June Roundtable Discussion Highlights: Managing Procurement Pressures During the Tariff Wars

June 12th, 2025, Executive Roundtables for purchasing leaders

The theme of this C-level Executive Roundtable was on actions manufacturing companies are taking to mitigate tariff-related costs and address supply risks.  Highlights of the roundtable discussion are summarized below. 

• President of an electronics supplier to automotive, truck, and golf cart OEMS shared that moved their manufacturing from the U.S. to Mexico because of post-covid wage pressures (local service employers were offering wages of $15/hr – $20/hr). 
  They established a maquiladora operation with two advantages: 
  • Labor costs are $10/hr all-in (wages are $5.50/hr). 
  • Most items meet USMCA requirements and have zero tariffs even though they are sourcing components from China (local content requirements are increasing, so may become compliance will be getting harder). 
    
    A few more thoughts on this topic: 
    • For parts that don’t meet USMCA requirements, they are paying 25% + 2.5% duties, which they are passing through to customers. 
    • They are investigating moving some production to the U.S. by leveraging automation – the cost of automation may make the investment infeasible, but their parent company maybe be able to provide expertise and resources. 
    • It would be nice if the U.S. government dedicated some of the tariff revenue to assist manufacturers’ reshoring efforts (subsidies or reduce cost of capital). 
      
      They also shared that the U.S. society and culture will need to return to viewing manufacturing as cool to change perceptions and boost workforce availability 
      
• CEO of an injection molding company shared that they’ve been concerned about a skilled labor shortage for 10 years (mentioned that 30M to 55M skilled trades people will retire in the next 5 years).  One thing they are doing is offering a flexible work schedule to workers nearing retirement to keep them around. 
  
  They also shared that they are getting a lot of opportunities to quote because of customer reshoring initiatives.  But with tooling lead times of 18-36 weeks, it’s not possible to predict the tariff impacts for quoting. 
  
  They also commented that they are “getting exercised” by potential customers and are trying to figure out which opportunities are strategic changes vs. fishing expeditions.  They agreed that a call from the CEO/Purchasing exec/purchasing manager would make them view an opportunity differently. 
  
  They two ways they are reducing costs: 
  • Outsource less complicated manufacturing to local suppliers – finding local manufacturers don’t always respond, so they’ve taken to calling the CEO/Owner/PE firm to explain their strategy. 
  • When the 135% tariffs were imposed on imports from China, they cancelled a shipment and looked for a supplier in Mexico. The Chinese supplier offered to provide the products DDP with cost reductions from current pricing. 
    
    They shared that they try to assist purchasing by participating in supplier meetings on-site.  Wait for a text to join the meeting when the buyer is ready for them. 
    
• CEO of a Canadian supplier of durable labels and injection molded components to heavy truck OEMs shared that they are trying to pursue a “make where you sell” strategy to minimize tariffs on their goods. 
  
  They had moved some manufacturing to Mexico 3 years ago at the request of a customer (costs increased), and now they are being asked to move manufacturing to the U.S. and are concerned about the reaction when costs increase.  They have investigated the move, but are waiting for tariff negotiations to resolve (mentioned an expected announcement during the G7 summit this weekend). 
  
  They mentioned that they will be considered a U.S.s entity when they move production to the U.S. by adopting a E1 (investment) visa. 
  
• Group President of a manufacturer of light towers and generators shared that they focus on total landed cost of purchased components as their products are 85-90% material cost. 
  
  They shared that have increased labor costs 30% over the last four years in order to keep the best people – only 1 our of 3 new hires survives onboarding, and it costs $7.5k – $10k to train new employees.  They find that the incoming generation of workers lack skills and commitment. 
  
  They also shared that there experience with automation has been challenging: 
  • It’s never as easy as the salesman tells you it will be 
  • Automation requires really smart people to maintain it 
  • Automation suppliers struggle to provide capable tech support