The 2019 Los Angeles Vistage Executive Summit at JW Marriott Live in DTLA drew hundreds of local executives with a shared commitment to accelerate the growth of their organizations and strengthen their leadership. The packed agenda included these headliner topics:
- CEO Decision Factors from Joe Galvin, Vistage Chief Research Office
- The Economy from Brian Beaulieu, CEO of ITR Economic
- Leading a Radically Inspired Life from John O’Leary, Author
Breakout networking sessions and sponsors provided additional opportunities and content, for example the tariff lunch session.
Tariff Talk on the Table
To address the fact that several LA-based Vistage member firms are impacted by tariffs, a lunch breakout session was offered, “How to Creatively and Profitably Deal with Tariffs” hosted by Vistage Networks. A strong team came together to engage the group, including Vistage Chair Ron Means, Vistage Chair Richard Haigh, Vistage Networks’ Christine Walsh, ProductToProfits CEO Amy Wenslow and Scosche Industries President Roger Alves.
Based on a show of hands in the room of several dozen executives, around 60% of their organizations have imports from China and are directly impacted by tariffs, leading to lively audience engagement.
The session began with a case history from Roger Alves, co-founder of Scosche Industries. Roger walked us through the $5.5 million impact of tariffs on his family business. We also heard from other experts and members of the audience. The list below represents my non-expert take on the recommended approaches, with the understanding that expert advice and counsel is recommended before taking any action.
10 Tariff Tips
- Raise prices and negotiate with suppliers to share costs of tariffs
- Find factories in other countries to build products. An example given was a new factory in Vietnam that came online for Scosche. In this case, the Chinese supplier was already in process to bring the Vietnamese factory online. In the near term, redeploy the product development team to find these new factories
- Review the relevant HTS (harmonized tariff schedules) rates for your product line. After reviewing, assess if any products can be migrated to those without tariffs and “scrub the product line.”
- Engage relevant attorneys and experts. Roger urged business leaders to develop “bullet proof” supplier agreements, and to always file for a design patent in China
- Do not assume that freight forwarders will provide you with best advice on HTS
- Leverage Panjiva, a site that will show you what your competitors are using for similar product’s HTS codes
- Promote your point of view by giving interviews to publications. Register for HARO (Help a Reporter Out)
- Determine if tariff duty drawbacks are optimized for export countries like Canada and Mexico. Scosche found that the method they were using “did not produce efficient returns” and has petitioned “for the faster method based on inventory turns”
- Separate out the cost of the design and development from the finished goods to ensure tariff is paid only on the correct portion
- Explore other approaches, depending on your business. Some that were discussed included Free Good Economic Zones (for those qualifying with ECommerce orders less than $800), paying in local currency, paying tooling suppliers separately from factory, bringing in more inventory before the implementation date, and using Buffalo Manufacturing Works as an expert resource
This tariff brainstorm is a perfect example of how diverse networks help leaders make better decisions. Pooling our experiences and insights gave each individual leaders new tactics to pursue in the face of evolving business challenges, just as I wrote about in “2 Proven Ways to Broaden Your Thinking for Better Business Decisions.”