Navigating Recent Tariffs in the Elevator Industry: Practical Advice for Our Customers
by Lee Ingram
With over 25 years of combined experience in supply management and the elevator industry, I’ve witnessed and experienced firsthand how global economic shifts can impact our sector. Once again, tariffs have emerged as a significant challenge, creating confusion, influencing costs and reshaping supply chains across the board. As a trusted partner, we want to share insights into how these changes might affect you and offer practical advice navigating this evolving landscape.
Understanding the Impact of Tariffs
Tariffs are essentially taxes imposed on imported goods. With significant portions of the elevator industry equipment and source materials currently coming from outside the U.S., the ripple effects can be felt throughout the industry. From steel, aluminum, and electronic components to basic sundries and daily materials, these additional costs can lead to price increases and potential delays in project timelines. For businesses relying on imported goods, the financial and operational implications can be substantial.
What Should You Be Looking Out For?
Price Fluctuations: Tariffs change the cost of raw materials as well as finished goods throughout the supply chain, for both imported and domestic products, we can see sudden cost spikes as the markets and suppliers react.
Supply Chain Disruptions: As manufacturers adjust to global changes, production activity and lead times will face disruptions. Declining demand and trade volumes for foreign products may reduce ocean freight activity, leading to slowdowns, delays, and limited availability of key components—all of which could impact project schedules.
Contract Clauses: Review your contracts for escalation clauses or provisions that address unforeseen cost increases due to tariffs.
Discuss Pricing Early and Often: If faced with price escalation, bear in mind the tariffs affect the cost of goods from specific countries, not domestic labor and other non-material costs. With the uncertainty of changes in rates and their application, purchasers and business leaders need to routinely monitor these adjustments and consider flexible and transparent approaches with your key suppliers. For example, consider working with your suppliers or contractors to implement a tariff allowance as a buffer in your budgets to account for potential price fluctuations.
Diversify Your Supply Chain: Shifting supply chains to onshore, nearshore, or tariff-free regions can help stabilize operations and mitigate risk, but these transitions come with challenges. Repositioning and establishing new countries of origin requires time, dedicated teams, and strategic effort. Leadership support and investment are critical for a successful shift—ensuring long-term resilience without undue disruption.
Plan Ahead: Build flexibility into your project timelines to account for potential delays in material delivery. Communicate realistic expectations clearly with various stakeholders and keep them updated.
Collaborate with Partners: Work closely with your suppliers and contractors to identify cost-saving opportunities and streamline processes. Your suppliers are also struggling to understand the impact on their business and how to appropriately respond. Routinely engaging with key suppliers earlier and openly, leveraging their knowledge, can lead to mutually beneficial outcomes. Short-term mitigations may be possible but also work to think and plan strategically for future proof solutions.
Stay Informed: Keeping up with changes and their impact on the elevator industry is essential for proactive decision-making. Knowledge underwrites better strategies. Connect with other organizations and industry thought leaders to exchange perspectives and explore potential solutions. Idea sharing can lead to innovative approaches that mitigate risks and uncover new opportunities.
Keep Calm: Navigating tariff impacts requires patience and strategic thinking. There will naturally be an adjustment period, and it's important to avoid kneejerk reactions. Review price adjustments and engage in discussions to understand the basis before accepting changes. Maintain a measured approach. Don’t let cost increases undermine long-term, mutually beneficial business relationships.
Benchmarking: Compare pricing strategies and approaches with those of other suppliers to evaluate and discuss tariff-related price increases. Over the longer term, this approach can provide reassurance to clients as well as internal stakeholders.
At ATIS, we’re committed to supporting our customers through these challenges. By staying informed and adopting strategic measures, we can navigate this complex environment together. If you have any questions or need assistance, don’t hesitate to reach out.
Together, we’ll continue to elevate the industry—one step at a time.