Defender weathering effects of tariffs on China

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Waterford — Anticipating the Trump administration’s escalation of a trade war with China, Defender Industries, the global marine-supply outfit with a warehouse and outlet store on Great Neck Road, moved to stock its shelves last year.

The strategy has stood the company in good stead.

“We hedged our bets early,” Stephan Lance, co-owner and president of Defender, said this week. “When the tariffs were 10 percent, we heard that there was a possibility that they’d be going to 25 percent, so we doubled down.”

Defender ramped up its purchase of inventory before the tariffs took effect, a testament to its capital resources.

An inflatable boat dealer, the company designs boats that until recently were built to its specifications in China. Early last year, it moved production to France, enabling it to avoid tariffs as well as develop a better product, according to Lance.

“It was worth it to have the boats built there (in France) because of the difference in quality,” he said. “But it was a win-win when the tariffs went into effect.”

The United States raised tariffs Friday on an additional $200 billion in Chinese imports. On Monday, China retaliated, announcing higher tariffs on $60 billion worth of American goods.

For Defender, the biggest impact of the tariffs, Lance said, was the uncertainty they caused in connection with the company’s publication of its annual buyer’s guide. Defender relies on thousands of manufacturers and vendors to set the prices of the tens of thousands of items the guide lists. Once the guide is published, prices can’t be changed.

Typically, pricing information is nailed down in September or October.

At that point last year, Lance said, Defender had some indication that the tariffs would increase to 25 percent. Unable to delay the guide, the company had to do some of its own pricing.

The latest round of tariffs affect many of the products Defender handles. Even products manufactured in the United Kingdom, for example, might contain “nuts and bolts” from China. An outboard motor that comes from Japan might have Chinese parts. In such cases, the cost of the product reflects the increased price of the tariffed components.

For the most part, tariffs are borne by the consumer, Lance said.

“We heavily invested in stock before the tariffs took effect,” he said. “Until we sell through that stock, we’ve insulated the customer (from the effect of tariffs). My goal is to get through the season.”

Defender sells products in 130 countries, including, ironically, China, Lance said. Two-thirds of the company’s sales take place online.

In March, its annual warehouse sale, which accounts for 15 to 20 percent of its yearly sales volume, drew more than 10,000 people, a record for the event. Lance attributed the turnout to Defender being able to hold the line on prices.

“We’re getting calls from others selling the same product who can’t get it at the price we’re offering,” Lance said. “We continue to look for products based on cost, value and where they’re coming from. In the boating industry, there are alternatives to China.”

“Honestly, I’m more worried about the weather than tariffs,” he said.

b.hallenbeck@theday.com

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