A message from Red Rhino Fireworks President, Steve Houser, regarding Coronavirus and the outlook for consumer fireworks this season.
To Our Valued Red Rhino Customer Family:
Greetings everyone. The last month here stateside has been tumultuous to say the least. We have seen the stock market dive abruptly as the globe comes to grips with the now infamous Coronavirus. Further as far as fireworks go we are under an immense inventory capacity strain throughout our industry. For me to say I wish it was still 2019 would be an understatement. I’m not going to delve into all of the discussion topics here, and there are many, but rather I want to give you a status report based on the outlooks for consumer fireworks this season and where we at Red Rhino stand.
Let’s begin with going back to Thanksgiving 2019. At that time I was ecstatic with where things were shaping up for 2020. Production overseas was ahead of schedule, product was being shipped stateside for the July season, new items were selected, all graphics were complete and the Red Rhino 2020 catalog was almost ready for the print shop. Red Rhino was well ahead of the curve and that is exactly where I wanted to be going into 2020 where we were all looking forward to a Saturday July 4th holiday. Two weeks later our first problem hit. In early December there was a significant accident at a factory that was manufacturing product for the European market. This resulted in approximately 22 deaths. The Chinese Central Government stepped in at that time and initiated significant new production protocols. It wasn’t until after Christmas that the factories were open again, and just a few days after reopening there was yet another accident, although it was much smaller. This again shut down most production. So effectively the production of fireworks for the U.S. market was down from early December 2019 through Mid-January 2020. Then began the Chinese Lunar New Year. This put us nearly 6 weeks behind at this point, a significant problem in its own right.
Then, the worst happened – Coronavirus. Many of our factories had tentatively planned on resuming production early in February by shortening the Lunar New Year Holiday so they could start to catch up, but when the virus struck, all bets were off. That essentially led to a shutdown that lasted until Mid-March 2020. These shutdowns have affected everyone in the fireworks industry and were very significant. Production is now back and moving along well but it is months behind from where we as an industry normally would be. The ramifications of this are serious. While Red Rhino began unloading product for this year in November and have done so through early March, we are now waiting for the next cycle of imports. Those will hit in Mid-April. The items in that group are the items that were finished before Chinese New Year that didn’t get shipped until just a few days ago due to virus related delays. While these shipments were significant, they were not the lion’s share of what we expect. After the April deliveries conclude, the next projected significant wave of container shipments will begin to arrive in the U.S. around Mid-May and will continue for the rest of the season – much the same story will be consistent for anyone importing product. Fortunately, we have strong, direct relationships with factories so I believe Red Rhino will do well, comparatively, in terms of overall import success this season. But there will be a lot of “just in time” inventory for the U.S. Fireworks industry this year. All of us in the industry will be operating outside of our comfort zones.
What does this mean for you? It means that we are all going to have to devise plans to accept and disburse late arriving merchandise in warehouses, buildings and temporary retail sales locations. This will probably entail the need for multiple shipments on orders because waiting to collect everything and shipping only one time will not be an option. There simply won’t be time for that approach.
I want to assure you that we are trying very hard to layout advance logistics for this but it is a very fluid and ever changing situation, especially with the unpredictability of the effects of the Coronavirus and what may yet happen here in the U.S..
In the coming weeks we should have a much clearer picture of where ultimate supplies will fall. For now, I would strongly urge you to get your orders in. There has been a massive influx of orders already and we have been shipping orders out regularly, with more to come. By being prepared now, you stand your best chance at obtaining inventory in June. DO NOT WAIT. With overall inventory shortages across the industry this year, if you wait, you may find yourself with little to pick from.
Our offices are fully staffed and we are here for you. Emails are very important and are a great way to start communicating because if “work from home” quarantines are instituted it will be much harder to have consistent communication via phone. Also, we have remote access capabilities set up for our accounting system and we have secure VPN’s in place to continue to transact business no matter where we are located. Red Rhino is here to provide the same high level of service and information that we have become known for and you rely on. Also, the online order system is functioning very well, so that is an important tool for you as well. If you need assistance setting up an online account then just call our offices or refer to the tutorial on our website at www.redrhinofireworks.com
On another note, as the current President of the National Fireworks Association (NFA) I am working on this problem at a national level daily. The NFA is pursuing a number of proactive remedies on behalf of the entire fireworks industry for relief and assistance to help us through this season. A significant part of this is working with CBP to address the expediting of 1.3 and 1.4 fireworks containers at the ports to insure they do not sit there for any amount of time but instead move through the delivery system quickly so there is no unnecessary delay of getting product to warehouses once the product arrives to the U.S.. We had those calls a week ago with a number of key U.S. Senator’s and Representative’s offices and they are taking action to see if we can get this to happen. The NFA is funneling a lot of information through their www.saveourfireworks.com website and Facebook pages so that you can be informed.
Red Rhino will also be sharing those links through our Red Rhino Facebook page as well, so be sure to check in on our Facebook page regularly. If you are not an NFA member you can still access this information, but we would urge you to join the NFA, it does so much to help our industry. It is an important way to support your business’ future.
Another thing I would mention is that the U.S. Small Business Administration is establishing a lot of emergency loan programs and easing the qualification standards for its 7(a) loan program for small businesses that may end up serving our industry very well. I would urge you all to start reading up on those programs because I believe credit options will be much more limited across the industry this season than in years past.
Here is a direct link to Phase 3 of the Senate’s Coronavirus relief bill that pertains directly to this program. Refer to pp. 5-17.
https://www.republicanleader.senate.gov/imo/media/doc/CARES%20Act%20Final%20-%20Mar%202020.pdf
Having said all of this I would like to close by saying that the Fireworks Industry is one of the most resilient, conquer the issue and beat the problem industries I have ever seen and we deal with lots of fires every year and manage through them. Those decades of experience have prepared us for the tasks we are facing this year and I am confident we will persevere, but it will take all of us working together and compromising to do it. WE will succeed and WE will make sure the skies are lit up this 4th of July, and WE need to. After this Coronavirus problem blows over, the country will need a boost to patriotism, a chance to blow of a little steam and time to join in a true national celebration!
Stay safe and stay well.
Sincerely,
Steve Houser
President
CDF, LLC
Red Rhino Fireworks
