Tariffs & Innovation
Normally, I get up and tend to start my day with a coffee at my computer creating my action plan for the day. But, with a newly rolled ankle that was still throbbing, I took a few minutes to sit down and watch some financial news.
It is a big earnings week for tech and other major players in the S&P. What struck me was a particular statistic that "whitegoods" have risen in price by nearly 20% this year. This is largely attributed to the tariffs raised against China as well as the tariffs on steel and aluminum. Here is an earlier article describing the increase - Tariffs & Product Prices
I don't know about you, but a 20% is a lot. If you had a 20% raise, you'd likely be happy. If your race time was 20% faster, you'd be ecstatic. If you had 20% fewer strokes on the golf course, you'd be jumping for joy. So a 20% increase should not be taken lightly. At some point, it has to impact consumers and demand.
So, with the rising global sentiment on tariffs and protectionist measures, it made me think about what impact will this have on design if these measures are sustained for any length of time. How long is it before you design in measures to counter the tariffs and / or transform a supply chain?
Specifically, as cost of materials increase, how can manufacturers offset those costs:
- change materials from steel or aluminum to other materials such as magnesium, plastic, or carbon fiber
- reduce material cost through optimization of designs, generative design and design space exploration
In both cases above, it has a direct impact on the manufacturing processes that may be used. Do manufacturers move from stamped materials to cast or perhaps sintering? Is there an opportunity to look at 3D printing as a viable, cost effective alternative? What new partners are needed? What new processes need to be created?
It is an intriguing possibility, that one of the intended consequences of the tariffs - onshore manufacturing - may actually change the nature of manufacturing and product design.
A forced change often causes people to break away from the past and re-evaluate the whole. As companies look to re-evaluate the whole:
- Will they do this with their existing workforce or look to outside parties?
- Will they look to their traditional set of suppliers to drive innovations or seek out new ideas from new companies and new partners?
- Will they continue to manufacture what they manufactured in-house or change the nature of their supply chain?
The tariffs may have an unintended consequence of actually spurring innovation. It may actually radically change the nature of design and the way products are ultimately manufactured. It may change the nature of how companies' work and drive innovation into their next generation of products. It may be the impetus of a design renaissance not because it wasn't possible before but due to an unintended consequence that finally forced the hands of leadership and engineering to look at the world differently. To Think Differently.
As always, your thoughts, dialogue and comments are welcome and appreciated.