Sometimes I get accused of being too much of a pessimist. Maybe sometimes I am, and perhaps my occasionally pessimistic outlook is justified.I prefer to think I’m just taking a hard look at real business issues.For a change, I’m going to let somebody else raise the tough issues. Recently, I received an unsolicited e-mail. It’s published here in complete. First read it, and then I’ll tell you what I suggested when I talked to the guy.

Now you can continue reading. I had a lot of undoubtedly accurate and valuable platitudes about business cycles I recited to Dale. None of them seemed to make him feel much better. I received this e-mail over a month before I sat down to write this. With so much time to think about it, I’ve come up with a couple of ideas, or maybe just helpful perspectives.

First, let’s all decide to call the wood from China “birch.” Apparently, that’s what it is, and there’s no reason we should be helping to perpetuate the myth that it’s anything else.

Second, recognize that it’s been around a long time and is going to continue to be around. For cheap completes sold in big chains it probably makes sense-and may even serve the benefit of getting more kids skating for a cheaper initial cost.

Third, it’s clear that Chinese birch skateboards don’t hold up when used by real-more experienced-skateboarders doing real skateboard tricks. So while some of the major brands may be tempted by cost to try to use it, enlightened self-interest will make them back off. They can’t afford to have their decks collapse on a massive scale in the way Dale describes. The issue, then, becomes whether Chinese manufacturers can procure the harder Canadian maple and make and deliver decks that are as good as what is currently made in the U.S. What I’ve said before is that they can and will if the market makes it worthwhile in the same way they have with so many other products.

If the quality is there and the price is lower, then they will become a standard, and only new technology in skateboards will slow that process down. I suppose the other thing that could happen is that major brands could collectively decide to boycott decks from China. Aside from the issue of legality, that would be a level of industry cooperation that’s rarely seen. And even if that cooperation exists, it can break down if business pressures get too strong.

The other problem is that we already know blanks take a big piece of the market. If Canadian-maple Chinese decks of good quality become available, I suspect people who are willing to buy current blanks, and maybe some others, will be more than happy to buy an even cheaper, high-quality product.But where will the Chinese get their Canadian maple? Most likely not from LaGrand Lumber & Veneer. Sounds like Dale would have to price it in such a way that he’d lose money if he wants the business. Perhaps if they get in early they can corner the market-but it doesn’t sound like Dale and the other members of management at LaGrand are the kind of people who believe that you can lose a little on each piece and make it up in volume. So unless LaGrand can dramatically change its business model, it doesn’t sound like losing money selling to the Chinese while helping knock its existing domestic customers out of business makes much sense.

Dale might do five things. He might talk to all the other domestic veneer suppliers and find out how they are reacting-which he’s probably already doing. Second, he might publicize the quality issue (I guess I’m starting that for him) with an ad or two in SKATEboarding Business to begin to create some awareness-sort of like Intel Inside.

The third step would be to meet with the companies he sells veneer to and talk about their plans and their reaction. Is there room for some form of cooperation on new skateboarding technology? Fourth-and he’s probably already doing this, too-he has to look at the source of the existing decline in veneer sales. How much does he really believe the result of Chinese decks coming into the country, and how much is the slowing of skateboard sales?

Finally, depending on the answer to four, he should certainly be looking for new markets. That is something that any business should be doing all the time. It’s worth some attention even when part of your business isn’t threatened because it positions you much better when, inevitably it seems, some threat emerges.

The devil, of course, is in the details. I can’t offer specific advice to Dale or LaGrand without specific information about their business. I hope my general advice is useful, and I thank Dale for sharing this very real issue with us.

Jeff Harbaugh is president of Jeff Harbaugh & Associates, an action-sports consulting firm that helps managers and owners improve profits by focusing on the few issues that are really important. Reach him at (206) 232-3138 or via e-mail at: jharbaugh@msn.com.

Dear Mr. Harbaugh:

Thank you for your insights and ideas you submit in your columns in TransWorld SKATEboarding Business magazine. I always appreciate your hard line on doing what is best for the business in general.

I am the sales manager here at LaGrand Lumber & Veneer, Inc. and am very alarmed by the Asian influence on business here in the States in general and especially with the skateboard industry. We supply hard maple veneer from our three mills to skateboard-deck manufacturing plants throughout the U.S., Canada and sometimes abroad. In an average year we sell nearly (quantity withheld by author). Of this amount, (25 percent to 30 percent) is skateboard veneer, which we have been supplying for nearly 25 years.

As you are probably aware, the furniture industry has taken huge hits from imported components shipped in from China. Over a dozen plants have been closed forever in North Carolina because those companies now order their components and completed goods from China, idling over ten-thousand workers. I have clients in the component manufacturing business here in the States that have lost over 50 percent of their business to Pacific Rim countries.

