic economic stimulus projects that are pulling rural Chinese workers out of the cities for large infrastructure construction projects closer to their villages in interior China
- Shortages of shipping containers
- The beginning of organized labor in China and the disruption that normally accompanies the birth of organized labor
These factors could represent big opportunities for snow sports suppliers that have goods in their warehouse. Several suppliers in the snow sports industry have experienced problems due to one or more of the factors listed above. Some suppliers will not be able to ship their goods to retailers until November-December. This presents an opportunity to companies that have stock ready to ship to retailers that are running short of product in the early season.
The China Contract Labor Law enacted in 2008:
The 2008 China Labor Contract Law requires all labor contracts be in writing and imposes significant penalties on employers who fail to comply with the 2008 law. The new law also greatly limits the use of term contracts and probationary periods; previously popular ways to skirt China's existing labor law regime. Under Chinese law, an employee can be discharged either at the expiration of a term contract or for cause. To avoid the need to terminate for cause, employers in China have typically engaged employees under a series of short-term contracts. This practice is no longer possible under the LCL. The employer is permitted to enter into a maximum of two term-contracts with the employee.
If the employee continues on after the expiration of a second term-contract, the subsequent employment contract is deemed to be an “open-term contract.” Under an open-term contract, the employee is employed until he chooses to terminate the contract or reaches retirement age. The employer can only terminate the employment contract by discharge of the employee for breach. This means that once the relationship has shifted to an open-term contact, the result for competent employees is effectively “employment for life".
Shortage of High Skilled Chinese Labor:
Early in 2010, factories struggled to rehire enough willing workers at existing wages (see low skill issues below). Then in May, Taiwan's Hon Hai Precision Industry (2317.TW; also known as Foxconn), the world's largest contract electronics manufacturer, said it would double the salaries of its mainland workforce following a rash of high-profile employee suicides. A few weeks later, staff at Honda (HMC.NYSE, 7627.TYO) and Toyota (TM.NYSE, 7203.TYO) plants in China went on strike over wage demands.
It has been suggested that China has crossed a critical threshold in its economic development where its pool of cheap labor has been exhausted and wages inexorably begin to rise.
The real Chinese labor crunch is concentrated almost entirely in the market for more skilled, experienced workers - and it is becoming more acute as manufacturers try to move up the value chain. Virtually all of the high-profile cases where Chinese workers have successfully pressed their demands have involved activities - like automotive or electronics manufacturing - whose skill requirements make qualified employees hard to recruit, expensive to train and difficult to replace. Click here to read entire article.
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WINNING RETAILER: “SERVICE AND YOU GOTTA PARTICIPATE,” RAUL PINTO, SATELLITE BOARDSHOP
Raul Pinto, co-owner of Satellite Boardshop in Boulder, Colorado, got started in the industry by working at Surf Sports in Marin Country. He later got into snowboarding after moving to Santa Fe. In 2002 Raul and his business partner, JG Mazzotta, opened Satellite Boardshop. Raul took some time out of his busy schedule to give some predictions for the season and industry insight.
SIA: Why are you in the industry?
Raul: It’s just life for me now. I don’t look at it as an industry as much as just a way of life. "This isn’t a costume man; it’s a way of life". Haha!
SIA: How can the industry work together to do better business?
Raul: We should build stronger relationships. Partner with the strong brands and vendors and trim some of the fat. That is what this whole recession thing is all about; trimming the fat. Brands that are not strong, shops that are not strong, and more importantly brands and shops that don’t participate. They need to go away, and in the end, we hope we have a good solid community that is in this lifestyle for the right reasons.
SIA: How were your Labor Day sales?
Raul: Solid, but we had quite the fire here in Boulder, so I think people were more concerned with other things. It’s still smoky outside.
SIA: What are your customers’ reactions to some of the new gear and product for this season? Predictions on hot sellers?
Raul: Reverse boards will still do well and so will Airblaster, Holden, ThirtyTwo, and Nike.
SIA: What do you see as your immediate business priorities in this current economic climate?
Raul: Just stay solid. Let consumers that have lost their local shops, know that we are still here. Get the word out to consumers (who are seeing less variety at big box shops) that we have it all.
SIA: How do you feel about the upcoming season? Predictions?
Raul: It’s going to be good. People have been sitting on old stuff and their wallets for a while now. Overall, it will look level because of unemployment and all that unfortunate business going on
SIA: In what way do you see consumers changing their shopping behavior? How should retailers respond to those changes?
Raul: Getting stuff they really need and holding out on all the fluff.
SIA: How can snow sports specialty shops keep consumers coming in and buying product?
Raul: Shops can keep consumers buying product by providing specialty service and specialty products. The snow sports industry has so many colors and faces it’s easy to speak to tons of different customers and that’s what’s gonna keep things fresh and moving forward.
SIA: What characterizes a winning retailer?
Raul: Service, service, service and then sprinkle on some more service. Also, you gotta participate. If you don’t put days in on the hill, how do you really know anything?
SIA: Which retailer – company or individual – do you admire the most in the industry and why?
Raul: Probably Cal Egbert, owner of Milosport in Salt Lake. He knows what’s up and he surrounds himself with others that do as well.
