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EY Entrepreneur of the Year among the local leaders speaking out on tariffs

Margie Manning

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Gator Cases was founded by father-daughter team Jerry Freed and Crystal Morris. (PHOTO CREDIT: Gator Cases)

Crystal Morris, president and CEO of Gator Cases Inc. in Lutz, is one of at least a half-dozen local business leaders asking for relief from 25 percent ad valorem tariffs on an additional $300 billion in products imported from China.

The proposed tariffs would result in a 25 percent tax on schools, local communities and cultural life in the United States, Morris wrote in a June 11 letter to Ambassador Robert Lighthizer, U.S. Trade Representative.

Her written comments were among more than 1,600 comments received by the Office of the U.S. Trade Representative in advance of hearings that began Monday on President Donald Trump’s proposal to expand tariffs. The overwhelming majority of the letters warned that additional tariffs would raise prices for consumers, cost American jobs and disrupt production at companies across the nation, according to the Washington Post.

Some of the letter-writers, including Feld Entertainment in Palmetto and Galaxy Fireworks in Tampa, also have signed a letter to Trump, urging him to resolve the trade dispute with China.

Morris’ letter stands out in part because she was just named the 2019 EY Entrepreneur of the Year in the consumer products category.

Gator Cases, which makes protective cases and stands for the music industry, is a small, family-owned business started by Morris and her father in 2001. It’s since grown to 120 employees.

“Many of our products are used in schools K-12 across the country, and of course music is an incredibly important part of the lives of all our children. We believe it is very important for communities and schools to have access to the affordable equipment they need to support not just children but people of all ages and backgrounds,” Morris wrote. “Unfortunately to make our products affordable, many of our products are sourced in China, and if imposed this tariff would end up being a 25 percent tax on schools, local communities and the cultural life of the USA. This additional tax could only lead to fewer instruments, stands and cases being purchased which could severely impact my company and the people I employ.”

One of the reasons the president has given for the increased tariffs is that he wants to stop practices that force American companies to turn over valuable technology to access the market, according to Politico.

But optical products such as eyeglass frames “don’t require any significant technology, nor could the manufacturing process be regarded as innovative,” wrote Jaclyn Frumkin, vice president of business operations for Eye Q Eyewear Corp. in St. Petersburg.

Eye Q is a family owned and operated value-based eyewear company that services many insurance packages, healthcare organizations and optical chains and distributors around the U.S., Mexico and Canada. Prescription eyeglasses and the optical frames and frame parts used to make them are the most widely used medical device in the U.S., if not the world, Frumkin said.

Optical products already are subject to a tariff, ranging from 2 percent to 2.5 percent, and adding an additional duty of up to 25 percent on top of that would push the cost of optical products to unreasonably high levels, she said. It also would have a health impact, as consumers refrain from eye exams and updating their existing prescriptions.

“By delaying eye exams, other eye-related conditions and diseases diagnosed during checkups will go undiscovered. This could include cataracts, macular degeneration, corneal ulcers, diabetic retinopathy, color blindness and glaucoma,” Frumkin said.

Here are excerpts of the other local letter-writers’ comments.

• Feld Entertainment, which produces Disney on Ice, Monster Jam and other live shows, also produces and sells toys and souvenir items, mostly sourced from China, that are sold at the shows. It’s not easy to source from other locations, vice president Thomas Albert wrote in a June 3 letter.

“The infrastructure, long-term business relationships, manufacturing capacity and affordable labor force cannot be easily or quickly replaced, duplicated or moved,” he said.

Feld employs more than 2,000 people and conducts more than 3,600 performances annually, resulting in significant economic impact, including sales tax collections, in those venues, Albert said.

“While we understand the desire to impose these tariffs to modify overall Chinese trade behaviors, we are concerned that the impact of this tariff will fall heavily on American businesses like ours, the consumers who come to our shows and buy our toys and, ultimately, the communities we visit on our tours. This loss will be felt by every consumer, in every locality we visit across the country as we are forced to adjust our business accordingly. At the same time, it seems unlikely that these tariffs will have the desired impact on China’s acts and policies,” Albert said.

• All the consumer fireworks devices sold by Galaxy Fireworks are imported from China, and the company has formed strong relationships with several Chinese manufacturers over the past 30-plus years, said Patrick Cook, general manager, in a May 24 letter. Fireworks are not a high-tech product covered by Chinese industrial policy, and imposing a projected 25 percent tariff would cause significant economic harm to the family business, he said.

“It could add as much as $10,000 or more to the to-door cost per container. The profit margin on fireworks, even without an additional tariff, is quite small and an added cost of this size would almost nullify the margin,” Cook wrote. “We would be forced to pass along this additional increase directly to our customers, which in tum means smaller individual sales per sales location. Our customers are already operating on a limited budget for their holiday celebrations, and the tariff limits their budget even more.”

• The tariff Trump is proposing “will very likely end our industry retail businesses,” wrote Cindy Rivera, owner of The White Closet Bridal in Tampa.

“Raising our prices by a couple hundred and more dollars per wedding dress will immediately give our already cost-conscious consumers sticker shock. This will result in thousands of locally owned bridal and social occasion boutiques out of business,” Rivera’s letter said.

• Universal Parts Inc., which distributes scooter parts and accessories and is based in Largo, already is suffering from a 10 percent tariff, wrote Kate Celestian, director of operations, and Jamie Near, purchaser, in separate but identical comments.

“Increasing to 25 percent and taxing EVERYTHING would be devastating. These parts cannot be purchased domestically,” they wrote. “Our company operates on very tight margins and we don’t know if we could survive this.”

Jabil Inc. (NSYE: JBL), the largest company headquartered in St. Petersburg and with significant manufacturing operations in China, did not file a letter with the U.S. Trade Representative, but one of its customers did.

Extreme Networks Inc., a networking equipment company in San Jose, California, listed Jabil among its 29 suppliers with Chinese manufacturing operations.

Extreme relies on China for low-cost, low-skill assembly of its products, to keep prices low and to compete in the tight global market for network equipment, according to a letter from Katy Motiey, chief administrative officer and general counsel.

“In Fiscal Year 2018, primary and secondary schools comprised almost a third of Extreme’s business in the United States. Public schools have very tight budgets and cannot absorb even incremental price increases. The same is true for hospitals, higher education institutions, small-to-mid sized businesses and many of Extreme’s other U.S. customers,” Motiey’s letter said.

None of the local companies were listed among those scheduled to testify at the U.S. Trade Representative’s hearings, which continue through Tuesday, June 25.

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