This is trade they’ll never get back.

Meanwhile, when you and I go to buy a new piece of furniture for our home, none of the cost-savings benefit reaped by the manufacturer is gained by us. That same 3,000-dollar sofa made two years ago completely in the States still costs 3,000-dollar even though it cost far less to produce overseas. The manufacturer and the Chinese government are the winners.

While furniture imported from China, made from Chinese raw material may be acceptable in appearance and performance, my experience with skateboards is totally different. As was indicated in the article “Skateboard Science” (by , TransWorld SKATEboarding Business, April 2002) Chinese raw material (veneer) does not match hard maple, which has been the standard forever. The veneer, touted as “China maple” is in fact not maple. It is a species of birch. Tests performed at the Forest Research Laboratory in Madison, WI prove that this species has approximately the same physical characteristics as soft maple, a species long ago abandoned by the skateboard industry.

I have two customers who bought China maple veneer from a sales rep here thinking they were buying North American hard maple. That rep should be tarred and feathered (or worse), but that’s another topic. Anyway, they manufactured the decks and sent them out through their normal distribution channels. In short order, literally thousands of decks were returned in various states of ruin and decay. Decks were split, broken, and mushy. All due to the quality of veneer used to manufacture them. One customer nearly lost his largest account because of the poor quality. He was able to salvage the account when we provided him with the necessary veneer to quickly replace the order.

My fear is that as a raw-material supplier I should have seen this coming long ago, and it may be too late to react. I believe that if we don’t do something soon, cheap imported decks will become the standard. Once riders become accustomed to a lower standard, they will no longer know the difference and imported decks will be acceptable. I know this may be insulting to the current rider who can tell the difference, but my concern is perpetuating the business, and I’m afraid the young, new rider won’t know and won’t be told.You should know that what really convinced me to write to you is an experience I had yesterday with an export agent. He called requesting a quote on container loads of skate veneer going to China. Upon quoting him our standard prices, he laughed and told me that if I wanted to do business with China, I needed to learn how to lower my prices. We price veneer based on the cost to produce plus a reasonable profit margin. I asked him what benefit I would gain from hurting my loyal U.S. customers by selling overseas for less and losing my profit margin. He laughed and responded that I’d have my foot in the door when the Chinese totally take over U.S. skateboard manufacturing.

There is no doubt that manufacturing is down due to the economy. However, there is also pressure coming from beyond the economy, and if we don’t react now while we are slow and have the time to react, we will all be left in the dust when the next surge (and I’m confident there’ll be one) comes.

I am venting this on you because you are a connected person who people seem to listen to. We do as much as we can to promote the industry, including attending shows and working on promos with our customers. Try as I may to get the message out that quality and integrity starts with the raw material, it seems to fall on deaf ears.

Is the skateboard-manufacturing business preparing to roll over and allow imported decks become the standard? Should I start looking for new markets to replace our skateboard-veneer sales? Should I “learn how to lower my prices to China”?

Please advise.

Best regards,

Dale Rosema, Sales Manager, LaGrand Lumber & Veneer, Inc. we don’t do something soon, cheap imported decks will become the standard. Once riders become accustomed to a lower standard, they will no longer know the difference and imported decks will be acceptable. I know this may be insulting to the current rider who can tell the difference, but my concern is perpetuating the business, and I’m afraid the young, new rider won’t know and won’t be told.You should know that what really convinced me to write to you is an experience I had yesterday with an export agent. He called requesting a quote on container loads of skate veneer going to China. Upon quoting him our standard prices, he laughed and told me that if I wanted to do business with China, I needed to learn how to lower my prices. We price veneer based on the cost to produce plus a reasonable profit margin. I asked him what benefit I would gain from hurting my loyal U.S. customers by selling overseas for less and losing my profit margin. He laughed and responded that I’d have my foot in the door when the Chinese totally take over U.S. skateboard manufacturing.

There is no doubt that manufacturing is down due to the economy. However, there is also pressure coming from beyond the economy, and if we don’t react now while we are slow and have the time to react, we will all be left in the dust when the next surge (and I’m confident there’ll be one) comes.

I am venting this on you because you are a connected person who people seem to listen to. We do as much as we can to promote the industry, including attending shows and working on promos with our customers. Try as I may to get the message out that quality and integrity starts with the raw material, it seems to fall on deaf ears.

Is the skateboard-manufacturing business preparing to roll over and allow imported decks become the standard? Should I start looking for new markets to replace our skateboard-veneer sales? Should I “learn how to lower my prices to China”?

Please advise.

Best regards,

Dale Rosema, Sales Manager, LaGrand Lumber & Veneer, Inc.