How Tariffs are Impacting Manufacturing, and What You Can Do About It

Growth always comes at a cost.

Oswald recently teamed up with Terry Bolden of the Small Business Administration, James Dascenzo of HBK Manufacturing Solutions, and Taylor Evans of Rust Belt Recruiting for a panel moderated by Alex Hertzer of the Mahoning Valley Manufacturers Coalition. They discussed how tariffs may impact manufacturing.

Among the biggest issues is talent, according to the panel.

The manufacturing sector already faces a significant labor shortage that is expected to grow to 2.1 million unfulfilled jobs by 2030, according to the U.S. Census Bureau.

In addition, manufacturers are relying more on robots and artificial intelligence to complete entry-level tasks, so the race is on to find and create more experienced employees.

There is an increased need for mid-level manufacturing workers who also command higher salaries. The average salary for a mid-level employee in the manufacturing sector is approaching $100,000.

President Trump has said the goal of the tariffs is to return more manufacturing to the U.S. However, that leads to a problem to solve: more manufacturing facilities will need to be built to handle the work. Then more machinery and more people will be needed to do the work.

The insurance factor

With growth comes risk, which will change how insurers view manufacturing.

Manufacturers will need to grow responsibly because they will face greater scrutiny from underwriters looking to see how the additional risk will be controlled. Prior to experiencing growth, manufacturers can proactively plan by tightening how they manage risk in their business today.

In addition, the costs of building materials for the additional manufacturing facilities will likely increase. Higher construction expenses may cause insurance companies to demand that their insureds carry higher replacement cost limits on their property, which can increase premiums.

Given the anticipated impact of tariffs on the cost of items such as inventory and raw materials, companies will need to make sure their insurance values are reviewed to encompass total cost – including the additional expense of the tariffs.

Making sure values are appropriately set and negotiated prior to your insurance renewal will be important. You should also review how tariffs may impact exposures around areas such as business interruption, annual sales and business property in transit.

It is a lot to dissect and digest. Oswald can help you sort it all out, reduce your risk and exposures, and find the right coverage for your business.

For more information, please fill out the form below or learn more on our Manufacturing page.