February 1, 2008
How today’s weather in China could impact your July 4th fireworks
If you are making fireworks yourself or are a consumer of Chinese fireworks, what is happening in China right now, today, will be affecting you.
The man who makes many of Skylighter’s Chinese fireworks products possible is Matt Palaszynski. Matt has a company in Liuyang. Liuyang is basically the center of the fireworks universe. He splits his time between there and his home in the US.
Matt works with each factory making consumer fireworks for us. He also helps us find all sorts of wonderful things we need in making fireworks. Things like screens, comet and star pumps, ematch blanks, the wonderful array of colored effect fuses we carry, and many other items that we now consider essential to fireworks making.
Matt sent me the following note yesterday. It affects all of us who are concerned about buying and making fireworks for July 4th and other events. This year, the fireworks industry worldwide is experiencing the most significant cost increases in a decade. Matt’s note explains graphically why some of these increases are happening, even as I write this.
I would like to update you on the weather situation in China as well as the impact on your order.
Central China is experiencing the worst winter storm in 30 years. For the last two weeks the weather has been poor and has been causing disruption to production. However, several days ago much of central and southern China was hit with an exceptional winter storm which has knocked out major power grids and shut down most transportation arteries. The forecast is for the weather to remain poor for at least the next week.
At this point, all production and transportation has ceased until at least mid-February. For those of you that were expecting shipments before Chinese New Year for arrival in March, the weather will delay your shipments.
For everyone else, production was progressing in January and shipments planned for late February and March are not likely to be significantly impacted. However, expect a delay of a few weeks vs. where we would have been without the poor weather. We were prepared for a difficult spring due to the Olympics and therefore, our production is ahead of schedule vs. typical years.
The storm is of natural disaster portions and will likely have some direct impact on the Fireworks Industry in the form of further RMB/USD appreciation. The poor weather is crippling food and fuel movement at a time of the highest annual consumption due to the holiday.
Because of this, food and fuel prices are climbing and the government is responding by allowing further appreciation of the RMB [the Chinese currency] in an effort to combat domestic price inflation. This means the RMB is likely to continue to appreciate further, further increasing the cost of importing fireworks into the USA (source China Daily Business Section, Feb 1st, 2008). Currently the RMB is at 7.19 per dollar, down from 7.5 at the beginning of the production season.
I personally have been in Liuyang since January 10th and was delayed in leaving for several days due to the weather. All roads and airports were shut-down. I just managed to get to a warm Beijing hotel room only after waiting with tens of thousands of other stranded holiday travelers for a standing room only seat on a local train.
The normal 12 hour trip took 18 long hours and was truly a once in a lifetime experience that I seem to have all too often here in China. Back in Liuyang, my team is struggling with below zero temperatures and only have a few hours of electricity (and heat) each day.
Under these conditions, we have given up on making any progress at production and the team has started their own difficult journeys to visit family and begin the most important Chinese Holiday.
Chinese New Year is an unusual holiday for us in the West to understand because all of China is shut down for several weeks. Many workers in China have left behind friends and family in the rural areas of China to work in and around the cities. During Chinese New Year they make the difficult trip back home and don’t return for several weeks as they enjoy the company of friends and relatives.
As China has become more prosperous, and especially this year, workers have begun to leave for home much earlier then in years past. The reason for this is the relative prosperity in China.
Factory workers no longer are living day to day and when the weather turns cold in early January, they are leaving for the warmth of their fireplace at home with family savings accumulated from two income sources, prosperous children sending money back home, etc.
What this means for you is a more difficult production environment. We have taken steps to plan your production carefully to ensure timely delivery, however please understand that the situation is becoming more difficult: lack of workers, exceptionally poor weather, the Olympics (factories will begin to produce European orders immediately following Chinese New Year in anticipation that shipping will cease during three months of the Olympics), and other factors are combining to make spring production more difficult then usual. Rest assured we have taken steps to manage these difficulties.
I will end this update on a positive note and wish everyone a prosperous and healthy Lunar New Year.
Please see attached some photos of production from this month.
All the best to you and your families,
Dominator Fireworks, Liuyang, China
What this means to Skylighter’s fireworks makers and buyers
Matt ain’t just awhistlin’ Dixie. The front page story in the Washington Post today reports that hundreds of thousands of people are stuck in railroad stations throughout central China.
We have a number of new products coming in our next container from Matt. But between the weather and the normal two-week holiday for Chinese New Year, it looks like it’ll be arriving later than we originally planned. The wait will be worth it. There are a couple of surprises in that shipment that most of you have never seen before. Stay tuned. Holler if you have any questions. And start making those July 4th fireworks!