PC Case Maker CaseLabs Closes Permanently (pcgamer.com)

U.S.-based PC case manufacturer, CaseLabs, announced on social media that it is "closing permanently" and will not be able to fill all current orders. "We have been forced into bankruptcy and liquidation," CaseLabs said in a statement. "The tariffs have played a major role raising prices by almost 80 percent (partly due to associated shortages), which cut deeply into our margins. The default of a large account added greatly to the problem... We reached out for a possible deal that would allow us to continue on and persevere through these difficult times, but in the end, it didn't happen." PC Gamer reports: CaseLabs is likely referring to the growing number of tariffs being enforced on Chinese imports by the United States government. China and the US are currently engaged in a trade war, causing many U.S. companies to lose money, lay off employees, or close entirely. CaseLabs went on to say that it won't be able to fill the backlog of case orders, but other parts will most likely ship to customers. "We are so incredibly sorry this is happening. Our user community has been very devoted to us and it's awful to think that we have let any of you down."

Comments

Not *just* due to tariffs

[Anonymous Coward]

FT company website:

"We are very sad to announce that CaseLabs and its parent company will be closing permanently. We have been forced into bankruptcy and liquidation. The tariffs have played a major role raising prices by almost 80% (partly due to associated shortages), which cut deeply into our margins. The default of a large account added greatly to the problem. It hit us at the worst possible time. We reached out for a possible deal that would allow us to continue on and persevere through these difficult times, but in the end, it didn’t happen.

Blame the business owner, not the tariffs.

[Anonymous Coward]

The tariffs have played a major role raising prices by almost 80 percent (partly due to associated shortages)

The ten percent aluminum tariff causes prices to spike eighty percent? Sounds like CaseLabs' suppliers ripped them off.

The default of a large account added greatly to the problem... We reached out for a possible deal that would allow us to continue on and persevere through these difficult times, but in the end, it didn't happen.

So, CaseLabs got ripped off by a client. This was a business failure, not a tariff problem. That's confirmed by the company's failure to secure financing to continue: even the bank knew that the owners sucked at running a business.

They made overpriced cases (seriously, $600 for a case?) and ran their business badly. They failed.

Re:Can Someone Explain?

[narcc]

The tariffs are designed to help American manufacturing, they make American products cheaper than foreign products.

In the same way that killing everyone smarter than you will make you the smartest person in the world.

Tariffs don't make US products cheaper, they make foreign products more expensive.

It's bias in the media

[Solandri]

China and the US are currently engaged in a trade war, causing many U.S. companies to lose money, lay off employees, or close entirely.

The way the media portrays it:

If a trade policy is implemented by a Democrat:

• Open trade is good for the economy.
• Tariffs protect American jobs by preventing them from being sent overseas.

If a trade policy is implemented by a Republican:

• Open trade causes American jobs to be sent overseas.
• Tariffs cost American jobs by stifling the economy.

The reality is that both are true. The press just likes to spin it in favor of or against the party in power.

• Open trade causes American jobs to be sent overseas (assuming there are foreign countries with a lower standard of living than the U.S., which means they have lower labor costs). But the increased economic activity due to imported goods being cheaper than domestic goods results in a net boost to the domestic economy and the standard of living in the U.S.
• Trade tariffs protect American jobs from being sent overseas. But do so by increasing the price of goods sold in the U.S., resulting in a net decrease to the domestic economy and the standard of living.

The tariffs are designed to help American manufacturing, they make American products cheaper than foreign products

Nope. They're designed to help American manufacturing by making foreign products more expensive than American products. That is, they protect American jobs, but do so by making the products you buy more expensive.

That's why I generally fall on the pro-open trade side of this. It's a Prisoner's dilemma situation, where if one side implements tariffs, they get a better result than open trade, while the other side gets the worst possible result. But if both sides implement tariffs, they both end up worse off than with open trade. The best solution for both sides overall is open trade.

Trump's rationale (which I partly agree with but mostly don't) is that China has been abusing our policy of open import of Chinese goods by restricting export of American goods to China and/or subsidizing some of their goods which the U.S. imports which artificially kills off U.S. producers, thus giving China the advantage in the Prisoner's dilemma (and puts the U.S. at a disadvantage). The best solution found thus far to the iterated Prisoner's dilemma is the tit for tat strategy. If one side abuses the Prisoner's dilemma, the other side abuses it right back thus signaling that it won't take such abuse lying down. And eventually the side which started the abuse backs down, and the other side also backs down, reverting both sides to the best possible strategy for both (in this case, open trade).

On the subject of steel

[quonset]

One thing everyone here is missing is that U.S. Steel and Nucor Steel have been fighting every single exemption request companies have put forth to the U.S. Commerce Department. These companies want exemptions from the tariffs so they can continue to get steel at reasonable prices and/or quality and type they need.

Instead, the two largest producers of steel in the country have raised their prices and told the Commerce Department the exemptions are bogus because they can make the product, even though in at least one case, a company stopped buying steel from U.S. Steel because of quality control issues.

