After Donald Trump was elected president, Craig Sousser was preparing for an increase in business for his manufacturing company based in Pennsylvania, who, who, who, who, who, who Made of robotics systems used in food packaging. Instead, he is now faced with higher costs and a drop in demand that led him to delay investments in his business – and consult the addition of manufacturing outside the United States.
“It was the most bizarre route of roller coaster,, Where our enthusiasm that goes this year was the high sky,, And then it was as if the air had come out of the ball, “said Subal, CEO of JLS, that his family started 70 years ago.” No one has seen the magnitude of this coming. I do not know if it was his plan or not, who knows, but it took what we thought was a year of rebound and made it really bad. We have business but it is far from what we expected. And we are not alone.
It is an experience that cuts one of the declared objectives of Trump policies: since its entry into office, Trump has imposed a range of import prices which, according to him, will revive American manufacturing by protecting companies against competition abroad cheaper and encouraging companies to move their production in the United States
However, while some companies, including in the pharmaceutical and automotive industries, have announced its intention to extend manufacturing in the United States after Trump’s pricing announcements, others already creating their products in the United States say they do not feel the prices. Instead, prices have led to higher import Costs for the materials and machines they need to make their products in America, as well as The drop in customer demand and a climate of uncertainty that has made it difficult to invest in the expansion of their American operations.
Since Trump’s prices have entered into force, the manufacturing activity has dropped to its lowest point in five months in the highest costs, a drop in income and a drop in exports, according to a survey in April with manufacturers by the supply management institute. Distinct surveys of the Federal Reserve also showed a drop in manufacturing in several regions in April, and the Bureau of Labor Statistics revealed that the manufacturing industry as a whole reduced approximately 1,000 jobs last month, in the midst of overall employment growth.
“We are heading in the wrong direction,” said Tim Fiore, president of the Commercial Survey Committee for the Manufacturing of the ISM. “When income starts to lower, you cannot pay your payroll. You cannot pay your suppliers. You start to free people, you start to reduce. You start to watch your dollars.”
He said his investigation revealed that export orders had fallen to an “alarming” level in April, similar to the figures observed during the great recession almost 20 years ago. About half of the companies interviewed by the ISM said that they had faced higher costs in the previous month, against only 14% which declared cost increases at the end of last year.
“You expect prices to increase as demand increases, but demand has not increased,” said Fiore. “So here we have the demand that collapses and we have growing prices. It’s almost like the impossible equation. “
Last month, Trump placed a minimum rate of 10% on almost all goods in the United States and a rate of more than 145% on goods from China, with the exception of electronics which has a 25% rate of rate. He also placed a 25% rate on imported steel, aluminum, cars and car parts.
For the Souer food packaging company, he says that the prices have made more difficult to remain competitive. The key robotics equipment he needs to make his machines in his York, Pennsylvania, Europe installations, and companies like his must pay a 10% price for Importing European products in the US Sousser said that he had no choice but to pass this cost to his customers in the form of higher prices.
Scott Livingston, CEO of Horst Engineering at East Hartford, Connecticut, said that he had also seen a peak of the costs for the materials he uses to make parts and components for the aerospace and defense industries that use steel, aluminum, cobalt, nickel and titanium from the whole world.
He said that he did not have the ability to transmit these higher costs to his customers, who include large aerospace companies, due to the long -term nature of the contracts he has with them. That meanss The higher costs will reduce its results.
“I think there is good that will come to existing American manufacturers. However, if I cannot strengthen capacity because my entry costs are increasing now, what have we won? ” Said Livingston.
In addition to the higher cost of importing components and materials used in products manufactured in America, companies are also faced with higher costs to import the machines and tools they need. Livingston has just bought several machines in a company in Japan and planned to place another order later this year, which it now plans to cost more if Trump’s prices remain in place. He said he was unable to find this type of highly specialized equipment from an American company.
Companies have filed more than 1,000 requests for exemptions on the manufacturing equipment they say they need China in order to build their products in the United States, according to public comments filed with the American commercial representative. Requests, which came before Trump increases the prices on China more than 145% last month, includes requests From Tesla and Ford for equipment, companies say they are necessary to make electric vehicles in the United States
Positive changes
Some companies, however, have said that they are optimistic prices of Trump will encourage more American customers to buy their products to avoid paying prices on imports.
Drew Greenblatt, president of Marlin Steel Wire, based in Baltimore, which manufactures wire baskets mainly used by medical, aerospace and food processing customers, said that he had just received an order for five tractors of a customer’s product that bought from a foreign competitor.
“Because of these prices, they came to us,” he said. “It is five steel tractor trailers that I will buy at my aciérial in Tennessee. So they are enthusiastic about this. I had to order all kinds of boxes from my local boxing company. I had to order all kinds of pallets for my local pallet company, and my employees will work over time to try to follow this. ”
Greenblatt said that the 25% price of Trump on steel imports has increased the cost of its steel, even if it buys from an American steel mill due to higher demand than the steel factory now sees. Steel prices have jumped since Trump announced his prices.
However, he sees the advantages prevail over higher costs.
With the growth in Greenblatt’s expectations of prices, he also invests in new equipment which he buys from companies in Illinois and Indiana, and he seeks to hire 10 people with a starting salary of around $ 25 per hour. He is Hopefully he could double the size of his business to more than 200 employees, if Trump is able to conclude agreements with other countries that would reduce the price that these countries charge on his products.
“We just ask for equality. If it’s equal, we will prosper, we will prosper because we are so innovative, we are so intelligent, we have such great technology, we have such a great talent,” said Greenblatt. “But we are in hand because the other guys cheat.”
Other companies, however, have said that they saw a lower demand due to the uncertainty that the prices have created for their customers. Sousser said that he had seen the orders of his products stop bakeries and other food companies to which he sells his equipment, because some of them also see higher costs following prices.
The prices have led him to suspend some of his own investments in his business, and he now plans to manufacture some of his robotic systems in Italy, rather than in Pennsylvania, for his customers in Europe.
Even for companies ready to see an increase in their sales from prices, the changing policy of the Trump administration in the first months prevented certain companies from making long-term decisions concerning the expansion of their American manufacture, said Scott Paul, president of the Alliance for American manufacturing, which has generally supported prices as a tool to support the manufacture of the United States.
“Do I have to make this decision to open an American installation or make this investment? For many people, you cannot answer this until you know with absolute certainty what will be politics,” he said.
Paul said that his organization was putting pressure on other political measures that could compensate for part of the negative effect of current prices, such as various tax alternatives for manufacturers of legislation currently worked at the Congress.
“We are very at a stage of training of all this. I also think that it is right to say that it is also the phase where you have the medication, but not sugar,” he said. “You are in your boat, you try to pass the storm in many ways, and hope that there is sun and calm water and the wind behind your back when you cross it.”
