We are all aware of the recent news about tariffs and the stock market's significant drop last week. Tariffs will affect our lives and business. I want to share what we know, how we expect these tariffs to impact Mauser, and our plans to manage this environment.
Understanding Tariffs
Some tariffs are determined and vary by country of origin, with Canada at 25%, China at 54%, and Mexico at 25%. Recently, new "reciprocal tariffs" have been introduced, based on the rates other countries impose on US goods. Additionally, there are industry-specific tariffs, notably a 25% tariff on non-US steel and aluminum. These tariffs are already increasing our manufacturing costs, affecting materials like IBC tubing, metal closures, drum covers, and more. Consequently, higher costs may lead to lower demand for our products.
Our Strategy
We must ensure that tariffs do not impact our margins. To achieve this, we will work closely across our enterprise and with our suppliers to evaluate alternative countries of origin, consider onshoring options, and qualify alternative materials. Purchasing must resist cost increases, and everyone must support this effort. Additionally, we need to execute better by improving quality and reducing mistakes.
We will accelerate EIP by continuing to generate valuable ideas and fast-track differentiated products to market through innovation. Furthermore, we must optimize our operations by reducing unnecessary travel, improving safety, focusing on critical tasks, and ensuring capital is spent wisely. Our sales efforts should target customers who value us, identify those impacted by tariffs, and offer better support than competitors. Enhancing customer service is crucial to prevent customers from considering competitors.
To further mitigate the impact, we will increase in-country production to minimize customer impact and margin erosion. Finally, price increase letters have been sent to customers today due to unavoidable tariff costs that we are unable to mitigate through other means.
In these turbulent times, we must address our weaknesses, leverage our strengths, and remain proactive and transparent in our communication. Tariff policies are constantly changing, and we must be agile in our response. I am confident that together, we can transform this challenging environment into an opportunity to better serve our customers and solidify our position as their preferred partner in industrial packaging.
Thank you,
Mark Burgess
President & Chief Executive Officer
Mauser Packaging Solutions