Latest / Best of Business / Nick Mowbray: Zuru Toys co-founder on US businesses holding off on purchases as a result of Trump's tariffs

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Nick Mowbray: Zuru Toys co-founder on US businesses holding off on purchases as a result of Trump's tariffs · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from News Talk sed B.
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  Speaker 2: Me Piven, Entourage, Fame and mister Selfridge Fame, among other
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  Speaker 2: things with us after eight o'clock meantime, as we continue
• 0:25
  Speaker 2: to swim in this area of uncertainty around the Trump
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  Speaker 2: view of the world, in this tower of war, there
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  Speaker 2: are a few more directly affected than the Chinese, of course,
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  Speaker 2: who've currently set at a number of one hundred and
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  Speaker 2: forty five percent, and within China the toy industry is
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  Speaker 2: getting smashed. The irony is the toy industry employees, for example,
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  Speaker 2: more than two hundred and seventy thousand Americans, but eighty
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  Speaker 2: percent of the product, of course, is still made in China. Anyway.
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  Speaker 2: In the middle of all of this is Zuru Toys
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  Speaker 2: co founder Nick Mowbray, who is with us. Nick, very
• 0:49
  Speaker 2: good morning to you.
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  Speaker 3: Morning Mike.
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  Speaker 2: How do you plan?
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  Speaker 3: You don't?
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  Speaker 4: I think every day we are getting together for a
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  Speaker 4: new planning meeting because everything seems to change each day,
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  Speaker 4: so very very difficult to plan, very difficult to allocate capital.
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  Speaker 4: We're basically in a state of just stopping everything at
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  Speaker 4: the moment, because it is impossible to plan.
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  Speaker 2: What do you think will happen?
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  Speaker 4: It is hard to know at this stage, or the
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  Speaker 4: administration seems to change their mind every day, and so
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  Speaker 4: I imagine these tariffs are going to be negotiated down.
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  Speaker 3: But we as a result of that, are just in
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  Speaker 3: a holding pattern. More or less.
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  Speaker 4: I think we ship about willship about two billion dollars
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  Speaker 4: worth of goods to the US this year. So at
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  Speaker 4: that run rate, that makes our tariff's worth about three
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  Speaker 4: billion dollars at the moment.
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  Speaker 3: So that is obviously impossible to do.
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  Speaker 4: Obviously, we're moving to sange retails, moving to a first
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  Speaker 4: sale model. But at this stage a lot of retailers
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  Speaker 4: are just pausing, and we're all in a holding pattern.
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  Speaker 2: Why don't you do what Donald Trump says you should do,
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  Speaker 2: which is simply close everything you have in China down
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  Speaker 2: and move it to I don't know, Kansas.
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  Speaker 3: Yeah, obviously impossible.
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  Speaker 4: America has about four percent unemployment, and so I think
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  Speaker 4: in China you've got around one hundred and twelve million
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  Speaker 4: people at work in manufacturing. In the US you've got
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  Speaker 4: about eleven million. And China has a deep and complete
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  Speaker 4: ecosystem for toys. I mean, it is an industry that
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  Speaker 4: moves very quickly. You've got molding, electronics, packaging, tooling, and
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  Speaker 4: that whole supply chain is all very close together. There's
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  Speaker 4: lots of competition, all the infrastructures built out, they've got
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  Speaker 4: decades and decades of experience. I think Ensen alone has
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  Speaker 4: more engineers that graduate every year, and manufacturing engineers and
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  Speaker 4: the whole of the US. So you're in a business
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  Speaker 4: that moves incredibly quickly with complex products, and you've got
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  Speaker 4: the whole ecosystem that's been built over decades and decades.
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  Speaker 3: So I think, Neil, basically it is impossible.
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  Speaker 2: Yes, exactly. The other thing he would want you to
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  Speaker 2: do is, I don't know how this works. You you might know,
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  Speaker 2: you don't pass the cost on to the consumer. You
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  Speaker 2: just give him some money by because you pay the
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  Speaker 2: tariffs as his seemingly, how does that work.
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  Speaker 3: It doesn't.
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  Speaker 4: So at one hundred and forty five percent tariff, we
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  Speaker 4: have to pass through significant price increases, which we'll see
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  Speaker 4: obviously volumes four off significantly as well. But because the
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  Speaker 4: environment is so unstable and changing literally every day, all
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  Speaker 4: our retailers in a state of parallel a state of
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  Speaker 4: pause as well at the stage, so everything is just
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  Speaker 4: more or less in a holding pattern. Most manufacturers are
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  Speaker 4: holding right now, as are most retailers, and we're just
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  Speaker 4: waiting to see what's going to transpire.
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  Speaker 2: Are you worried?
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  Speaker 3: It'd be hard to say we're not worried.
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  Speaker 4: I think last week was an interesting week when I
• 3:54
  Speaker 4: was in Bentonville, Arkansas with Walmart and Zoo won two
• 3:59
  Speaker 4: of their seven Supplier of the Year awards, so that
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  Speaker 4: was a pretty amazing achievement. And then the very next
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  Speaker 4: day that the first tariffs came into play, so we
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  Speaker 4: went from quite a hig quite a low, and then
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  Speaker 4: obviously it's escalated ever since then.
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  Speaker 3: So it would be.
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  Speaker 4: Hard to say we're not worried, but we're moving. We're
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  Speaker 4: in a lucky position obviously compared to I think a
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  Speaker 4: lot of smaller supplies, smaller manufacturers and retailers in the US.
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  Speaker 4: We will be able to weather this and come out
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  Speaker 4: the other side potentially even stronger. But it really depends
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  Speaker 4: how long it continues for and of course we're all
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  Speaker 4: hoping that that it doesn't continue very long. But the
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  Speaker 4: administration is definitely extremely chaotic.
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  Speaker 2: Is does America feel a bit. I mean, you're there constantly.
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  Speaker 2: Does America feel a bit freaky at the moment or not?
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  Speaker 3: Hard to know?
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  Speaker 4: Hard to know, to be honest, I'm pretty much cooped
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  Speaker 4: up on our office and at my place there in LA,
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  Speaker 4: just working on this terraff situation every day, working with
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  Speaker 4: our retailers. So I mean added about that much, apart
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  Speaker 4: from from yesterday I popped down to the to the INDYCA.
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  Speaker 4: So it's hard to know, to be honest, I think
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  Speaker 4: retailers are all just trying to deal. We're all just
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  Speaker 4: trying to deal with the situation as an unfolds daily.
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  Speaker 2: Jeez. All right, good to catch up with you. Appreciate
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  Speaker 2: it very much. Nick Mowbray, who's the Zuru Toys co founder?
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  Speaker 2: What an inside a seventeen minutes away from Mate.
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