GSP Expiration Survey: Preliminary Results

There has been a great response to our GSP expiration survey so far, with responses from more than 125 companies in 28 states.

Please add your responses here before the next Friday, March 21 if you have not completed it already.

In the meantime, we wanted to provide some highlights from responses to date. The below graph shows the share of companies that responded “yes” to the question: “Has your business experienced any of the following effects from GSP expiration?” 

GSP_Expiration_Impacts-03142014

Clearly, lost sales is most-frequently reported impact. Nearly three-quarters of respondents reported lost sales as a result of trying to increase prices. Almost half reported bringing in less product because it is not competitive with tariffs included. Here are some of the detailed responses:

  • Our new accounts division has seen almost a 30% reduction in acquisitions since the increase in our prices has been in effect.
  • Our [confidential] division is the primary importer under GSP and sales declined by over $2 million, whereas our other division that only imports minor quantities under GSP had a sales increase of $2.7 million. I would estimate that our [confidential] division would have had a 5% increase, or about $2 million, so total estimated loss of $4 million in sales.” And that is on top of $400,000+ in GSP tariffs paid!
  • We have incurred losses of at least $1.5 million in sales from existing clients as well as new clients who have expressed an interest to buy from us, but will not unless the GSP is renewed.  They simply will not pay the additional cost.

These lost sales and potential profits impact all aspects of the business. About one third of companies reported delayed capital expenditures, meaning GSP expiration impacts many companies that do not benefit from the program directly. Here are some of the detailed responses:

  • We are a manufacturer located in the City of San Francisco, home of the most expensive labor in the USA. Our competitors are located primarily in China and India. We need to continually invest in automation technology to maintain our competitiveness, so additional duty costs are a hindrance to our ability to maintain a viable manufacturer in our market.
  • Capital expenditures for accounting software and computer hardware have been put on hold. The accounting software expenditure delay includes both the cost of the software and the hiring of a consultant to install and implement.
  • $150,000 in investments for handling and storage capacity have been delayed until further notice.”

As far as direct worker impacts, more than 30 percent of companies reported delayed hires and about one in eight companies reported both worker benefits cuts and layoffs. Here are some of the detailed responses:

  • We laid off 8 people and have not hired replacements. There was no money for Christmas bonuses or 401K funding.
  • “We lost sales because our prices are no longer competitive. We were planing to hire 2 people by the end of last year but because of the GSP expiration that increased our cost, we had to forget about it.
  • The additional costs for duties has placed pricing pressure on our product offerings and our ability to remain competitive and profitable – so much so that our monthly sales have been negatively impacted by an average of about $100,000/mo. over the last 6 months. We have suspended plans on hiring about 3 additional employees who were intended to support the segment of our business associated with these imports.

About a quarter of companies reported “other” impacts as well, such as:

  • Reduced research and development. As one chemical company wrote: “The largest impact is that we have discontinued and reduced our product development work in various areas. Product development work is expensive. It requires purchasing development equipment, test equipment, technical people, sampling, etc.  The problem with doing this is that our life blood is being innovative and bringing value to our customers. If we stop, ultimately we lose our leadership role and thus can’t maintain our competitive advantage. And then the product will move to China.
  • Personal hardship for small business owners. “The $80,000 in tariffs paid could help my company deal with the severe winter issues. Right now I have more than $60,000 in credit card debt at a high interest rate.

These responses are just the start. Unlike tariffs paid, which Congress can refund with a retroactive GSP renewal legislation, Congress cannot turn back the clock to make up for lost sales, delayed purchases, or lost employee hours.

Stay tuned for more details from the survey and again, if you haven’t taken it already, please do so here.

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One Response to GSP Expiration Survey: Preliminary Results

  1. sid says:

    Its been over 6 month my funds had not been release any body know how long it will take congress to make their mind

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