I do not usually get political in my public postings - however, we are getting a LOT of questions regarding the effect of tariffs on the dog kennel industry. I will not dive into the political side of things, but I do want to post a little bit about what we are seeing as a kennel manufacturer regarding the tariffs on metals this year.

In our ever-changing world of manufacturing, we are seeing some pressures created by our government. Some of these pressures are good - while others are causing some headaches. In this post, I will explain:

• What are the tariffs
• What are the effects of these tariffs?
• What are the positive effects of the tariffs?
• What do you see going forward regarding the effects of the tariffs?
• How can someone who is looking at getting kennels avoid some of the cost increases?

To start, in case you have not heard, President Trump has signed a series of executive orders designed to make United States produced goods more competitive on the world market. The idea is that by making the super-cheap products produced elsewhere more expensive, people will be more likely to buy goods produced here in the United States. Only time will tell if this method actually works.

What are the effects of the tariffs?

To start, as of August 19, tariffs on aluminum hit 50%. This means that any aluminum or steel  (or any product that is contained in aluminum or steel) has an import fee of 50% of the cost of that product.

To put a quick number on that, if a piece of aluminum ore costs $100 to mine out of the ground and a company wanted to sell it in the United States, it would cost $50 to get it across the border into the United States. Then, that lump of aluminum will need to be processed into a product and sold. Obviously, this means that the overall cost of the finished good will cost more. However, keep in mind that the cost of the materials is usually just a PART of the overall cost of the finished good, so the 50% tariffs does not mean an automatic 50% increase to the cost of the finished part. Additionally, as more people start to buy US-produced materials, there is less demand for the imported materials, so the companies trying to import to the US might have to drop their prices in order to entice US buyers to buy. That means that $100 piece of ore might sell for $90 - dropping the tariff to $45.

How is Gator Kennels specifically affected?

Gator Kennels has always been buying materials from suppliers in the US that also source their raw materials from within the US. That said, not much of the raw aluminum is actually mined here in the US, so a portion of the raw ore is imported (usually from Canada).  We have seen about a 9% increase in prices from our suppliers overall (despite the tariffs being 50%). This increase is mostly due to the increased demand for US-produced products. Any time demand rises, prices also go up. 

We have really worked hard to keep our prices stable - and we have some really amazing suppliers who are also working to keep prices as stable as possible! We increased our prices about 7% from a year ago and do not anticipate needing to increase the prices any more this year - despite the tariffs expanding in scope! How can we keep our prices so stable? Well, that ties into the positive effects we are seeing from the tariffs:

What are the positive effects of the tariffs?

While most of the world is focussing on the negative sides of the tariffs - we are seeing some positive impacts! To start, we are seeing an increased interest in US-produced products. This leads to increased volumes - which helps us buy raw materials with more purchasing power. We are able to negotiate better deals with suppliers when we are committing to buying more raw material. This usually helps us offset some of the cost-increases caused by the tariffs.

We are also seeing an improvement in quality. While we have been buying most of our materials from great US-based companies, some of the smaller components (hardware especially) was typically made outside the US. These components are now starting to be made more and more here in the US. I'm not necessarily saying that the US companies manufacture better quality - but we are seeing an increase in quality which is most likely caused by more competition within the market. More companies are trying to capitalize on the disruption caused by the tariffs and they are putting their best product out there in the hopes to win more business. We will see over time if the quality continues - but we are happy to see the change so far.

Lead-times have also been fluctuating. At first, the lead-times jumped like crazy as some companies started panic-buying. They were either trying to save as much as possible before the tariffs hit - or they were trying to buy raw materials while it was cheap and then try to sell them later for a profit. Either way, the lead-times jumped like crazy earlier in the year. Those lead-times have now leveled out and in most cases, have actually dropped! In turn, we are able to drop our lead-times as well - leading to us being able to get your kennels built and shipped even faster than before!

What do you see going forward regarding the effects of the tariffs?

I think now that most of the uncertainty of the tariffs are behind us, we will see a leveling off of the prices. New agreements will be made with specific trading partners and the tariffs will be reduced/removed from some of them. I do not think the tariffs will be removed from all places, but I think businesses will adapt and new trade routes will be created. 

We are excited with some of the agreements we were able to negotiate this year. We are also excited with some of the new suppliers we met as the tariffs disrupted the usual trade-channels. Some of these new suppliers are allowing us to expand our product offerings and/or allow us to be more stable with lead-times and prices going forward. This means that those of you who are needing kennels in the near future should be able to also benefit! The doom and gloom we hear from the media should also die down and business should go back to a more normal pattern. As I mentioned before, our lead-times have dropped significantly, and we anticipate keeping the lead-times more stable than in the past. (that said, we do usually see a spike in orders for the holidays as the boarding companies need kennels - but also the non-profits who are trying to use up the last of this year's budget). This leads right into the next point:

How can someone who is looking at getting kennels avoid some of the cost increases?

Start off by getting a quote.

Quotes are free (or at least they should be from any reputable company). A quote will not only show you the overall cost of the components, but also any applicable shipping and taxes. A quote will allow you to budget and look for financing if you need it.

Ask for multiple quotes.

Sometimes there are multiple ways to arrange your kennels and this could lead to some cost-savings! Another thing you can look at is full kennels vs just the gates that you attach to built-on-site walls. You can even get a quote for a full kennel-bank to see what the full project cost will be, but then scale back to just ½ or ¼ of the project to get started. The more information you have, the easier it will be to make the best decision for your situation. Again, quotes should be free.

A quoted price should lock in your price for a period of time - even if tariffs jump again! Due to the reasons I mentioned above, we are able to keep our prices stable for the rest of the year - but if you get a quote you have that price locked in writing. Having a written price-quote keeps the prices from jumping unexpectedly. Keep an eye on the quote validation periods - not all kennel manufacturers offer as long of timelines the quotes are valid for.

Get quotes from multiple places.

Again, the more information you have, the easier it will be to make your decision. Not every kennel manufacturer offers the exact same materials, sizes, or features; but getting quotes from multiple places will help you find the fit for your project. Be sure to study the differences in the different materials. Some materials inherently cost more than others - but will last longer - saving you money in the long run. (learn more about the materials Gator Kennels use for their kennels here). 

Hopefully this guide offered some insight into the state of the manufacturing (at least kennel manufacturing) world. I really see some positive market factors going forward and anticipate things will settle down once the hype of the tariffs starts to die down in the media.

If you'd like a quote for your project, or want to learn more - contact us!