Tariff Tussles: Navigating Trump's Trade Policies and Soaring Construction Costs
Constructing Fresh Infrastructure to Evade Tariffs Will Not Come Without Challenges
President Donald Trump's push for high tariffs on imports has stirred up a tempest in the construction industry. Yet, as our parent company's Manufacturing Group revealed during their latest roundtable discussion, it's a storm that many businesses may struggle to weather, given the scarcity of available factories, escalating construction expenses, and surging equipment costs.
On June 4, entrepreneurs and experts gathered to discuss how the tariffs are shaking up the manufacturing sector. Their consensus: If you haven't reevaluated your facility or upgrade costs recently, buckle up – you're in for some major shocker! According to Jim Mayer, founder of manufacturing communications consultant MFG Connector, the cost of machine tools, which could've set you back $1 million in 2018, 2019, or 2020, now commands the price of $1.3 million to $1.4 million.
Here's who graced the event with their insights:
- Jim Mayer, MFG Connector founder and machine tools expert
- Joseph Windover, construction solutions executive at paint powerhouse Sherwin-Williams
- Michelle Comerford, project director and supply chain practice leader at site selection firm Biggins Lacy Shapiro & Co.
- Matt Stagemeyer, national director of operations for consumer products at construction engineering company Burns & McDonnell
- Tom Wilk, editor-in-chief of Plant Services
Disrupted Timelines and Skyrocketing Costs
Windover shed light on the research Sherwin-Williams conducted in partnership with Endeavor Business Intelligence, revealing that 49% of industrial construction projects face challenges in managing schedules and meeting project timelines. This staggering statistic implies that a whopping 87% of those projects have suffered from delays, which in most cases are instigated by material shortages. What's more concerning is that 72% of the respondents confessed that these delays have adversely impacted their budgets by 6% to 20% – a worrying reality for multibillion-dollar projects.
Limited Inventory and Inflated Prices
Comerford pointed out that businesses hoping to score existing structures may encounter limited options, as the COVID-19 disruptions prompted an influx of manufacturing investment activity in the U.S. Inflation, subsequently, made building too expensive, causing many developers to pause construction efforts in hopes of better market conditions. Currently, there's a surge in available inventory, but much of it is intended for distribution rather than manufacturing use.
Rampant Cost Pressure
Stagemeyer underscored that those who trade the hunt for existing structures for new construction would also experience significant shocks. Prices have skyrocketed, and construction timelines have lengthened. Stagemeyer explained that industries, such as the tech-driven data center sector, are gobbling up labor and essential components, putting even more upward pressure on costs, tariff announcements notwithstanding.
Equipment Woes
Mayer warned that challenges don't abate when your factory is built and it's time to source equipment. He reiterated that tool prices are up substantially, uncertainty shrouding the horizon for a potential decline in the coming months.
In conclusion, the panelists emphasized that although they discussed numerous challenges, they offered hope that these obstacles could be surmounted. Awareness of the situation, forged partnerships within the industry, and an understanding of succeeding in the chaos of tariffs and inflation can help any business conquer the challenges they face.
To watch the full webinar, click here.
Footnotes:
[1] Sherwin-Williams' research in partnership with Endeavor Business Intelligence (link)
[2] Biggins Lacy Shapiro & Co.'s research (link)
[3] Mineral wool insulation price rise announcement
[4] Bisnow's "Construction Costs and Demand: What Developers and Contractors Should Know in 2025"
[5] Mortenson Construction Cost Index report
- The increasing costs of machine tools, which were around $1 million in recent years, are now reaching as high as $1.3 million to $1.4 million, posing significant financial challenges for businesses in the manufacturing sector.
- As investigation by Sherwin-Williams in partnership with Endeavor Business Intelligence revealed, over half of industrial construction projects face issues in managing schedules and meeting timelines, often leading to delays caused by material shortages and impacting project budgets by as much as 20%.
