Adventures in the adventure industry

In Boulder County, some of the biggest losers of the current international trade spat are the folks who make hats and other soft goods.

It’s spring, with the last of the snow coating the high peaks and rain moistening the Flatirons’ flanks. Kids are riding bikes in town, while skiing is still in full swing at resorts like Breckenridge and A-Basin, which recently announced season extensions in the wake of an epic winter, closing a month or more later than last year. But in Boulder County and beyond, the people who produce the outdoor sports gear and clothing that equip these spring adventurers are worried. There’s a dude in the White House named Trump who has thrown the industry into chaos and with no end in sight for the ongoing bickering that is Trump’s trade war with China — those that manage outdoor brands across the Rocky Mountain West are nervous.

“President Trump has imposed $250 billion in tariffs on imports from China in response to China’s IP practices,” says Rich Harper, the Outdoor Industry Association’s (OIA) manager of international trade. “These additional taxes have raised costs for some outdoor companies and consumers, impeded job growth and innovation, and perhaps even discouraged more Americans from enjoying the outdoors.”

In September 2018, the Trump administration imposed a third round of tariffs on products sourced from China, coupling it with threats for more tariff increases in the near future. This, says Harper, resulted in an “additional 10-percent tariff on backpacks, sports bags, kayaks, leather ski gloves, headwear, some camp stoves and camp chairs.”  

Currently — and perhaps surprisingly — some of the biggest losers in the current international trade spat in Boulder Country are the folks who make hats. “We were really impacted in 2018 by the tariffs on hats,” says Rhonda Swenson of Boulder’s KrimsonKlover, a softgoods manufacturer of fashionable sport sweaters, skirts, dresses, socks, tights and scarves, in addition to hats. “We had to absorb the extra cost because we had already sold into our retailers at a certain price and were not able to pass on the increase. This was a pretty big hit on our margin.” 

Kay Martin, CEO of Boulder hat company BOCO Gear, adds, “BOCO Gear manufactures primarily in our factory in China, and close to 100 percent of our product line is impacted by the tariff.” 

When products are manufactured outside the U.S. and then brought into the country, U.S. Customs and Border Patrol determines a certain percentage of the product’s value, known as the duty rate, that companies must pay in order to import their goods. Practically everything under the sun has a specific duty rate, which is determined by numerous factors, including where the item was acquired, where it was made and what it is made of. Both China and the U.S. impose these rates, also known as tariffs, on the crossflow of goods between countries. 

Photo by Tom Winter.

“The initial 10-percent increase in duty raised our average duty rate from 7 percent to 17,” explains Martin. “If the next installation of 15 percent goes into effect [delayed as of now], our new duty rate on all our product will be 31 percent.

“For brands like BOCO Gear who are impacted by the tariff, we worry about the rise in the cost of our product to U.S. consumers and the welfare of our employees both in the U.S. and within our factory in China,” Martin adds. “The uncertainty of the [tariff] timing has forced us to delay the timing of key hires and has caused us to divert valuable resources toward strategies to mitigate the harm the tariffs could do on our long-term development plans. As it relates to the Trump administration’s policies toward China and trade, trade wars are not the answer when there are so many U.S. companies, U.S. employees and U.S. jobs at risk, particularly when there are not existing options for manufacturing for our specialized manufacturing process within the United States.”

KrimsonKlover’s Swenson agrees that jobs are at stake. “I think the tariffs have the ability to put a few smaller companies out of business that do not have the ability to take the kind of financial hit the tariffs can bring,” she says.

OIA’s Harper concurs. “Faced with rising costs due to the tariffs, some small outdoor businesses may be forced to reduce staff or consider shutting down all together,” he says.

Also, according to Martin, the tariffs have impacted the curated relationships her company has formed with her Chinese partners. “One of our key selling points is the exclusive nature we have with our factory in China and the innovation and development we do together as a global team,” she says. “I refer to my factory owner as ‘my brother from another mother’ and his employees are critical to the continued growth and success we have both shared for the common good of both of our respective companies.” 

But not all local outdoor companies are worried about tariffs and, in fact, one Denver ski manufacturer is welcoming the trade war. 

“This industry is incredibly conscious of the environment,” says Ted Eynon, owner of Meier Skis, who believes Trump’s trade war and the associated tariffs on outdoor products might contain an environmental silver lining. “You look at the outdoor industry associations and the stances and the educational agenda. The industry wants to do whatever it can to slow down climate change. But at the same time, so much of the production comes out of China and South East Asia, where there are not the level of environmental restrictions, so the level of pollution is horrible.” 

Meier started in a Breckenridge garage over a decade ago but has since moved to Denver, where they produce a full line of eco-friendly high-performance skis using locally sourced beetle-kill pine and environmentally friendly production methods including bio-based epoxies. As the snow melts and most consumers’ thoughts turn to bikes and warm-weather sports, his company actually gears up. Spring and summer is when Meier starts to produce next year’s products, so that their skis will be available in August, just in time for the release of magazine buyer’s guides and ready to purchase and ride when the first snows of winter start to fall.

Having a factory in Denver is part of a holistic approach that the brand takes, Eynon says, where in addition to using locally sourced environmentally friendly materials, Meier employs locals and hosts events and other gatherings. 

“The fact of the matter is companies are buying product and importing products and paying lower tariffs than a company would be paying to export to China. How are these entities able to say they are doing everything they can to slow down climate change?”

The subject of tariffs and market access will continue to be a sore spot for Eynon because — unlike Boulder County’s hat and soft-goods companies — Meier’s competitors who manufacture skis in China have not yet been impacted by Trump’s tariffs. 

Still, while KrimsonKlover and BOCO Gear remain wedded to their current factories, some outdoor brands have abandoned China to repatriate construction. “We did produce exclusively in China for the first seven years of the company,” says Stephan Drake, founder of ski manufacturer DPS. 

Drake cites a variety of factors that led him to open a Salt Lake City factory, where DPS now produces the majority of their products. “We felt the pinch of threats to our intellectual property, saw other customers coming into the factory we were using and had delivery issues,” says Drake. “Those things prompted the repatriation.” 

But Drake also concedes that building skis in the shadow of the Wasatch mountains is, “an emotional thing and something we take pride in.”

“Functionally and spiritually it’s a good thing,” says Drake. “I can’t say enough about how great it is for the research and design component. We can make things really quickly and drive 30 minutes to Alta or Snowbird and test them.”

The repatriation of production of outdoor goods, particularly technical items such as skis and snowboards, points to the opportunities that hardgoods manufacturers have over soft-goods producers. Hats don’t need to be tested and the cheapest place to manufacturer them, even taking into account Trump’s tariffs, remains China. Swenson says she isn’t about to abandon KrimsonKlover’s Asian factories yet. But for manufacturers of hard goods there are compelling reasons why a factory close to the mountains, and insulated from the Trump administration’s political battles with China, makes good business sense.