How Mid-Size Building Materials Manufacturers Can Offset Tariffs Through Smart Efficiency Gains

Tariffs on imported metals, components, and machinery continue to drive up costs for U.S. building materials manufacturers, eroding margins and straining supply chains. "Tariffs are reshaping daily operations for U.S. manufacturers, forcing leadership teams to make fast, often uncomfortable efficiency decisions just to preserve margin.”  (Wall Street Journal, “North Carolina’s Furniture Industry Scrambles as Tariffs Upend Day-to-Day Routines,” October 2025). Yet, for most mid-size manufacturers, some of these pressures can be offset internally. By focusing on operational efficiency, technology integration, and data-driven decision-making, it’s realistic to uncover 10–15% in cost savings, effectively neutralizing the impact of current tariffs. 

Key actions include:

• Streamlining software systems to reduce redundancy and costs
  
• Eliminating operational bottlenecks that slow throughput
  
• Analyzing data for smarter purchasing and waste reduction
  
• Onboarding AI/ML within a clearly defined strategy
• Reevaluating supplier structures to minimize tariff exposure

These best practices not only offset rising costs but also position manufacturers for scalable, profitable growth in an uncertain global trade environment.

Introduction

Tariffs on imported steel, aluminum, and other raw materials are impacting the economics of U.S. manufacturing. For mid-size building materials manufacturers, already operating in competitive markets with tight margins, these tariffs can feel like a direct hit to profitability. 

But there’s good news: the same cost pressures that tariffs create can also spur innovation and healthy streamlining initiatives. By systematically finding efficiencies and eliminating waste, many manufacturers can offset added tariff costs before raising prices.

The Real Impact of Tariffs on Building Materials Manufacturers

Since 2018, tariffs on imported metals, machinery, and components from countries like China, Canada, and the EU have driven up costs across the U.S. manufacturing sector. For example:

• Steel and aluminum tariffs of 10–25% have increased the cost of raw inputs for products such as beams, fasteners, and brackets.
  
• Machinery and component tariffs have raised the price of European and Asian production equipment—often critical to plant operations.
  
• Retaliatory tariffs abroad have increased the cost of exporting finished U.S. goods, shrinking international market share.

As a real-world example, a C&C client recently reported a double-digit increase in equipment and parts costs from a European supplier, disrupting their investment strategy to add capacity at a critical growth phase. These pressures compound quickly, especially in businesses where cost increases can’t be passed to customers.

While a 10–15% increase in input costs is painful, most companies have at least that much opportunity for internal improvement. A recent Deloitte study found that manufacturers implementing operational excellence programs often realize 10–20% efficiency gains within the first year. 

The key is approaching cost reduction systematically. Below are several proven strategies that can help manufacturers recapture lost margin and even emerge stronger from tariff uncertainty.

Software Rationalization and Technology Integration

Many mid-size manufacturers run a patchwork of software tools, one for inventory, another for production scheduling, and yet another for procurement and customer relations. These silos create inefficiencies and blind spots. Conducting a software rationalization audit can reveal redundancies and opportunities to consolidate systems.

For example, a building materials supplier in the Midwest replaced five separate systems with a unified ERP and analytics platform, reducing manual data entry and freeing up 200 hours of staff time per month. The upfront investment was offset within six months through lower administrative costs and better purchasing accuracy.

By first assessing strengths and weaknesses, and removing unnecessary components from the organization’s tech stack, firms can better position themselves while saving costs. 

Identifying Operational Bottlenecks

Tariffs raise material costs, but throughput bottlenecks raise cost per unit even faster. Using value stream mapping and time studies, manufacturers can often identify underutilized assets or inefficient workflows.

A practical step is to form a cross-functional “efficiency team” to review production data weekly, identify slowdowns, and implement small, rapid improvements. For example, reconfiguring work cells and improving machine changeover processes can lead to double-digit increases in throughput, directly countering higher material costs. 

This is a difficult step for operations teams to perform on their own, due to inherent bias and a comfort level with the way things are done today. However, a neutral perspective can more easily spot the low-hanging fruit, and yield throughout gains without costly investments in bodies or equipment. 

