Preparing for tariffs that never come can be just as problematic and costly as being unprepared.
Many companies, especially in the mid-market range ($100 million to $1 billion), have been somewhat paralyzed with anticipation and afraid to make a move. Amid plenty of talk about what they might do, few have actually pulled the trigger on countermeasures.
In this article, Gary Hoover, Vice President, Global Private Equity Practice, at TBM Consulting, highlights strategies for manufacturers to enhance their resilience against tariff fluctuations and maintain stability in their operations.
Here is how:
- Grasp onto untapped productivity. A lot of companies aren’t fully leveraging their productivity potential. It’s important to surface opportunities to enhance productivity, reduce costs and optimize quality.
- Develop talent. Training, reskilling and cross-training will be essential to developing a future-ready manufacturing workforce that attracts young talent and retains seasoned professionals.
- Reconsider plant layout. Part of optimizing productivity across your equipment and processes should include taking a 30,000-foot view of your existing operations, including how the facility is laid out.
- Consolidate plants. In the wake of mergers and acquisitions, multiple facilities often operate far below their max utilization. Plant consolidation, from three plants into two, for example, can be a smart way to reduce footprint, slash overhead and liquidate assets.
- Automate where you can. In the private equity space, there are also opportunities to leverage investments in automation software/solutions jointly across portfolio companies. This allows PE firms to universally lower their talent demand and create more efficient processes.
- Adopt AI & analytics. The PE space is ripe for leveraging investment in analytics tools and lessons learned across the portfolio to identify productivity enhancements at scale that can help offset the impact of potential tariffs.
- Aggregate results to minimize risk. No single strategy can fully counteract tariff impacts, but a multi-faceted approach can generate significant savings. At a minimum, combining multiple solutions can help reduce the burden and provide valuable time to expand onshoring capacity.
These strategies can help enhance operations and drive value creation regardless of tariff enforcement—which should be the goal of every manufacturer.
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