How Tariffs & Rising Costs Are Squeezing Manufacturing Margins
Originally published on September 29, 2026
“Being busy or selling a lot doesn’t always mean you’re doing better. You could work yourself literally out of business.” — Kevin Golden
In this episode of Moore on Manufacturing, Kevin Golden joins the show to talk through the financial pressures manufacturers are facing right now, from tariffs and rising labor costs to supply chain shifts and interest rates. The conversation covers cost visibility, margin types, pricing strategy, inventory management and tax planning.
Golden brings a practical, numbers-first perspective to each topic, and the discussion is especially useful for manufacturers trying to separate what’s driving their margins from what just feels true based on how busy the shop floor is.
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Full Transcript
[00:02] Host: Hi everyone, and welcome to episode two with Kevin Golden. How are you doing, Kevin? I know this is a busy time for you.
[00:27] Kevin Golden: Oh yeah, it’s a great time. There’s always a lot going on this time of year, between the seasons changing over, kids being busy with spring break, tax season, but it’s all good.
[00:27] Host: Good, good, I’m glad. Okay, so we’re going to go through the questions. We have a lot to cover today, a lot of really interesting things I’m interested to hear your opinion and expertise on. With tariffs, supply chain shifts, and rising labor costs in the headlines, what’s the biggest financial risk manufacturers are facing right now?
[00:55] Kevin Golden: I honestly think for a lot of manufacturers it’s just not being in tune with what your costs are. Tariffs are an example of an additional cost thrust upon companies. But even then, the thing you see is a lot of manufacturers get really, really busy, which is great, we want to grow the business, we want people interested in our products, we want to sell them. But then you get so busy and you’re in this ramp-up, ramp-up, ramp-up, and you don’t notice those rising labor costs.
[01:18] Kevin Golden: You don’t notice that even the smallest changes in your supply chain can add substantial cost, because you’re just not in tune with it. You’re really good at making your product, but you’re not in tune with what it actually costs to make it. Your infrastructure, understanding how much it costs to make your widget, has to be in sync with how well you can make that widget. Not keeping up with running the business, in addition to how to make your item, has huge cost and cash flow implications that can bring a company to a halt.
[01:38] Host: Where do you think manufacturers underestimate the true cost impact of these shifts?
[02:13] Kevin Golden: I think a lot of times they underestimate what their true margins actually are. I’ll talk to a manufacturer and ask how much they make on a product, and they’ll give me a rough percentage or dollar amount. Then when you actually go look at it, it’s totally different. A lot of times they have more of a gut feel for it. Gut isn’t bad, but gut alone isn’t enough substantiation.
[02:37] Kevin Golden: People underestimate the power of not only being in tune with their numbers, but of getting data to speak to what’s actually happening day to day on the floor and in the market, instead of relying on “this is about how much we should be selling” or “this is what our costs are” based on feel alone. These things are constantly in flux. Costs from a year ago, six months ago, are not today’s costs.
[03:10] Kevin Golden: That’s an ever-changing environment that’s speeding up and slowing down dramatically. We saw that during 2008, and during COVID, a lot of things came to a screeching halt and costs inflated dramatically. Those are extreme examples, but things are changing quickly. Don’t assume what worked yesterday is going to work today.
[03:46] Host: Why do outdated costing systems create blind spots for manufacturers?
[04:15] Kevin Golden: Being busy or selling a lot doesn’t always mean you’re doing better. You could work yourself literally out of business. The blind spot is thinking, “we’re busy, look how stuff is flying off the shelves, we can’t get materials in fast enough, so we must be doing well.” That creates a false sense of security.
[04:29] Kevin Golden: It’s great to be busy, but if you’re not staying on top of your costs, even the slightest change in pricing can have a ripple effect. You won’t feel it today, but six months or a year from now you’ll feel it, and now you’re doing a post-mortem instead of being proactive and staying ahead of it.
[04:53] Host: Can you explain the difference between contribution margin and gross margin, and why that matters?
[05:10] Kevin Golden: Think of this on a micro versus macro scale. Contribution margin is usually used when you have multiple products. You look at the direct costs that go into a specific product, and how much is left over to help pay for all your other fixed costs and overhead. That tells you how much product X versus product Y is really contributing to covering shared costs.
[05:39] Kevin Golden: Gross margin is a higher-level picture of the general health of the company, mixing all your products together to see how much margin is left over to cover overhead. Contribution margin gives you more insight product by product, while gross margin is more of what you’d see on a set of financials overall.
[06:05] Host: How should manufacturers think about adjusting pricing in today’s environment?
[06:30] Kevin Golden: There are really two ways to think about it. First, are your prices staying up to date with the market and with the margin or revenue goals you want to hit? But sometimes the knee-jerk reaction, when you’re not making as much as you thought, is to just increase prices. Sometimes that works. Think of COVID, prices went up across nearly every product. But sometimes the market won’t tolerate it, and you can price yourself out, so mathematically you get the answer you wanted, but now there’s no demand for your product.
[06:59] Kevin Golden: There also has to be a look at efficiency. If you’re not making the margin you thought this month, why not? There may be underlying issues that aren’t as efficient as they should be, or things that are getting covered up. If you’re constantly looking at that, you can tell whether it’s a pricing issue, an execution or efficiency issue, or, often, some combination of both.
[07:17] Host: What’s one financial metric manufacturers should be watching weekly right now?