SIA: What value do you see in SIA and in the Show?
Raul: It’s not perfectly clear but it should be the biggest community table (providing info and building relationships, national local and international) but we never have pot lucks!! That’s where people create ideas and make a more dynamic industry. SIA sometimes comes off as being a little more stagnate than it has the potential to be.
SIA REGIONAL RETAILER OF THE YEAR AWARD NOMINATIONS
Attention Suppliers! Make sure you check your inbox this week for the SIA U.S. SnowSports Regional Retailer of the Year Award nomination survey. Once again, you have the option to vote on your favorite retailer of the 2009/2010 season. This award recognizes those retailers in the snow sports industry that have successfully cultivated and furthered relationships with suppliers and reps to promote the sales of snow sports products.
The 2010 U.S. SnowSports Retailer of the Year Award will be presented to one retailer in each of the following six regions. Nominations for this accolade come from U.S. suppliers and reps in the snow sports industry. Please join the industry by helping us recognize these individuals through voting for the SIA SnowSports U.S. Retailer of the Year Award!
- Atlantic [NJ / NY / PA / DE / MD / DC]
- Eastern Lakes [MI / OH / IN]
- Mid-West [ND / MN / WI / SD / IA / IL / NE / MO / KS / OK]
- Northeast [ME / VT / NH / MA / RI / CT]
- Northern California
- Northwest [WA / OR / ID / MT / AK]
- Rockies [WY / UT / CO / NM / TX]
- South [WV / VA / KY / TN / NV / SC / GA / AL / MS / FL / AR / LA]
- West [Southern CA / NV / AZ / HI]
This year these awards will be given out during the 2011 SIA Snow Show in Denver, CO, January 27-30, 2010.
SIA SHOW AND DEMO HOTEL BLOCKS OPEN: EARLY BIRD RATES END SEPTEMBER 30
Take advantage of early bird specials for the 2011 SIA Snow Show and On-Snow Demo/Ski-Ride Fest by booking before September 30. The promotion ends September 30 or when they are filled (whichever happens first).
Reservations can be made online at siasnowshow.com/denverhotels. See a complete list of SIA Hotel Rates here.
On-Snow Demo/Ski-Ride Fest hotel rates are posted; Book here. SIA recommends booking rooms early, as rates will increase in November.
| Important Dates: |
| Tuesday, Jan 25 |
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LG FIS Big Air Snowboard Competition |
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Downtown Denver |
| Wednesday, Jan 26 |
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USSA Big Air Ski Exhibition |
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Downtown Denver |
| Thursday, Jan 27 |
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SIA Snow Show Opens
SIA Snow Style & Trends Show (fashion show) |
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9A – 6P
Doors Open 6:30P |
| Friday, Jan 28 |
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SIA Snow Show
SIA Retailer & Rep of the Year Awards |
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9A – 6P
6P |
| Saturday, Jan 29 |
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SIA Snow Show |
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9A – 6P |
| Sunday, Jan 30 |
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SIA Snow Show
On-Snow Shuttle Transportation
Nordic Demo Reception |
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9A – 1P
4P
6P (Devil’s Thumb Ranch) |
| Monday, Jan 31 |
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SIA/WWSRA On-Snow Demo |
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10A – 4P |
| Tuesday, Feb 1 |
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SIA/WWSRA On-Snow Demo |
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10A – 4P |
Continue to check siasnowshow.com for updates. See you in Denver!
RENEW YOUR SIA MEMBERSHIP TODAY
“For Liberty Skis, membership in SIA affords us the opportunity to demonstrate our products and technologies to an informed audience. In addition, we value several of SIA’s data products,” said James Satloff, Chairman at Liberty Skis Corporation.
June 1, 2010 marked the start of our new membership year. Renew your membership today. Our plans for the 2011 Snow Show are underway and we have a lot of great things in store. Don’t miss out! And remember, in order to exhibit/attend the 2011 Snow Show, you must be a current member of SIA. Notices regarding “lapsed” status will be sent out the week of September 13th.
Please contact Patricia Grenke in our membership department at PGrenke@snowsports.org or 703.506.4222, if you have questions regarding your member status Thank you to those who accessed our online renewal site and updated their company information. We look forward to working with you again in 2010/2011. Click here to renew.
SALES REP DANNY CLAYTON’S SALES TIPS AND OUTLOOK FOR THE SEASON
With the summer officially over and Labor Day sales just ending, we figured it would be a good time to gather some perspective from the industry. SIA recently checked-in with Danny Clayton to hear about his summer and get his outlook on the season ahead. Danny is a Sales Rep for Spyder, Bula, Gramicci and Arnette, Danny provided a few sales tips for the season and some predictions.
How I spent my summer:
“My wife, kids and I spend a lot of time in local rivers and lakes canoeing and kayaking. I turned my eight year old daughter onto mountain biking this summer and she digs it! My four-year-old son is game for anything and got off of his training wheels on his bike. We have a new puppy that we hike with, but he is more inclined to eat anything in the yard that is not nailed down. He made a lunch out of my favorite hoody last week and spends a lot of time stalking our chickens. I sell some lines that require that I hit the road for line showings and service calls in the summer months. In addition, Spyder committed a lot of resources for me to do build-outs and open two shop-in-shops in New England, so that has kept me and the other members of my crew jamming since about July 20th -- Bob Vila style.”
