Meet Daniel Rogge, CEO of Tormach, a machine-tool maker.
Please consider How Tormach Tried to Get Ahead of Trump’s Tariffs.
Machine-tool supplier Tormach has raised prices twice this year on some products. The small Wisconsin manufacturer asked a landlord to alter a lease. Then it told staff it was reducing 401(k) matches and eliminating some bonuses
Tormach thought it was prepared. The company tried to get ahead of a potential trade war by shifting production from China to Mexico, where it bought a factory in 2023. In August, it boosted its stockpile of Chinese-made goods by 20% to blunt the possibility of fresh China tariffs, squeezing its cash flow. It sped up plans to triple production in Mexico.
Then, in early February, President Trump announced new tariffs not only on China, but also on Mexico and Canada. “This is a worst-case scenario for Tormach,” Chief Executive Daniel Rogge wrote to employees the morning Mexican tariffs were slated to take effect. “A prolonged trade war with both Mexico and China is a severe blow to our business model.”
Soon after Rogge sent the Feb. 3 email, Trump paused tariffs on Mexico and Canada for 30 days. However, an additional 10% tariff on Chinese imports such as Tormach’s machine tools kicked in a day later. On Feb. 13, Trump ordered federal agencies to explore reciprocal tariffs. On Thursday, the president said he planned to impose an additional 10% tariff on imports from China and he was moving ahead with the 25% tariffs on goods from Mexico and Canada next week. Tariffs on steel and aluminum are set for March 12.
“Whipsaw. That’s an accurate description,” Rogge said in an interview. “Can we please, God, know what’s going to happen so we can plan accordingly?” he said. “What I want is no tariffs. What I want after that is certainty.”
Tormach is relatively small, with about 100 employees, split between the U.S. and Mexico, but its efforts to respond to fast-coming changes in trade policy threaten to ripple through the economy. Many of its customers are startups and small businesses that buy Tormach’s low-cost machines, typically priced at $10,000 to $50,000, then graduate to more expensive ones.
On Feb. 19, Rogge told employees the company was reducing spending on marketing by 25%, trimming the company’s 401(k) retirement savings plan match and eliminating work-from-home stipends and anniversary bonuses. “It beats laying people off,” Rogge said. Tormach has been employee-owned since 2014.
Korn, Tormach’s co-founder and chair of its board, has been working for roughly three years on a new design for a machine tool that Tormach could produce in Mexico at the same or lower cost as machines made in China. Perfecting the design could take a further six months, he said.
Korn said he shrugged when Rogge recently asked whether the new machine could also be made in the U.S. “It’s much easier for us to shift our focus to foreign sales to take advantage of Mexico’s stability and free trade,” Korn said.
Small-business confidence plummeted in February, posting the largest monthly drop since the start of the Covid-19 pandemic, according to a survey of more than 400 businesses conducted for The Wall Street Journal by Vistage Worldwide.
Fifty-four percent of those polled said that tariffs would negatively affect their companies, while just 11% said they would benefit, according to Vistage, a business-coaching and peer-advisory firm. Nearly one-third said the economy will worsen in the coming year, more than double the share that had said so in January.
Trimm, a Youngsville, N.C., maker of power-distribution products, is scaling back efforts to expand international sales this year. “I don’t want to invest the time and find we will get slapped with a reciprocal tariff and our market just went away,” said Will Newton, the company’s president.
This week, Trimm started holding price quotes for 14 days instead of 30 days. The 48-person company is looking for ways to redesign and source parts locally to avoid tariff-related cost increases on specialized electronic components imported from Mexico and Canada. “We have no idea what is going to happen,” Newton said. “Because of this, we will conserve capital and focus on short-term projects with more immediate paybacks.”
Tormach Coping Synopsis
- Reducing spending on marketing by 25%
- Reduce 401(k) retirement savings plan match
- Eliminating work-from-home stipends and anniversary bonuses
- Shift focus to foreign sales to take advantage of Mexico’s stability and free trade
Multiply that by tens of thousands of small businesses.
Fifty-four percent of small businesses polled said that tariffs would negatively affect their companies, while just 11 percent said they would benefit.
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