Bearing With The Marketplace

(Pull Quote: If a kid wants to slap a pair of trucks onto an old fencepost or two-by-four, there is no league or parents’ group to stop him.)In the never-ending quest to become better-informed consumers, society has created the standards committee. These committees are designed to set standards of specification for mass-produced goods offered to world consumers in a plethora of markets. ABEC, the popular acronym that applies to bearings, is one such committee. ABEC (Annular Bearing Engineers Committee) is in charge of setting the standards to be used by the American Bearing Manufacturers Association (ABMA), a group whose members test bearings for everything from high-speed routers to skateboards. ABEC has been around for over 35 years and uses a rating scale from one to nine (odd numbers only), with nine being the rating of highest precision. Factored into the ABEC rating is tolerance, dimension, geometry, and noise. However, ABEC standards do not cover how loosely balls fit in the raceway, the materials bearings are to be made from, type of lubrication to be used, and a number of other potentially important factors for both the skateboard industry and skateboarders alike. Unbeknownst to many skaters, the vast majority of bearings rated by ABEC never make it into a soft urethane skateboard wheel and will never be lovingly slid onto a fresh set of trucks. This is where a small amount of controversy arises over the usefulness of the ABEC rating system to skateboard-shop owners and consumers.George Powell’s widely acclaimed Bones Bearings, developed in 1983, carry no ABEC rating whatsoever. Powell proposes, “To merely give Bones an ABEC rating would be to ignore all the improvements we have engineered into Bones and the resulting difference between Bones and standard ABEC-rated bearings.”Skateboarding, unlike most sports, does not have set standards for skateboarding products. If a kid wants to slap a pair of trucks onto an old fencepost or two-by-four, there is no league or parents’ group to stop him. Perhaps this is why bearing companies seek to use the ABEC rating to position themselves ahead of the growing crowd. According to Powell, “Younger skaters are buying bearings for the first time and don’t know how to tell a good one from a bad one. As a result, they are often swayed by fancy packaging, toy giveaways, high ABEC ratings, what their best friend bought, the lowest price, and so on.”When George Powell created Bones Bearings, it was extremely difficult for demanding skaters to get top-quality bearings. Skaters wanted faster bearings in an era when skateboarding was growing on the streets and ramps of America.Powell admits the one main downside to his Bones Bearings is the high price: “The Swiss have to charge this much to make money, and we have to pass our increased cost.” This led Powell to search the globe for a high-quality bearing that he could offer to skaters at a lower pricepoint. His search brought him to China.Powell says that his Chinese manufacturer is “highly developed, possesses good manufacturing equipment, and is capable of producing high-quality items at low cost.” Powell’s Chinese-made bearing, aptly named Bones REDS, has nearly the same performance as their Swiss-made bearings for roughly half the price.While Powell adamantly stands by his Bones REDS bearings’ high-caliber quality, many bearing resellers dip into the Chinese market to buy the cheapest bearings possible, nicely repackage them, and market the hell out of them to unknowing U.S. consumers.Japanese-made Ninja Bearings outright slams Chinese-made bearings on its Web site (ninjaskate.com), stating, “They use low-grade steel with poor anticorrosion properties and are crudely constructed. You won’t find these bearings in any application where real safety or performance are of concern.”Skateboard bearings are among the many products imported into the U.S. from China. Sure, there are some items that proudly sport “Made in the U.S.A.” labels, buut these are notable exceptions, not the rule. The United States is based on a capitalist economic system, so one can (and arguably should) obtain products at a price that maximizes profits.Statistics gathered from the U.S. International Trade Committee (ITC) indicate that the majority of bearing exporters are in east China’s Zhejiang province. Angered by the Chinese manufacturers’ ability to undercut costs, major United States-bearing manufacturers, such as Torrington, accused the Chinese bearing exporters of dumping their bearings into the U.S. market.”Dumping” occurs when an imported product is sold at a lower price than fair market value and causes material injury, or threatens to cause material injury, to the domestic producers of comparable products. International law allows the United States the right to offset this practice by imposing additional duties to the price the imported merchandise is dumped at. Countervailing Duties (CVD) are imposed when foreign producers receive countervailable governmental subsidies and when the importation of their subsidized goods causes material injury. The U.S. also has the right to seek remedy for the alleged material damage. Importers subject to a CVD order are responsible for cash deposits to the U.S. Customs Service in the amount of estimated CVD liability.What this jargon means is small companies that imported bearings from China, such as Bones Bearings, were forced to pay high tariffs because of alleged dumping. “We were assessed about a 50-percent tariff on our Chinese-made REDS bearings for about a year. You can imagine what that did to our profit margin,” explains Powell.Inflated costs must either be passed on to the skateboard-bearing end-consumer or swallowed by the company that imports the bearings. Bones was forced to put up tens of thousands of dollars as a deposit that would go directly to Torrington if the allegations were upheld. “This put us in a cash-poor position and cost us a lot of money and time trying to figure out what was happening,” says Powell.Theoretically, these deposits are to protect home markets and encourage continued production of American-made bearings. This created a great deal of confusion for both Powell and Bones: “First, our government changes the rules, allowing low-cost imports from these countries, which allows the multinational firms to build and utilize factories in developing nations to reap huge profits from U.S. consumers, while at the same time, taking their jobs away from them,” Powell explains. “Next, it allows these multi-nationals to utilize old protectionist legislation to injure their small competitors, pocketing their competitor’s money in the process.”In the end, the process invoked by Torrington and Co. was rejected as without merit. After holding their competitor’s money for some time, Torrington was forced to repay the small bearing importers.In an interesting twist of events, after the ruling, Torrington moved its production facilities overseas to China.