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Business Journals
23-04-2025
- Automotive
- Business Journals
North Texas manufacturing executives share sentiments on tariffs
While tariffs continue to be the talk of the town, executives from various industries shared their sentiments in the Dallas Fed's Texas Manufacturing Outlook. Dallas-Fort Worth and Texas had an overall mix of both positive and negative reactions to tariffs, according to the Fed survey, which was released in March. With the looming uncertainty of costly imported goods and equipment among manufacturers, some companies have planned ahead by stockpiling inventory in preparation for the Trump trade war. The automotive sector was one of the many other industries that were hit with tariffs after President Donald Trump put a 25% levy on imported goods from Canada and Mexico. Manufacturers including major companies such as Toyota North America and General Motors – a large SUV assembly plant in Arlington – both trade from these countries, which raises the concerns regarding day-to-day operations. Arlington Mayor Jim Ross told WFAA that tariffs could lead to a higher cost in production and 'drive away' customers and roll back on manufacturing production. Ryan Robinson, president and co-owner of Irving-based Signal Metals Industries Inc., added in an emailed statement that he doesn't believe that tariffs are 'inherently good' and that it wouldn't ultimately strengthen the U.S. economy. Nearly 40% of Signal Metal Industries' revenue comes from domestic steel-making. Robinson said that steel-making companies are in favor of tariffs, as they believe that could put a stop in foreign steel makers from dumping steel in the U.S. He also added that, 'when [the] domestic steel-making industry is doing well, our business tends to do well.' Although Signal Metals Industries buys a small amount of finished and semi-finished steel products from China, Robinson said that they've decided to pause and cancel orders from its longtime supplier in China, as the company pursues to source from other countries with "small" tariffs on U.S. products. In addition, Brendon Quick, president of Western Industries Corporation, gave an emailed statement to Dallas Business Journal that the company won't see an increase in its operational expense due to any tariffs with Mexico since the company is a part of the IMMEX program, which allows the company to freely transport its fabrication into the country without paying tariffs. "... We won't see an increase in operational expense due to any tariffs with Mexico, but indirectly, our customers may see a decrease in their sales to U.S. customers and this will manifest itself with a reduction in revenues for us potentially in the months to come." Meanwhile, the restaurant industry is also facing heat from tariffs being raised to 145% on products that are imported from China. The aftermath of the Covid-19 pandemic continues to put pressures onto restaurants as they continue to see an increase in labor shortages, higher menu prices and ingredients. Sid Patel, franchisee of The Brass Tap, told the Business Journals that he plans to increase beer sales by 20%, as his inventory consists of gloves and packaging materials that have now become more costly after the tariffs were put into place on all Chinese products. The Brass Tap relies on raw materials like aluminum, grain and certain liquors which could impact the day-to-day operations, Patel said to the Business Journals. While the 90-day pause on reciprocal tariffs have left some wiggle room for companies to focus on stocking up on inventory, the nature of tariffs and the uncertainties around the economy will be on the forefront of the minds of many businesses in the upcoming months. Manufacturing companies in North Texas Local employment Rank Prior Rank Company 1 1 Lockheed Martin 2 2 Texas Instruments 3 3 General Motors Arlington Assembly View this list
Axios
04-03-2025
- Business
- Axios
The tariff tailwinds behind a manufacturing rebound
The Trump administration says tariffs will encourage domestic production and investment, but that's a trend that was already well underway. Why it matters: Long before tariffs, deglobalization and reshoring trends were accelerated by the passage of U.S. tax legislation in 2017, and then supercharged by an executive decree from Mexico last December. How it works: Normally, when companies invest in expensive new equipment, they can't write it all off as a business expense. Instead, the value of the equipment is considered to depreciate over the course of its natural life, usually between five years and 39 years. A 2002 law introduced the idea of " bonus depreciation" that allows companies to write off 30% of any investment costs in the first year. In 2017, the Trump tax law allowed five years of 100% bonus depreciation, which means the whole cost of machinery could be deducted in the same year it was purchased. That policy, combined with ultra-low interest rates, spurred a huge wave of investment. Flashback: "People just went ham on buying machinery," recalls Oisin Hanrahan, CEO of Keychain, a company that connects brands with production facilities. "Anyone with a factory that was generating cash was like, this is the easiest way to stop paying tax," he said. "It created an insane increase in capacity." Where it stands: That capacity was briefly put to use during the pandemic boom, but became idle again as Americans bought more services than goods. The idle capacity caused U.S. manufacturers to lower their prices to try to compete internationally, but that eats hard into profit margins. Manufacturers want Trump to "press the tariff button even harder," said Hanrahan, because they "have unbelievable amounts of spare capacity." Section 321 loophole But while Trump was complaining about Chinese trade practices, Mexican President Claudia Sheinbaum was doing something about them. Between the lines: Until December, when Chinese companies wanted to export their goods to the U.S., they often shipped them to Mexico under its IMMEX program, where they were stored for less than 120 days, repackaged, then sent over the border in individual parcels worth less than $800 each. In taking that route, the goods ended up incurring no tariffs at all. Why it matters: When Sheinbaum closed that Section 321 loophole in December, she set off a scramble by logistics companies to move their operations out of Tijuana and into U.S. warehouses. What they're saying: By February, logistics company Stord had already hit its half-year goal for new sales, CEO Sean Henry told Axios. "All of a sudden we saw hundreds of companies reaching out to us, saying, hey, we need to rapidly move all of our inventory into the U.S.," he said. "The tariffs are great for us," he added, because any disruption to established ways of doing business allows him to step in and take advantage of the reshoring trend. "We are seeing a resurgence of the fight for space right now," Henry noted. "There was like two years of emptiness where you couldn't even sublease your space for half your cost. Now it's getting hypercompetitive." The bottom line: Domestic logistics and manufacturing were doing well even before any tariffs. If these tariffs stay in place, their fortunes are likely going to improve even more.
