Tariffs and supply chain disruptions are pushing up the cost of steel, metals, and industrial supplies. If you're a Job Shop owner, you already know why prices are rising. The real question is:
How do you protect your margins, communicate effectively with your customers, and strengthen your contracts to stay profitable?
Here are five immediate, tactical actions you can take:
1. Strengthen Your Customer Communications
Don’t assume your customers fully understand the impact tariffs have on your costs. Proactive communication is key:
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Notify customers early about cost pressures you are facing.
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Frame cost increases transparently: Explain that tariffs and material surcharges are external forces beyond your control, not inefficiencies.
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Position yourself as a solutions partner: Offer alternatives, like lower-cost materials or design adjustments, when possible.
Tip: Communicate increases in writing and well ahead of quoting or reordering deadlines.
2. Review and Update Your Contracts
If your contracts with OEMs or end users don’t allow for adjustments based on external factors like tariffs, you’re exposing your shop to serious financial risk.
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Audit all existing contracts for flexibility on price adjustments.
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Add Force Majeure clauses that specifically cover tariffs, raw material surcharges, and supply chain disruptions.
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Negotiate cost adjustment clauses tied to recognized indices (e.g., steel price indexes) for longer-term contracts.
Tip: Engage a legal advisor to help revise templates now before you’re locked into unprofitable terms.
3. Tighten Cost Accounting and Pricing Strategies
It’s essential to understand — and re-calculate — your true costs quickly and accurately:
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Update your bill of materials (BOM) and quoting tools with current raw material and supply prices.
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Recalculate break-even points on all key jobs.
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Shift to dynamic pricing where possible to account for input cost changes.
Tip: Build escalation clauses into new quotes and explain them clearly to customers.
4. Forecast Materials and Supplies Aggressively
While some price increases may already be here, better forecasting still gives you an edge:
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Analyze your past 12–24 months of purchasing data to identify recurring needs.
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Place forward buys or long-term purchase agreements for high-consumption items where possible.
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Diversify suppliers to reduce over-reliance on any one source, especially for critical materials.
Tip: Even partial forward buying can protect your margins in volatile markets.
5. Offer Surcharge Models Where Needed
In some industries, customers are more accepting of temporary surcharges tied to raw material cost spikes rather than permanent price increases.
Tip: Customers are often more accepting of temporary surcharges than permanent list price hikes if handled professionally.
Job Shops that survive tariff-driven cost spikes will be the ones that communicate smartly, protect themselves legally, adjust pricing surgically, and forecast supply needs aggressively.
Now’s the time to move beyond reacting — and start leading your customer relationships and contracts strategically.