Manufacturers scramble to avoid tariff impact

WASHINGTON — President Donald Trump’s imposition of tariffs and threats to expand them have Connecticut small manufacturers in fear of a business free-fall, desperately grabbing for hand holds to prevent greater damage to their bottom lines.

“We’re between a rock and a hard place,” said Paul Lavoie, general manager of Carey Manufacturing in Cromwell, which makes high-quality handles and latches for the aeronautical and defense industries.

Even though the company of 36 employees brought back a significant portion of parts manufacturing from China in 2016, Carey has seen costs rise 25-30 percent since last year because of tariffs on China.

“I increased prices at the

beginning of 2018 so I’ve been able to hedge a bit of the impact,” said Lavoie, whose products are made from steel, brass and aluminum. “But I can’t pass all of it along because I’m still competing with finished products from China.”

Trump’s tariffs on China affect parts but not finished products. Had they been drawn the other way around — tariffs on finished handles and latches — “my phone would have been ringing off the hook,” Lavoie said, with new customers looking to avoid higher costs from Chinese competitors.

Carey Manufacturing’s predicament is emblematic of the sudden economic downturn some Connecticut firms are experiencing, a rough patch made more difficult by uncertainties. President Trump is threatening new tariffs on Mexico if the administration doesn’t secure greater cooperation on stemming illegal immigration.

Added to the tariffs already in place on China, India and European Union members — and with little chance of resolution in sight — Connecticut manufacturers say the uncertainty is propelling them to put off expansion decisions.

“Businesses like known quantities,” said Chris Ulbrich, CEO of Ulbrich Stainless Steels & Special Metals, Inc., a 95-year old business based in North Haven. “But this is an unknown.”

The company, which buys metal and reprocesses it for parts for use in airplanes, automobiles and other products, has seen a drop of 3 to 5 percent because of tariffs. Ulbrich imports 20 percent of its metal from EU countries subject to Trump tariffs. “A dollar’s worth of metal was $1.25 overnight,” he said.

“We look forward to a better global trading environment,” said Jamison Scott, executive director of the New Haven Manufacturers Association. ‘Uncertainty is not good for our manufacturers.”

Connecticut exported $943.6 million to China, which ranks as the

state’s sixth largest trading partner behind France, Germany, Canada, U.K., and Mexico. International trade is 12.8 percent of Connecticut’s GDP. The state’s largest export category is aircraft, aircraft engines and parts.

In the scramble to blunt the impact of tariffs, Connecticut manufacturers are finding out that reliance on domestic suppliers is not necessarily a guarantee of cost savings.

Scott, who also is executive vice president of Air Handling Systems in Woodbridge (which makes metal ventilation ducts for industrial customers), has relied on domestic producers of galvanized steel. But last year after tariffs were imposed, his suppliers jacked up prices and changed the price guarantees, saying they could only deliver 75 percent of his order.

“It was really ugly,” said Scott. Prices have stabilized for the Air Handling, which employs 14, but are still eight percent higher than four months ago. “We can’t raise prices 30 percent,” he said. “Raw materials are a big part of our price, but I have to work within my limits.”

Brad Horrigan / New Haven Register Jamison Scott, executive director of the New Haven Manufacturers Association, says tariffs are “certainly not good for our manufacturers.”