Of course politics plays a big role in all this:

Charlotte-based Nucor, which financed a documentary film made by a top trade adviser to Mr. Trump, and Pittsburgh-based United States Steel, which has previously employed several top administration officials, have objected to 1,600 exemption requests filed with the Commerce Department over the past several months.

To date, their efforts have never failed, resulting in denials for companies that are based in the United States but rely on imported pipes, screws, wire and other foreign steel products for their supply chains.

In one case, a company stated “the sole U.S. producer of high speed steel material appropriate for cutting tools is not currently ramping up any production to expand this aspect of their business and has not shown any interest in quoting new business.”

As the tariffs take hold, expect prices of finished goods to rise substantially and more businesses to either go under or relocate out of the country. The largest nail manufacturer in the country has already laid off 12% of its workforce, cut hours for the remainder and is still on the brink of extinction, so it has to make such a decision.

Re: Look at all these jobs...

[gtall]

So far, Trump hasn't restored any jobs save a few steel production jobs. The Make America Great Again will raise prices on every product America produces. That will mean we all get to pay more, and those companies will be at a disadvantage when attempting to compete outside the U.S. So enjoy your Kool-Aid while it lasts, but declaring economic war on more or less the entire world shows just how ignorant Trump and his advisors from Fox are about modern economies.

Re:Look at all these jobs...

[Aighearach]

No, because since Harley-Davidson is not a commodity product, but actually a premium product whose sales are based on the brand, it will more closely match Intel, the manufacturer in the cited study. Steel manufacturers don't produce all those extra jobs, it is a much lower number because the products are all fungible with low margins.

So 1000 direct jobs lost manufacturing a brand-driven product would cause many more losses, probably over 4000 total, but adding 1000 steel manufacturing jobs would only increase the total workforce by maybe 1200-1500 jobs.

Re:Can Someone Explain?

[gordguide]

U.S.-based PC case manufacturer

The tariffs have played a major role raising prices by almost 80 percent (partly due to associated shortages)

Can someone explain? The tariffs are designed to help American manufacturing, they make American products cheaper than foreign products. And as for shortages, a PC case manufacturer needs thin sheet steel, paint, plastic, and LEDs. Don't tell me you cannot get sheet steel in America any longer? Also, the margins on cases should be astronomical, 5 lbs of steel and a few LEDs, an ounce of black paint and a few plastic parts probably take 5-8 dollars in material costs. The only problem in the industry should be that China can make them cheaper which can be solved with the appropriate tariffs.

Probably the effect of the tariffs being "recent".

This causes disruption in the supply chain, as any predictable price adjustment would. What importers do is make large orders based on expected mid-term demand, in contrast to their usual (what business school teaches these days) on-demand or "just-in-time" parts inventory practice. This can stress the financials of the importer, as they have new, unplanned costs (large order financing, new inventory & storage costs, delayed return on investment ... parts will be in inventory, paid for, for a longer period of time before they can recover the cost through sales, versus "normal" import volumes ).

Or Not. It may also be that downstream wholesale buyers will have upped their orders from the importer, eliminating the long term storage and cost recovery period issues but possibly causing shortages (cannot fill all orders completely) amongst businesses that are ultimately competitors. Prices may rise (as they always do to reflect higher demand than supply) out of proportion to the increased import cost. If you have unfilled orders and the price of a part in shortage has risen 400% (even though the tariff might have only increased cost to the importer by 10%) ... what do you do? Allow the buyer to cancel the order and hit your annual bottom line, or pay the 400% and ship the product, possibly at a loss, to keep people working and customers happy?

I would imaging the parts the OP's firm is referring to as increasing product cost would be power supplies typically included with case orders. (Just a guess, I've never looked at their site but if they don't offer PS upgrades, maybe they did deserve to go bankrupt, or at least should have read a book on marketing and business theory). Maybe they also included the option to add things like HDDs or SSDs at competitive prices, which would be dangerously narrow margins.

Regardless, those are all items not manufactured in the USA, so would have to be imported from somewhere; typically Asia as the costs to fill a Bill Of Materials (BoM) for electronics in Asia is significantly lower than in North America. It's even cheaper to buy electronic components in Australia than North America due to it's proximity to the manufacturing sites, not all of which are in China.

Oz (and New Zealand) have surprisingly robust electronics manufacturing industries, despite their first-world economies and small population sizes. Compare that with Mexico, which has comparable labour costs to China ... where is the cheap electronics assembly industry there? Doesn't exist at anywhere near the scale of Asia so obviously there are factors other than labour costs at play in that industry.

There are lots of challenges when a disruptive element enters business planning. Some of it is unpredictable and some of it carries unintended consequences. This is always the case, there is nothing particularly unique about new tariffs on Chinese manufactured goods in that respect. One day we can expect the tariffs will fall or be eliminated (either that, or there is a Hidden Agenda since tariff reduction is the carrot dangled to China should it change wha

Re: Look at all these jobs...

[L. J. Beauregard]

Why is it OK for the EU to impose 6% tariffs on US car imports but the US can only impose 4% tariffs on car exports to the EU?

You do know that there's a 25% import duty on light trucks, do you not? Oh, wait, you probably don't know, because Fox Propaganda didn't see fit to tell you.