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Lights on, tariffs off for Miami’s Jademar

The showroom at Jademar Corp. in Miami is a spectacle of lights, with fixtures resembling giant tropical flowers, an alien head, slick ultra-modern shapes and streetlights from the 19th century.

Which is appropriate because family-owned Jademar is a manufacturer of energy-efficient light bulbs, fixtures and lighting systems. The Miami-based company designs and sells indoor and outdoor lighting products to commercial, industrial and residential clients, as well as to distributors, mostly in Latin America and the Caribbean.

“We went from being an export representative to manufacturing our own line of products,” said Joseph A. deMartino Jr., the president and one of the owners of Jademar, which has been in business for more than six decades.

The company produces and sells lighting fixtures and components, including LED (light emitting diode) and LED solar products, traditional lighting (incandescent, fluorescent, high-intensity discharge — HID) made mostly in China. It also designs and installs lighting systems and consults.

“There has been a significant transition from traditional lighting to LED in recent years,” deMartino said. “LED now represents the majority of our product development, inventory, sales and gross margins. We have been working with more than 20 factories in China for anywhere from 15-20 years, and this allows us to private label our brand and maintain quality control.” Due to low production costs in China, Jademar can offer high-quality products that are more expensive to produce in the U.S. And while the cost of installing energy-efficient LED systems is high compared to traditional lighting, deMartino says clients save on electric bills and recoup their investments in relatively short periods of time.

However, the Trump administration created a serious problem for Jademar when it began imposing a 10 percent tariff on lighting product imports — and many other items — from China on Sept. 24. A proposed 25 percent tariff — originally scheduled to take effect Jan. 1, 2019 — is temporarily on hold as Beijing and Washington discuss trade policy.

“All of our lighting products were affected, with a few exclusions,” deMartino said. The 10 percent tariff would have had a devastating effect on Jademar, since most of its products come from China.

But the company found a solution. It set up a Foreign Trade Zone (FTZ) at the giant warehouse of its next-door neighbor, Interport Logistics, a major player in Miami’s international trade sector.

FTZs, which have been around for about 80 years, are special sites that allow companies to import, store, manufacture, assemble, repackage and re-export products duty free. They exist to encourage international trade. After federal trade rules changed in 2012, it became easier for companies to set them up at sites like bonded warehouses.

Essentially, the FTZ allows a company like Jademar to legally import goods from China and re-export them without paying the 10 percent tariff. Since most of Jademar’s sales go to foreign clients, or to foreign clients who have their own bonded warehouses in Miami, this mechanism allows them to avoid the tariffs.

“This has been a huge advantage for Jademar,” deMartino said.

For some time, Jademar suspected tariffs on China were in the offing and set up its FTZ at the end of October 2018. “We saw this coming when Trump was campaigning for president,” he said. If a higher tariff is imposed next year, Jademar would still be exempt.

There are an estimated 80 FTZs in Miami-Dade County today.

Of course, if Jademar imports Chinese products for sale to U.S. clients, it will have to pay whatever tariff is in effect. And the company plans to expand its sales here. But, deMartino said, the combined effect of low-cost Chinese products and tariff relief on exports helps the company to balance the impact of sales to U. S. customers and remain competitive.

Company name: Jademar Corp.

Founded: in 1954 in New Jersey by Joseph Anthony and Olga deMartino, parents of the company’s two current senior executives, Joseph Jr. and Gary deMartino. Jademar combines the letters J, A and deMar.

President: Joseph A. deMartino Jr., son of the founder, since 1985.

Ownership: Owned and managed by members of the deMartino family, led by Joseph A. deMartino Jr., president, Gary B. deMartino, executive vice president and Erica deMartino, domestic sales executive. The founders sold the company to the current owners in 1985.

Headquarters: 12950 NW 25th St., Miami. Jademar moved parts of its operations from New Jersey to Miami in the late 1980s and early 1990s, and established its corporate headquarters here in 1998.

Employees: Ten total, with nine in Miami and one in Guatemala who covers Central America. Most have been with the company for between 10 to 25 years.

Clients: Commercial and industrial customers, distributors, hospitals, government facilities, home improvement stores and residential clients in Latin America, the Caribbean and the U.S. About 80 percent of sales go overseas.

Financials: Sales have averaged about $10 million in the last few years, and will be in the same range this year. Jademar expects a substantial increase in 2019 because of the advantage of operating out of their FTZ.

Competitors: MaxLite, Westgate and RAB Lighting, plus other companies in the U.S. Some Chinese companies have also begun targeting Jademar’s markets, offering cheaper, low-quality products, deMartino said.

The difference: In the lighting business for 64 years, Jademar offers a broad range of high-quality, energy-saving products made in China and can sell them at very competitive prices. The company’s product lines include its own brands — like Photon X LED and Photon X Solar — as well as international brands. Moreover, “We have the ability to offer a wide variety of stock out of our Miami warehouse for quick shipment, and give special credit terms to qualified customers,” deMartino said. “We contract with reputable factories in China so we can offer excellent quality and extended warranties.” Jademar also uses U.S. manufacturers for some of its customers.

Client view: “We’ve been working with Jademar for approximately 15 years,” said Jose Rieumont, president of Hialeah-based Soled Technologies. “We buy everything from them, especially solar and LED lighting and fixtures.” Soled sells and installs lighting systems to private companies, government agencies, Miami Dade College and others, he said. “We buy from Jademar because they offer a very wide variety of high-quality products as well as strong customer service. Plus they provide warranties on their products, no questions asked.”

Business lesson: In the early 1990s, Jademar was working with one large supplier that accounted for about 50 percent of their business. When that supplier unexpectedly aligned itself with another company and stopped selling to Jademar, the Miami firm faced a huge challenge. But this turned out to be “a blessing in disguise,” deMartino said. He was forced to travel to China to find reliable suppliers who produced Jademar’s original private label — Jadco — and new brands like Photon X LED and Photon X Solar. “Although the transition was difficult, it has paid huge dividends,” he said. The company now has established brands that are recognized and popular in its foreign and U.S. markets.

Outlook: LED and LED solar systems are becoming increasingly efficient, and continue to lower energy costs for clients, despite a sizeable initial investment. This is especially important in some foreign markets, where electricity costs are high but payback periods are relatively short, deMartino said. The company plans to maintain or grow its foreign markets, as it expands in Florida and other states.