From Steve Jackson Games to The Game Manufacturers’ Association (GAMA) many companies* are posting some form of “what does this mean to us” regarding tariffs and the current administration’s decision to enter trade wars with ally and adversary alike.
NOTE: Please see our other news posts on tariffs for additional information on how they are impacting The Wargaming Company:
*Catalyst Game Labs has also weighed in, the board game market is worried for good reason, and bloggers are trying to articulate the fundamentals for those who might assume this will all blow over.
What does it mean to The Wargaming Company?
Well, other than being personally offended that the current administration has literally chosen to tariff two islands of penguins who literally export nothing to the US … because, ya know, they are penguins.
It also means our costs are going up. Which necessarily means that our prices are going to go up.
This probably seems obvious when it comes to NOCH trees and flock which we import from Germany, but it will also impact our own products from books to cards to miniatures to accessories.
Now, a person might ask: “But, but, but, but all your products are made in the US? Shouldn’t these tariffs help The Wargaming Company?”
Well… Welcome to an integrated global economy and supply chain.
We produce all of our own products in the US, correct. Our books are printed here (depending on which book at what point in time here has referred to Minnesota, Illinois, Minnesota again, and Illinois again currently), our miniatures are produced in California, our cards are produced in New York, our Dashboards are produced in Virginia. But the raw materials that are used to produce these products are not. Our manufacturing partners source paper from Canada and China. They source plastics and rubbers from Europe. We ourselves source resin for printing prototypes and potentially our new line of buildings from both Europe and Asia, and MDF for bases and accessories from seemingly all over the world. We currently expect all of our raw materials to increase in cost, how much depends on which material.
During the pandemic we saw our book printing prices double at one point. Not only that, but paper went into shortage meaning that not only was it expensive, but printing lead times went from 30-45 days to 9-15 months. Yes, 9-15 months. At that time domestic printers would not even lock the schedule until we submitted our files and our initial downpayment for the job despite the approximately one year of production time backlog. Under normal circumstances we recoup the printing cost of a book the same year it is shipped, so at maximum we need are out that capital for approximately one year + 4-6 weeks (production time). But when production time was increased to approximately a year, we then had to be able to float that cost for 20-30 months. Now you know why it took so long to get Master of the World, 1812 in Russia, Series 3 to ship and one of the significant reasons we’ve had slower releases since the pandemic, our “war chest” for producing new products is still recovering. Will stuff like that happen again this time? We, like you, have no idea. But the magic eight ball says “outlook does not look good”.
A person might reasonably ask when our prices are going to go up. And the answer is, very unfortunately, starting soon. We haven’t decided yet if we can pre-announce a price increase for a future date or if we need to simply push out the increase “today”, we’re currently determining that. If we’re able to announce one for a date in the future, we will, and we’ll update this post with that information as well as post it out via our normal communication and advertising channels.
That same reasonable person might ask: Can’t you put off a price increase until you’ve sold through your existing stock of [fill-in-product-here]? No. We can’t. Because we need to have the additional capital to purchase the restock order (or to put the next product into production) at the increased prices.
So are these tariffs bad? Yes. The tariffs will hurt our business. The tariffs will slow our ability to produce the stuff you ask us to make. We don’t operate with large margins, we don’t bank tons of capital each year. Our market power is far closer to yours as an individual consumer than it is to any large company you can think of, so we aren’t going to be able to strong-arm any suppliers to eat the rising costs.
Will these tariffs delay future releases of our products? Yes. Both because lead times will increase and because we’ll need to build up more capital to fund each release.
Will these tariffs reduce our profits? Yep.
Will these tariffs require us to increase our prices even with profit reductions? Yep.
And there we are.
We hope you continue to buy our products because that’s how we afford to produce new products and that is literally why we got into this business. Not to get rich but to produce the products we wish existed in the market but didn’t. We’re going to try and push through this, but if someone tells you “these tariffs aren’t that big a deal” or “these tariffs will make everything better, just wait”, either they incorrectly believe it won’t impact them, are unfamiliar with the gravity of the situation, or for some other reason are simply unconcerned at how much this is going to hurt us all.
In the end we are likely to all be some amount poorer and have less access to fewer cool things. While there are hopes and dreams that this will cause substantial reinvestment in US manufacturing, that is not a given, and this is an area in which we at The Wargaming Company have some personal experience from our past lives before we joined up with Pen-Gin™. The investment, training, building, and supply chains required to “do this all ourselves” is something measured in decades, not months or years. What is certain is that when our country previously attempted this form of protectionism and economic isolationism in the early 1800s and again in the early 1900s, it went poorly for us. There will also definitely be some casualties in this trade war, we’re hoping Nappy the Pen-Gin™ isn’t one of them.
Thank you for your support, we honestly appreciate it very much.
Remember: Trade wars are ultimately without positive result, but wargames need not be.
PHOTO CREDIT: © Matt Curnock, Australian Antarctic Division/AFP