Sales Tips for the Season:
- Make sure that your brand story is getting to the end-consumer by utilizing social media, in-store clinics and on-snow events.
- Pre-books for Spyder were very strong, but there will be room for re-orders. Be the first in the door after the weekend!
Predictions for the season:
“Dealers were still feeling the pinch of the recession during last year’s booking season; I predict open-to-buy for re-orders will be strong during October and November.”
“Joe LaHout, of LaHouts Country Clothing and Ski Shop, sold six of Spyder’s Core Sweaters in one day over Labor Day Weekend. Discussing this with him at his Littleton, NH store last week, he said “Danny, I am declaring the recession over.” For those of us who know Joe, that’s BIG!!! I agree with him, I think we are seeing a solid upturn in consumer spending. But…big caveat, pray for snow!”
All about Danny:
Danny is an avid snowboarder, skier and mountain biker. He has been a sales rep in the action sports and outdoor industry since 1987. Danny has represented Oakley, Helly Hansen, O’Neill and Ray Ban. He employs his brother, Steve Clayton, as his wing-man; an office assistant, Shay Manning; and a road warrior, Andrea (Andee) Weaver. In his 23 years in the industry, Danny spent a total of five years in management with Oakley Inc. and Burton Snowboards. In addition to his sales agency, Danny and his wife own an antique shop in Johnson, Vermont, which specializes in Vermont made antiques and architectural salvage. They live in Vermont with their two children. Visit his website at greenrep.org for more information on Danny.
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SESCO EEO-1 CLIENT ALERT
This month SESCO has put out a client alert on The Employer Information Report. The report filing deadline is September 30. The Employer Information Report, otherwise known as the EEO-1 report, is a government form requiring many employers to provide a count of their employees by job category and then by ethnicity, race, and gender. The client report gives information on when, how, and who should file. Click here to read the alert.
THE WORD ON THE SLOPES
Official News: Patagonia recently opened a new shop in Honolulu, Hawaii’s Ward Centers, and will hold a Community Day Celebration Saturday, September 18, with help from Surfrider Oahu, Khea, Blue Planet Foundation and North Shore Community Land Trust. Learn more… Chaos Headwear has partnered with TGR films as the official Headwear sponsor for six years running. Chaos hats will be at fifteen nationwide film venues. Read more… There are nearly a hundred days left until the World Snowboard Day which will launch the winter season in more than 40 countries all over the world. Learn more… Nordica is pleased to announce the addition of Zach Littlepage to its sales territory covering Utah, Arizona, and Wyoming. Read more… Polarmax and the National Ski Patrol have joined forces to provide patrollers access to the best technical base layer garments available on the market. Learn more… Hestra is pleased to announce the addition of several new members to their U.S. team. Ryan Opie is the new in-house Sales Representative for the Rockies Territory to include Colorado, Utah, New Mexico, and Wyoming accounts. Jacquelyne Cox is the new Marketing and Operations Manager. Greg Guras is the Sales Manager for Hestra Job, Hestra’s new line of industrial and work gloves to be launched this fall. Read more…. DC is proud to announce that Gymkhana TWO has received another major accolade, making the list of “The Top 10 Viral Ads of All Time” by prestigious advertising magazine, Ad Age. Learn more…. Volcom has officially gone direct online with the launch of its new eCommerce site, shop.volcom.com. The site features Volcom’s full product line. Learn more… Google is launching a new feature called Google Local Shopping that will steer Internet shoppers towards small, registered shops in their area that have the products customers are shopping for in stock. Learn more… The U.S. Ski Team's women's speed group, including Olympic medalists Lindsey Vonn and Julia Mancuso closed their first four-day block last week with what speed Head Coach Chip White called, "incredible success." Read more… Kirkwood Mountain Resort recently announced record profits for the California ski area's 2009-10 fiscal year ending in July, based upon operating results that were buoyed by a strong winter performance along with a noticeable increase in summer revenues. Learn more… The sixth installation of Aspen/Snowmass' The Meeting will deliver a packed schedule of the top 2010-2011 ski and snowboard movies and is accompanied by a strong music lineup featuring DJ Muggs and hip-hop great Bone Thugs-N-Harmony, both performing at Belly Up. Read more… In its 10th Sustainable Slopes Annual Report, the National Ski Areas Association reported the ski industry’s progress in implementing the Environmental Charter in the 2009/2019 season. Learn more… In February 2010, the Credit Card Accountability, Responsibility, and Disclosure Act went into effect, helping protect consumers against interest rate increases and various billing practices. However, small businesses were left unprotected by this act, causing them to face interest rates of more than 30 percent since January, according to an article by Courtney Rubin for Inc.com. Read more.
Send us your news, press releases and stories to PR@snowsports.org, SnowSports Industries America.
Please feel free to forward this message to anyone who is interested in the growth and further development of the snow sports industry, and continue to do your part. Let it Snow!
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