Leverage Data for Smarter Purchasing and Waste Reduction

Material waste and over-purchasing are hidden drains on profit. By better analyzing procurement and inventory data, companies can align order volumes with actual demand. Advanced analytics or AI-assisted forecasting tools help identify optimal reorder points and spot supplier inefficiencies.

One manufacturer discovered through data analysis that it was consistently overbuying PVC resin by 8% due to outdated demand models, tying up cash and storage space. Adjusting its procurement algorithm freed up over $500,000 in working capital annually.

Most manufacturers do not realize the ease with which they can engineer simple solutions that integrate with ERP systems to better leverage data for decision-making. Commercial tools and third-party applications offer low-cost, flexible and scalable ways to capture data on routine activities, pull it into a functional database, and display the data or feed it into automated workflows in ERP systems. The opportunities are endless, but require dedicated focus and treatment of data as an internal tool for cost savings. 

Onboarding AI/ML With a Strategy

Clear-eyed assessment of the tools and processes in use today can inform near-term investments in artificial intelligence and machine learning (AI/ML). The majority of organizations we encounter do not have the right infrastructure to realize ROI from AI/ML, whether it’s computer vision technology for quality control on the production floor, or generative AI for internal administrative tasks. 

When approaching AI/ML integration, building materials manufacturers should focus on a strategic, phased implementation. While some firms are already using AI on the production floor for predictive maintenance, robotics technologies, or computer vision for real-time quality control, generative AI will not overcome poor processes in the office. 

Instead, organizations should evaluate their AI readiness by examining their work as a series of decisions and the data necessary to inform those decisions, with an eye for areas where generative AI (like chatbots) can provide a boost in throughput. This should be followed by a thorough assessment of the current infrastructure to support AI/ML initiatives, from the way data is handled and stored to the procurement process for onboarding third-party tools. 

From there, onboarding basic tools to write initial drafts of marketing content, create technical documentation or user manuals for new products, or even summarizing complex research reports on new materials or industry regulations. This frees up staff time while increasing productivity. 

While higher order use cases abound, most organizations need to gain basic literacy before taking on more complex AI/Ml platforms and use cases. The key to successful onboarding lies in identifying specific, high-impact use cases where even simple AI solutions can yield tangible results, rather than attempting a wholesale transformation. Starting with pilot projects, establishing clear KPIs, and closely monitoring ROI ensures manufacturers can keep AI/ML initiatives aligned internally with the firm’s overall strategy. 

Structural and Strategic Enhancements

Finally, strategic changes, like nearshoring suppliers, negotiating volume contracts, or outsourcing non-core activities, can reduce exposure to tariff volatility. Some firms have shifted partial sourcing to domestic secondary suppliers, trading slightly higher base prices for stability and shorter lead times. Time can be effectively leveraged, along with other structural changes, to adjust margin and free up costs. 

C-suites and management teams can also take advantage of the moment to evaluate reporting lines, decision-making processes, and staff utilization metrics to re-think how the work is getting done. Even modest adjustments in the way authority and decision-making is delegated within the firm can yield measurable improvements in purchasing decisions, production throughput, and allocations of capital that yield stable margins to offset external volatility and cost pressures.  

The Bottom Line

In the case of the C&C client grappling with the impacts of higher costs for European machinery and parts, the C&C team applied some of these strategies to help them realize nearly 30% productivity gains with minimal investment. Most of the recommendations centered around optimizing their daily operations, better allocating staff resources, and harnessing data to ID their costliest bottlenecks. 

Offsetting a 15% tariff may sound daunting, but in practice, it’s achievable. By combining targeted technology upgrades, process improvements, and data-driven decision-making, most mid-size building materials manufacturers can uncover 10–15% in savings, often more.

The path forward isn’t about cutting corners; it’s about operating smarter. In an environment where tariffs and trade policies can shift overnight, the most resilient manufacturers will be those that treat efficiency not as a cost initiative, but as a competitive advantage.

C&C specializes in guiding mid-size manufacturers through these very transformations. From conducting comprehensive software rationalization audits to deploying cross-functional efficiency teams for bottleneck identification, C&C partners with clients to implement data-driven solutions. By providing neutral expertise and combined decades of industry experience, C&C ensures that efficiency initiatives translate into measurable margin improvements, turning tariff challenges into opportunities for sustained growth.

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