Are tariffs affecting your shop?

The United States and China called a 'truce' over the weekend on tariffs which haults additional tariff increases that were planned for January 1, 2019. This isn't a slam dunk for manufacturers though, there is a 90-day timeframe where the U.S. and China need to work together to come to a trade agreement.

We've started to hear from some folks that they are feeling the impact on their business already. Are you? What's your opinion on this latest development?

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Depending on the industry, such as automotive, aerospace and others where suppliers are built-in to supplier contracts, some are citing big problems with pricing and delivery.

For example, Principal Manufacturing Corp., tells Better MRO that even though prices for steel have dropped a bit recently, they are still significantly higher than in the rest of the world. The company is a precision manufacturer of metal parts, especially metal stamping and fine blanking, and also offers value-added services. It mostly sources specialty steels and has had to absorb much of the increased material cost.

In some cases, existing contracts allow for price adjustments. “In other cases, it has gotten contentious,” says Edward C. Farrer, Principal’s director of purchasing. A substantial part of its business is automotive parts, which have strict requirements, so Principal can’t just switch suppliers, he notes.

“We’re pinched between our customers and our metal suppliers,” says Farrer. In other parts of the business the company “down gauged,” i.e., made slight changes, to reduce the metal content of a part. Principal also applied for Section 232 exclusions but as of early December, it is still awaiting a decision. Principal also doubled-down on existing continuous improvement programs to increase automation and eliminate costs where it could.

We want to know how you and your business are dealing with tariffs.