For more than 60 years, speakers manufactured by Auratone may have helped to give life to some of your favorite songs.
Auratone, founded in 1958, is the company behind the 5C speaker, which in the 1970s became a must for studio engineers and the one who mixed Michael Jackson’s album “Thriller”. To date, the company says Audio engineers used aurtone speakers to mix songs from musicians, including Paul McCartney, Abba, Lady Gaga, Taylor Swift and others.
Like many other United States small businessesThe auratone managed by the family had to count with complicated and New expensive realities Due to new prices of the Trump administration, said Alex Jacobsen, president and owner of the company and grandson of the founder of Auratone, Jack Wilson.
Jacobsen, 35, estimates that around half of the parts for each speaker, some of which are no longer available in the United States, come from abroad, including China and Europe. The company’s products are then manufactured in Nashville or Minnesota before being shipped to customers in the United States and around the world. About 60% of aurest customers are international, says Jacobsen.
This means, due to the countries introducing theirs reprisals On American imports, aurtone will be struck by “two sides” because it brings parts for manufacturing and sells to customers abroad, says Jacobsen.
‘We cannot double the price of our speakers’
This is not the first time that Jacobsen has to make prices in his business model. From 2018 during Trump’s first administration, some of the parts that make up an aurator speaker were submitted at a rate of 25% to import from China, says Jacobsen. The move has increased the costs of the company by a nominal amount, but they did not increase prices for customers, says Jacobsen.
Jacobsen says that the current situation is more disastrous. The parts it imports from abroad are now subject to a new universal price at 10%, and potentially higher for some countries After a temporary break, he should rise in July. Then there is the huge 145% price On goods from China who entered into force on April 2 and were interrupted this week.
While the United States and China agreed on Monday to suspend most of the prices on the products of the other for 90 days, As CNBC reportsJacobsen says that his business should pay an additional $ 20,000, if not more, in new import taxes due to current trade negotiations.
“You can absorb an increase of 10% to 15%, but when you are touched with 170%, it’s another story,” explains Jacobsen, explaining the cumulative effect of the recent rate of 145% in addition to the existing 25% rates on Chinese parts for its company.
“If you start to classify them throughout the chain and with reprisals – we cannot double the price of our speakers,” explains Jacobsen.
The flagship speakers of aurtone currently cost $ 749 per pair.
Jacobsen wonders what will happen after the 90 -day break. President Donald Trump said the prices on China would not be 145%, even if a longer -term agreement cannot be reached once the 90 -day break is expired, CNBC reports.
“But they would increase considerably,” added Trump.
Many parts that make up an aurator speaker come from countries which are now subject to new prices.
With the kind permission of Alex Jacobsen
Some international buyers have started to fill up on aurtone equipment, says Jacobsen.
Auratone achieves about $ 400,000 in sales per year, according to documents examined by CNBC. By April, the company was approaching $ 200,000 in sales while buyers increased their purchasing times, perhaps fearing that new prices lead to an increase in prices of auratone.
Prices can actually conduct companies like auraitone to manufacture abroad
Trump says that the pricing policy of his administration Protect American jobs And Encourage more companies To bring their manufacturing efforts to the United States. Jacobsen says that prices could have the opposite effect.
Among its many scenarios in the way of maintaining the business alive, we consist in moving the manufacture of auratone abroad, probably in Europe. Jacobsen says that around 35% of its customers are there, and that the company could then benefit from free trade agreements within the European Union, the United Kingdom and new business partners.
Jacobsen is not alone. Most companies, 57%, say that high costs will prevent them from putting manufacturing in the United States, according to a CNBC Supply Chain Survey Out of 380 companies were supplied in early April. If they provide manufacturing in the United States, 81% expect to automate more work rather than hiring people for jobs.
Meanwhile, about half of the companies have said that building a new interior supply chain would at least double their current costs. Above 60% said that it would be more profitable to move their supply chains to lower countries.
Some owners of small businesses have disputed New prices. A cohort of five small businesses continued the Trump administration on April 14, seeking to block new prices, CNBC reportsalleging that Trump illegally usurped the power of the congress to collect prices by affirming that trade deficits with others country constitute an emergency. The following week, an American federal court judged that the prices would remain in force, saying that companies had not shown that they would be immediately injured by new import taxes, Reuters reports.
“Part of the company’s inheritance (of the family) of the company is to build them here”
Jacobsen always hopes that he will be able to keep part of the production line of auratone in the United States
“Part of the company’s inheritance is to build them here, and it’s my dream and my inspiration to continue doing it,” explains Jacobsen. “But if it forces a situation where we must (move manufacturing abroad), then we will do, we must do it. But it is not my preference.”
Jacobsen, who resumed his grandfather’s company about ten years ago, says that he prefers to see the federal government providing other incentives to small businesses that make in the United States, for example by providing tax alternatives. He noted that his grandfather built auratone with funds from the GI bill after serving in the Second World War.
“It seems to me that there would be easier means to encourage manufacturing here, if it was really intention,” said Jacobsen.
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