[07:46] Kevin Golden: It’s hard to boil it down to one, but I’d say working capital, because that affects cash flow. That’s how much you have available to expand, invest, or do something else with, instead of having cash tied up somewhere else. If you’re a company struggling with cash, work on your cash flow numbers regularly and make sure you have the foundation to generate them. Inventory is also important, but if I had to generalize, I’d say working capital.
[08:09] Host: How should manufacturers approach inventory management in uncertain markets? I feel like this might be the golden ticket question.
[08:33] Kevin Golden: For nearly every manufacturer, when you ask what problems they have, they say inventory and labor. Can’t find enough people, can’t get materials fast enough, and don’t have clarity into their inventory. There is no secret software you can slap on that just fixes inventory. If there were, everyone would use the same one.
[08:50] Kevin Golden: Instead, it’s about understanding not just your costs, but how your inventory actually moves through the system. Have you really walked it through, from the point you get it in the door to the point it goes out to a customer? If you can’t do that basic exercise, you won’t know if there’s a problem, and you won’t be able to replicate that process inside a piece of software.
[09:36] Kevin Golden: Take it back down to the studs. Take a foundational approach to inventory. Make sure you’re tracking it and understand how it’s running through your company, right or wrong. Then check whether it’s correct. Once it’s correct, you can replicate and speed that up by adding software, AI, or other tools that give you more clarity in real time. But if the foundation is broken, any software you add on top will give you inaccurate data and either bad insight or false insight.
[10:16] Host: What role does debt structure play with today’s interest rate pressure?
[10:46] Kevin Golden: Debt isn’t inherently a bad thing, it can be a good thing or a bad thing. Rates aren’t drastically changing right now. They’re not the best, because we got used to COVID rates, but they’re also not terrible, look at the 90s when rates were much higher. It’s about being wise in how you use debt. This ties back to cash flow and operational planning: what is the debt really doing for you?
[11:13] Kevin Golden: Look at the opportunity cost. Does the debt allow you to meet more demand, so it pays for itself? Or are you simply using debt to solve a cash flow issue? Be cognizant and purposeful about what the debt is for and what it allows you to do. And having a relationship with your banker never hurts.
[11:49] Host: How can tax strategy help offset policy and cost pressures?
[12:17] Kevin Golden: First, I want to be clear that no tax decision should change what you do day to day. Your primary driver should be your vision for the company, being more operationally efficient and more profitable. If I tell a manufacturer they’re going to double their profit, they’re happy to pay the tax that comes with that. That doesn’t mean we can’t also be more tax efficient.
[12:43] Kevin Golden: The strategies that come into play are often things you’re already doing, just made more tax efficient. R&D is a big one, because recent tax law changes have made it more favorable again. It’s not something new you have to go create, most likely it’s something you’re already doing, it’s just not being tracked and identified with the right structure in place.
[13:22] Kevin Golden: Looking for those opportunities, and staying ahead of cash flow planning around income taxes, is just as much a part of cash flow planning as decisions like how much inventory to buy.
[13:55] Host: What tax strategy are too many manufacturers leaving on the table?
[14:16] Kevin Golden: R&D, even though it’s been around a long time. It feels new because the tax law changed to be more favorable again. The reason it tops the list is that too many people hear “R&D” and think they have to be a highly technical company or running a scientific lab. That’s not the case. It can be an efficiency in how you produce something, or creating new products and solving problems within your niche of manufacturing. People just don’t take the time to talk about it or identify it.
[15:05] Kevin Golden: The other one, more recent, with rules still being clarified, is using qualifying manufacturing space within your plant to qualify for expedited deductions. Normally you’d deduct that over 39 years, but under the law signed last summer, you can deduct it all in one year if you meet certain criteria. That one is brand new, and there’s still more to be clarified. Not many manufacturers have capitalized on it yet, but more will as they expand.
[15:51] Host: What’s one mistake to avoid heading into 2026?
[16:20] Kevin Golden: Do not assume what worked yesterday is going to work today. Things in our economy are changing more rapidly, and that’s not going to slow down. This doesn’t mean recreating the wheel every day, but it does mean changing at least a little with it. I’ve heard it said that if the change outside your organization is greater than the change inside it, you’re dying. At the same time, you don’t have to reinvent everything. Constantly revisit your pricing, your structure, your people, and your vision to make sure you’re still on track.
[17:39] Host: What’s your final bit of advice for manufacturers looking to build more resilient operations?
[17:39] Kevin Golden: Surround yourself with the right people, internally and externally, and listen to them. Talk to key employees, people on the shop floor, who can tell you what’s going right and what’s going wrong in their world. Recognize what you don’t know, and recognize it quickly. Great leaders aren’t defined by what they know, but by who they surround themselves with and who they listen to: an attorney, a banker, an accountant, another manufacturer, even competition to some extent. If you’re good at making your product but not at running operations or the financial side, surround yourself with someone who is strong there, because at the end of the day, those areas are all connected. If they’re not connected and communicating, someone gets short-changed eventually.
[19:09] Host: I love that. All right, I think we had a great episode today, lots covered, lots of questions answered. It’s always nice to talk to you, Kevin. We’re going to be doing episode three with you toward the end of April, covering cost pressure to competitive edge, how smart manufacturers win in 2026. Looking forward to that conversation.
[19:31] Kevin Golden: All right, we’ll see you in a few weeks. Good to talk to you. Bye.
Watch the Full Episode
Watch the full conversation above for more detail on each of these points, including Kevin Golden’s take on pricing strategy, inventory foundations and the tax opportunities manufacturers most often overlook.
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