Massachusetts state-based Excel Dryer company benefits from the domestic supply chain as a result of Trump's tariff policy.

In the second term of the Trump administration, Excel Dryer, a hand dryer maker in Massachusetts, benefited because its domestic supply chain layout was unaffected by tariffs. The company collaborated with American suppliers to develop products that are entirely made in the USA, boosting global competitiveness. Excel's experience shows that tariff policies can encourage localization among small and medium-sized manufacturers, though they still face challenges like labor shortages. At the same time, General Motors took a flexible approach, planning to set up bases both in the U.S. and abroad to deal with the impact of tariffs.

Excel Dryer: From Edge Manufacturer to Tariff Beneficiary

In East Longmeadow, Massachusetts, Excel Dryer's Director of Operations, William Gagnon, has shown uncommon support for the Trump administration's tariff policies. He stated that these import taxes "changed the mathematical logic of location decisions," enabling the company to establish a fully localized supply chain, thereby gaining a competitive edge in the global market.

Excel Dryer is a leading global manufacturer of commercial hand dryers, with its flagship product, the "Xlerator," widely used since its launch in 2000 in places like New York's Grand Central Terminal, Buffalo Wild Wings restaurants, and airports in London and Istanbul. The company expects its revenue to reach $40 million by 2025.

A Key Turning Point: From Chinese Motors to Tennessee Manufacturing

Excel has long relied on Chinese suppliers for key components, especially motors. These motors, originally designed for vacuum cleaners, were later adapted for hand dryers. However, the balance of performance, size, and cost of these Chinese-made motors made it difficult for U.S. suppliers to compete.

The turning point came with the Trump administration's 25% tariff implemented in 2018. This policy significantly reduced the price advantage of Chinese motors, prompting Excel to partner with Scott Fetzer Electrical Group in Tennessee (a company under Buffett's umbrella) to develop a new motor specifically designed for the Xlerator. Gagnon stated, "Without that 25% tariff, we might not have made this transition decision."

This collaboration not only improved product performance but also strengthened the stability of the supply chain. Engineers from both sides coordinated design progress through weekly calls, and Gagnon frequently visited the Tennessee plant to build a close working relationship with the supplier. He noted that such interaction was almost nonexistent when working with Chinese suppliers.

Expanding and Challenging the Local Supply Chain

Excel's supply chain restructuring extends beyond motors. Its plastic casings and parts are manufactured by Double A Molding in Monson, Massachusetts. The company's owner, Ross Wulfing, noted that the price of filters imported from China rose by 30% due to tariffs, forcing him to turn to an Ohio supplier and cut the filters in-house.

Although local production costs are 10% to 15% higher, it allows for shorter delivery times and increased flexibility. Wulfing said, "While not as cheap as China, we can respond to customer needs more quickly."

However, this supply chain cannot completely detach from China. For example, Double A's plastic materials still require flame retardant additives imported from China. Additionally, its latest injection molding machines are also made in China. Wulfing worries that if U.S.-China trade tensions escalate, it may become difficult to obtain spare parts in the future.

How Tariffs Are Changing the Manufacturing Landscape

Excel Dryer's experience shows that for small and medium-sized manufacturers, tariff policies can be a catalyst for localization. Due to smaller order volumes, these companies face higher transportation and management costs when producing overseas. Harvard Business School professor Willy Shih pointed out, "It's a decision highly dependent on the product. For some products, localization is more economically viable."

Excel's supplier network also reflects that the New England region still retains a significant level of manufacturing capability. Factories in Massachusetts, Vermont, and Connecticut continue the tradition of precision manufacturing since the American Industrial Revolution. Double A Molding's products, in addition to supplying Excel, also cover diverse fields such as nautical compasses, dental equipment, and industrial grinding wheels.

Challenges Beyond Tariffs: Labor Shortages

Despite progress in localization by Excel and its suppliers, labor shortages remain a significant challenge. Wulfing stated that even with an average hourly wage of $21 for operators, it is still difficult to recruit enough staff. He has invested $45,000 in new equipment to compensate for the labor shortage.

This also highlights that even with favorable policy environments, the revitalization of manufacturing still needs to overcome structural issues such as a shortage of skilled workers and reliance on imported equipment.

GM: A Different Approach

Unlike Excel Dryer's proactive localization strategy, General Motors (GM) has adopted a more adaptable approach to tariffs. GM President Mark Reuss stated at the Miami Grand Prix that although the Trump administration's tariff policies have impacted the automotive industry, they will not affect GM's plans for Cadillac to enter F1.

Cadillac will join F1 in 2026 as the 11th team, initially using Ferrari engines, with plans to launch its own power unit by 2029. Reuss stated, "We are working to bring as much production back to the U.S. as possible to avoid tariffs, but it's not something that can be achieved overnight."

Cadillac's F1 team will have bases in Fishers, Indiana, and Charlotte, North Carolina, with a satellite facility in Silverstone, UK. This international setup shows that for large multinational corporations, tariffs are just one variable in supply chain management.

References

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