KTEP - El Paso, Texas

A Not-So-Thrilling Ride For U.S.-Made Roller Coasters

Jun 14, 2019
Originally published on June 14, 2019 11:22 am

Since the U.S.-China trade war kicked off last year, tariffs on soybeans, car parts and pork have had everyone from economist Paul Krugman to late night host Stephen Colbert talking about the economic ramifications.

But the duty imposed on American-made amusement rides has not been much discussed.

Unless you're Preston Perkes, executive director of administration for northern Utah's S&S Worldwide, one of the largest of the more than two dozen ride manufacturers in the U.S. Then you talk about it all the time.

"All of our returning customers that usually want to buy rides from us are talking to us about this," Perkes says. "They aren't signing contracts."

Since last fall, Beijing has imposed retaliatory tariffs on American-made rides and ride parts twice, hiking the tax to a little over 25%.

S&S Worldwide in North Logan, Utah, is one of this country's largest amusement park ride manufacturers. Business has been hurt since tariffs were placed on ride parts exported to China.
Gary Bird / Courtesy S&S Worldwide

Perkes says just one Chinese developer has reached out to purchase a ride since September's round of retaliatory tariffs. In past years, China has made up half of S&S's annual business. "When our customers are having to pay more money because of an added tariff, they're going to look other places," he says. "And that's what they've done."

If the growth continues in mainland China as it has over the last 15 years, by 2025, it'll be the largest theme park market in the world. - Dennis Speigel, International Theme Park Services

Executives at the company fear being shut out of China's lucrative market, as their usual customers realize they will likely have to shell out more than a million dollars in additional duties if they want to import a ride like S&S's organ-jumbling Air Launch Coaster, capable of shooting thrill-seekers from zero to 80 mph in 2 seconds.

Largest theme park market

Dennis Speigel, head of International Theme Park Services, a consulting firm for the amusement industry, says it's not unusual for America's biggest ride manufacturers to have half their clients based in China. The country's booming middle class has proved hungry for leisure activities, and Chinese real estate developers have responded with jaw-dropping amusement parks.

"If the growth continues in mainland China as it has over the last 15 years, by 2025, it'll be the largest theme park market in the world," Speigel says.

American companies may be the perceived quality leader, but it does not take long for Chinese companies to come up with a workable version that is similar. - John Gerner, Leisure Business Advisors

The U.S., home to some of the industry's most innovative companies, is poised to play a big role in that growth, says John Gerner, the managing director of Leisure Business Advisors, a consulting company for new attractions.

But with the trade war amping up the cost of the already-pricey ride parts, Gerner says the U.S. risks losing ground as park developers gravitate toward the United States' main competitors in Europe or opt for cheaper versions made in China.

"American companies may be the perceived quality leader, but it does not take long for Chinese companies to come up with a workable version that is similar," he says. "Sadly, [the tariffs] results in what could be very valuable lost opportunities."

It's more than just the Chinese duties that have made the trade war such a bumpy ride for manufacturers like S&S. Dave Tolman, a ride packager at the company, says the price of their materials has risen dramatically because of tariffs imposed in Washington.

Steel prices up

"The tariffs on steel and aluminum affect us in this business a real big amount," Tolman says. "That's two of the main things we use."

Since last March, when the Trump administration announced tariffs on all steel and aluminum imports, the price of the metal parts used by S&S has risen by as much as 70%, according to Perkes. Though the Trump administration walked back the tariffs with Canada and Mexico last month, he suspects the metal prices will stay high for the foreseeable future.

Perkes says it no longer makes financial sense for the company to manufacture certain ride parts in-house. Since the metal tariffs were imposed, Perkes says the company has tapped manufacturers in China to make pieces like the steel ties that hold roller coaster tracks together and walkways for ride maintenance.

"For us to work around those tariffs, we have to change our country of origin," he says. "We have to build things in China instead of here in the United States to help our customers with the cost."

Copyright 2019 KUER 90.1. To see more, visit KUER 90.1.

RACHEL MARTIN, HOST:

China is growing its population, its economy. We've heard this before. What you might not know is that within the next few years, China is predicted to become the largest theme park market on Earth. Ride manufactures in the U.S. are set to play a big role in that growth, but the U.S.-China trade war means tariffs on everything from soybeans to the parts for amusement rides. And some American companies are feeling squeezed.

KUER's Rebecca Ellis reports.

REBECCA ELLIS, BYLINE: Pretend you're a bullet hanging out in the barrel of a gun. The trigger's pulled, and then - boom - you're hurled into the air at turbo speed. Zero to 80 miles in two seconds - that's what being on a roller coaster made by S&S Worldwide is like. These organ-jumbling rides have turned the northern Utah company into one of the largest amusement ride manufacturers in the country. Earlier in May, Preston Perkes, an executive director at S&S, was overseeing roller coasters bound for...

PRESTON PERKES: Dubai, New Jersey, Pittsburgh, Chicago and China.

ELLIS: In the center of the factory sit two massive white steel pulleys, part of a $16 million ride going up in eastern China's newest military-themed amusement park, Sun Tzu Cultural Park. Soon, a truck will cart off these pulleys to Los Angeles. They'll cross the Pacific in an ocean container and arrive at the Qingdao port southeast of Beijing. That's when the customer will have to pay a tariff of a little over 25%. Perkes says there's going to be some sticker shock.

PERKES: Never would they have thought that they would have to pay such a high duty and tax.

ELLIS: Just like soybeans, cars, lithium batteries and thousands of other goods, roller coasters have gotten caught up in the escalating trade war between the U.S. and China. Since last fall, Beijing has hiked up the tariff on American-made amusement rides twice, potentially costing customers in China more than a million dollars in extra fees. It's enough, Perkes says, for some buyer's remorse to creep in.

PERKES: And when our customers are having to pay more money because of a added tariff, they're going to look other places, and that's what they've done.

ELLIS: This year, only one Chinese customer has reached out to purchase a ride. In past years, Perkes says, about half of their business came from China.

John Gerner is a managing director of Leisure Business Advisors. In China, he says, American companies are known as the go-to guys for high-tech rides - pricey, but worth it.

JOHN GERNER: And so they've been able to compete on the value of innovation, quality, intellectual property, characters and brands.

ELLIS: If the new tariffs stay in place, Gerner warns, American rides could lose their appeal, as Chinese companies are encouraged to buy Chinese.

Dave Tolman is a ride packager at the company, one of its hundred or so employees. He says it's not just the Chinese duties that have made the trade war such a bumpy ride for S&S.

DAVE TOLMAN: The tariffs on steel and aluminum affect us in this business a real big amount. That's, you know, two of the main things that we use.

ELLIS: Since last March, when the Trump administration announced tariffs on all steel and aluminum imports, the price of the metal parts used by S&S has risen by as much as 70%. Perkes says they had to rethink parts of their supply chain, seeking out cheaper steel for the ties that hold roller coaster tracks together and for the walkways for ride maintenance.

PERKES: We have to change our country of origin. We have to build things in other countries to avoid the tariffs.

ELLIS: Since the metal tariffs were imposed last year, he says, that work is now done closer to much of their customer base - in China.

For NPR News, I'm Rebecca Ellis in Salt Lake City. Transcript provided by NPR, Copyright NPR.