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Speaker 1: He only Piven entourage fame and mister Selfridge fame, among

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Speaker 1: other things with us after eight o'clock meantime, as we

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Speaker 1: continue to swim in this area of uncertainty around the

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Speaker 1: Trump view of the world, in this tower of war,

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Speaker 1: there are a few more directly affected than the Chinese,

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Speaker 1: of course, who've currently set at a number of one

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Speaker 1: hundred and forty five percent, and within China the toy

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Speaker 1: industry is getting smashed. The irony is the toy industry employees,

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Speaker 1: for example, more than two hundred and seventy thousand Americans,

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Speaker 1: but eighty percent of the product, of course, is still

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Speaker 1: made in China. Anyway. In the middle of all of

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Speaker 1: this is Zuru Toys co founder Nick Mowbray, who is

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Speaker 1: with us. Nick, very good morning to you.

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Speaker 2: Morning Mike.

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Speaker 1: How do you plan?

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Speaker 2: You don't? I think every day we are getting together

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Speaker 2: for a new planning meeting because everything seems to change

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Speaker 2: each day, so very very difficult to plan, very difficult

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Speaker 2: to allocate capital. We're basically in a state of just

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Speaker 2: stopping everything at the moment because it is impossible to plan.

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Speaker 1: What do you think will happen?

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Speaker 2: It is hard to know at this stage or the

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Speaker 2: administration seems to change their mind every day, and so

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Speaker 2: I imagine these tariffs are going to be negotiated down.

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Speaker 2: But we as a result of that, are just in

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Speaker 2: a holding pattern. More or less. I think we ship

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Speaker 2: about willship about two billion dollars worth of goods to

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Speaker 2: the US this year. So at that run rate, that

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Speaker 2: makes our tariff's worth about three billion dollars at the moment.

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Speaker 2: So that is obviously impossible to do. Obviously, we're moving

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Speaker 2: to sans retails, moving to a first sale model. But

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Speaker 2: at this stage a lot of retailers are just pausing,

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Speaker 2: and we're all in a holding pattern.

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Speaker 1: Why don't you do what Donald Trump says you should do,

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Speaker 1: which is simply close everything you have in China down

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Speaker 1: and move it to I don't know, Kansas.

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Speaker 2: Yeah, obviously impossible. America has about four percent unemployment, and

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Speaker 2: so I think in China you've got around one hundred

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Speaker 2: and twelve million people work and manufacturing. In the US

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Speaker 2: you've got about eleven million. And China has a deep

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Speaker 2: and complete ecosystem for toys. I mean, it is an

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Speaker 2: industry that moves very quickly. You've got molding, electronics, packaging, tooling,

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Speaker 2: and that whole supply chain is all very close together.

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Speaker 2: There's lots of competition. All the infrastructures built out, They've

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Speaker 2: got decades and decades of experience. I think sheens In

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Speaker 2: alone has more engineers that graduate every year, and manufacturing

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Speaker 2: engineers and the whole of the US. So you're in

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Speaker 2: a business that moves incredibly quickly with complex products, and

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Speaker 2: you've got the whole ecosystem that's been built over decades

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Speaker 2: and decades. So I think basically it is impossible, yes, exactly.

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Speaker 1: The other thing he would want you to do is

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Speaker 1: I don't know how this works. You you might know,

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Speaker 1: you don't pass the cost on to the consumer. You

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Speaker 1: just give him some money by because you pay the tariffs.

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Speaker 1: Is his seemingly, how does that work?

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Speaker 2: It doesn't. So at one hundred and forty five percent

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Speaker 2: tariff we have to pass through significant price increases, which

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Speaker 2: we'll see obviously volumes four off significantly as well. But

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Speaker 2: because the environment is so unstable and changing literally every day,

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Speaker 2: all our retailers in a state of parallel, a state

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Speaker 2: of pause as well at the stage, so everything is

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Speaker 2: just more or less in a holding pattern. Most manufacturers

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Speaker 2: are holding right now, as are most retailers, and we're

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Speaker 2: just waiting to see what's going to transpire.

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Speaker 1: Are you worried?

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Speaker 2: It'd be hard to say we're not worried. I think

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Speaker 2: last week was an interesting week when I was in Bentonville,

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Speaker 2: Arkansas with Walmart and Zoo won two of their seven

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Speaker 2: Supplier of the Year awards, so that was a pretty

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Speaker 2: amazing achievement. And then the very next day that the

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Speaker 2: first tariffs came into play, so we went from quite

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Speaker 2: a high to quite a low, and then obviously it's

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Speaker 2: escalated ever since then. So it would be hard to

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Speaker 2: say we're not worried, but we're moving, We're We're in

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Speaker 2: a lucky position obviously compared to I think a lot

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Speaker 2: of smaller supplies, smaller manufacturers and retailers in the US.

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Speaker 2: We will be able to weather this and come out

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Speaker 2: the other side, potentially even stronger. But it really depends

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Speaker 2: how long it continues for and of course we're all

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Speaker 2: hoping that that it doesn't continue very long. But the

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Speaker 2: administration is definitely extremely chaolic.

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Speaker 1: Is does America feel a bit for I mean, you're

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Speaker 1: there constantly. Does America feel a bit freaky at the moment?

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Speaker 2: Or not. Hard to know. Hard to know, to be honest,

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Speaker 2: I'm pretty much cooped up on our office and at

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Speaker 2: my place there in LA just working on this terraff

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Speaker 2: situation every day, working with our retailers. So I mean

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Speaker 2: aden about that much, apart from from yesterday I popped

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Speaker 2: down to the to the IndyCar. So it's hard to know,

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Speaker 2: to be honest, I think retailers are all just trying

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Speaker 2: to deal. We're all just trying to deal with the

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Speaker 2: situation as an unfolds daily.

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Speaker 1: Jeez, all right, good to catch up. You appreciate very much.

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Speaker 1: Nick Mowbray, who's the Zuru Toys co founder? What an

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Speaker 1: insight A seventeen minutes away from May.

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Speaker 2: For more from the My Asking Breakfast, listen live to

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Speaker 2: news Talks at B from six am weekdays, or follow

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Speaker 2: the podcast on iHeartRadio.