President Donald Trump surprised many — including some in his own cabinet — when he announced March 1 new tariffs on imports of steel and aluminum.
With the taxes kicking in about two weeks, the sheet metal and HVAC industry is now sorting out just what they mean for contractors, metals suppliers and companies that make the machinery that helps shape metal to ductwork.
Right now, it’s largely antidotal, but a number of visitors to Snips’ Facebook page say they’re already experiencing higher prices, although some analysts say that has more to do with market jitters than any supply issues related to the just-announced tariffs.
Unfortunately, there’s little that the average sheet metal contractor can do about the issue. Materials cost what they cost. But contractors aren’t helpless. That occurred to me when I remembered a couple of interviews with Mestek Machinery’s Mike Bailey, the company’s vice president of sales and new-product development.
When I was interviewing Bailey for a story about a new machine that had recently been installed at a New Jersey mechanical contractor’s shop, he stressed the labor savings that the equipment would bring. There aren’t many other places to save money, he said:
Mestek officials state that reducing labor cost is one of the few areas where contractors still have some control. In a mature industry such as the sheet metal and HVAC industry, there are limited options that companies have to substantially save money and labor is the at the forefront of those opportunities.
“When it comes to material cost and labor cost it really comes down to labor cost as far as savings,” Bailey said. “When it comes down to material purchases a contractor can certainly buy in volume and pay their bills in a timely manner in hopes of acquiring a better cost. However in those situations a contractor may only be saving up to 3 to 4 percent. That’s really not enough sometimes.”
It hadn’t occurred to me before, but it made sense. Perhaps the best way to react when the cost of your materials increase is to become more efficient, whether by incorporating lean manufacturing techniques or investing in machinery.
Bailey stressed the point in another interview:
“In this business — and you can quote this — there is no material savings per contractor,” he said, adding, “I can only say that because I worked for a distributor selling all the material too for 10 years. I tell this to contractors all the time: There may be 3 to 5 percent savings on materials based on how you pay your bills, the amount of material you order — or there may not. The only thing you’ve got in this whole entire trade to compete and better yourself from the other guy is labor. That’s it. And labor means automation, and labor means fewer steps to make a product.”
What are you doing to reduce the effects of the steel and aluminum tariffs on your business?