Jim Richards | |
This is a difficult economy for builders and contractors. Construction, especially in the commercial sector, is getting hit from all sides: tariffs, labor costs, and government cutbacks all squeeze builders. But I don’t think these factors alone are what’s bothering most suppliers and contractors. Anyone who runs a business has navigated their share of rough waters.
The real issue is not knowing what’s coming next. While I was writing this, steel tariffs doubled with almost no warning.
Most businesses plan three, six, or nine months ahead.
At TSS, our average cycle time is four or five months.
We won’t start to see the real results of today’s decisions for at least three to six months. But the price of steel jumped by 50% literally overnight. You can imagine the sort of panic you’d feel if you woke up one morning and discovered that prices you agreed to four months ago had suddenly gone from totally reasonable commitments to cripplingly expensive mistakes.
One of the most important things I’ve learned over the years is that people thrive on clarity. So I want to clearly lay out what I see happening, and how TSS has been responding, so that people who depend on us don’t get walloped with cost increases or mired in delays as they incorporate building security into their construction.
Global Supply Chains are Efficient—and Fragile
The average person today can afford to own more and nicer things than ever before in human history. That’s amazing. And it works because of really efficient global supply chains: you aren’t stuck buying pants from the tailor that happens to live in your town, or eating whatever can be grown within 20 miles of your kitchen.
Someone living in Ohio can eat a blueberry or banana in the middle of winter, and get good affordable clothes sewn halfway around the world. Those clothing manufacturers in Asia have made huge investments in making sure they have the most efficient system in place to turn raw cotton into a finished shirt—which they can do, because farmers in Mississippi and Texas have invested in becoming the best cotton growers in human history.
But as we all learned during the pandemic—and have learned again in the last few months—global supply chains are fragile.
During the pandemic, TSS invested heavily in reinforcing our supply chains.
We now have secondary and even tertiary suppliers for everything we use, and are constantly looking for and evaluating alternative suppliers and sources.
In recent months, we have had supply chain issues, just like everyone else. But we’ve been able to source alternatives, so that our customers don’t feel the impact.
Favoring Domestic Suppliers Reduces Risk—But Cannot Eliminate It
Approximately 32% of building materials used in the United States are imported, according to accounting and advisory firm Marcum. That’s a lot of variables outside of the control of anyone starting a building or renovation project.
TSS reduces that risk by domestically sourcing materials and components as often as possible. Our vendors and suppliers do the same. Right now, around 75% to 80% of what TSS delivers and installs is manufactured in the United States.
Keeping so much of our production process domestic has allowed us to greatly reduce the risk of a project going off the rails.
That said, in today’s market “made in America” is complicated. For example, our transaction windows are entirely built in-house, in the building I’m in right now.
The ballistic polycarbonate for the windows is cut here, steel for the frames is welded and powder-coated here, the counter is crafted here.
But the materials have to come from somewhere, even when they are also made in the U.S. The polycarbonate glazing for that transaction window is made in the U.S. by an American manufacturer, but they have to source some of their resins and other inputs internationally.
Door hardware is even trickier. High-end door hardware is assembled in Germany or the U.S., but most of its components—cast and stamped metal parts and fasteners—are produced in China. When you start looking at modern hardware that can integrate with access control systems, the part count skyrockets, as does the number of nations involved in supplying the parts.
That creates dozens of opportunities for a supply chain snarl to slow down your project. It is now fairly normal to learn that door hardware has delivery lead times of 12 or even 16 weeks.
Rather than being an afterthought, door hardware is something the end user should be picking out as early as possible.
“The Price is the Price”
From any customer's perspective, the clarity they most want is price transparency. Early on, I noticed that it seemed like some of my competitors consistently came in with an unrealistically low bid, only for the actual cost to steadily creep up with change orders and “unforeseen circumstances.”
At TSS, we never wanted to be those guys. We focus on properly assessing a job from the start, fairly representing what the options are and what they cost, and then delivering on that. With TSS, the price is the price.
With the current strains on global supply chains, we’re hearing lots of stories about people ordering something and then getting walloped with a surprise bill upon delivery that doubles or even triples the cost.
This is a tricky situation. On one hand, we all understand that the seller of a $50 ukulele can’t eat the cost of an unforeseen $150 tariff. On the other hand, a customer should not be put into a situation where they click “buy” and have to accept that what they’re buying might cost them three or four times as much as they agreed to pay.
Under these conditions, honoring our commitment to price transparency has taken on whole new dimensions. It isn’t just about accurately estimating costs, but also paying attention to timelines and supply chains, and ensuring we can deliver on the promise we made without going broke. If something on our end creates a delay, and that creates a situation where cost is going to increase, we accept that we created that situation and we absorb the cost.
That is extremely rare. Making this commitment drove me to cultivate a team that doesn’t accept excuses, drag their feet, or drop the ball.
Find Stability in Uncertain Times With TSS
During the last 25 years with TSS, there isn’t too much I haven’t seen. We’ve found ways to deal with recessions and supply chain issues and tight labor markets and sluggish economies, just like everyone else. I’ve found that, in the big picture, people like bad news or good news because it’s certain. What they hate is having no idea what the next six months or three months or three weeks are going to look like.
It’s the uncertainty that is so stressful. We can help manage that by doing what we can to reduce our exposure to global uncertainty, and by staying true to ourselves. When it comes to managing timelines and budgets, partnering with a U.S.-based manufacturer like TSS offers stability, quality, and efficiency.
Feel free to contact us anytime to discuss your next project and get a quote. If you aren’t ready to start a project right now, consider signing up for TSS’s free security newsletter.
I’ve spent decades designing, fabricating, and installing solutions that help organizations of all kinds increase their physical security and peace of mind.
In my quarterly newsletter I pass on some of what I’ve learned, in the hopes that it can help you thrive in an uncertain world. It hits your inbox just once each quarter; no sales pitch, just insight and advice.
