Fresh tariffs to hurt US model train industry

ORMOND BEACH - Washington's threat for more tariffs on Chinese imports would decimate the United States model train industry and see bread winners in hundreds of families lose their jobs, the CEO of a US import company warned.

"If we were to have 25 percent tariffs imposed on this product, if we couldn't find a way around that, it would probably put us out of business," Bob Grubba, president and CEO of Broadway Limited Imports, said in a recent interview at his office in Ormond Beach, Florida.

The US in May raised additional tariffs on $200 billion worth of Chinese imports to 25 percent from 10 percent, and threatened to levy extra duties on more Chinese products.

"This whole industry, almost everything in the industry, is manufactured in China," said Grubba, who has been working with his partners in the coastal city of Qingdao in China's Shandong province for almost 20 years.

Most of these companies have a "profit margin in the range of 30 percent", and if they were to pay a 25 percent tariff, the remaining 5 percent will not be enough for them to pay rent, insurance and other bills, Grubba said.

"We would have to raise prices. A certain number of people just can't afford it anymore. That will be a big problem for us," he said.

The model train industry in the US is a fairly small business but a lot of companies and people are involved, Grubba said.

"Around 500 people work for manufacturers like us, the importers and manufacturers, but that doesn't include all the hobby stores," he said.

"There are probably 1,000 hobby stores in the US that sell this type of product. Each of those, maybe, has five to 10 employees, so that's another 5,000 people. I think those hobby stores would probably close."

The idea to relocate production out of China is also unrealistic, Grubba said, noting that it is hard for toy industry businesses to find another country with the comparable infrastructure, skilled workers, and research and development capabilities.

"It's difficult to move a factory (out of China) because our product is very specialized. It took us a long time to train the workers at the factories and train the engineers and get the quality the way it's supposed to be," he said.

"And if we try to move to another country, then you have to develop that expertise all over again," he said. "That takes a long time (and) a lot of money."