From excitement to exasperation, tech CEOs give tariffs mixed reviews

LOVELAND — Massive tariffs being imposed by the Trump administration were a hot topic Tuesday at a BizWest CEO Roundtable for executives of Northern Colorado-based companies that are advancing innovative technologies. Some leaders hailed the opportunities they present while others cited the rising costs and decried the uncertainty.

Marcia Coulson, whose Fort Collins-based Eldon James Corp. manufactures plastic tubing used in the pharmaceutical and medical industries, was especially effusive in her praise of the policy and President Donald Trump’s sweeping actions in general.

“We’re excited about the tariffs,” she said. “Everything we do is here in the U.S., so we think it’s going to help level the playing field. We’re also hearing from customers that are manufacturing their products and making use of our capabilities, so that’s opening doors and opportunities for us. These types of products really should be manufactured in the U.S. and shouldn’t be going to China for our pharmaceuticals or our medical devices. So we feel really good about the changes.”

When Eldon James “hit the COVID cliff” five years ago, she said, “we had to scale down for the first time in 38 years of our company. Now, in the last three months, sales are up 70%, we’re scaling up again and the future looks great.”

She attributed the surge in positive business sentiment she’s seeing to the idea that, “all of a sudden, we have a business-friendly government now, at least from the top down.

“You see what Trump’s trying to do with just starting the conversation, just saying ‘Let’s talk,’ because there’s been inequality in the way these tariffs have worked, and other countries have tariffed our products.

“So I think what he’s doing is good because he’s starting the conversation. And yeah, there’s all kinds of ripples and challenges for us, but I think overall it’s going to level the playing field for U.S. manufacturing. The pain we’re going through right now could really be worth it, and we may not see those benefits for a year or two. But if we can at least have our medical devices and pharmaceutical drugs manufactured here in the U.S,, we as a country are in a much better position.”

Added Jay Dokter, president and CEO of Vergent Products Inc. and whose Forge Campus hosted the event, “I’m appreciative of tariffs. For us, it gives us a competitive edge to compete in other countries. There are still  issues that we don’t understand, but we’ve landed some orders because of it.”

Dennis Roark, founder and president of Terra Firma, whose communications-oriented company supplies wireless fiber optics and power for ethernet systems, said that, “because we sell to governments, tariffs haven’t been an issue. We’re really more interested in all the small-business programs that are coming up.”

Addison Stark, CEO of AtmosZero Inc., had a more mixed review of whether tariffs as the administration is imposing them were a positive or negative influence.

“For manufactured goods, absolutely,” he said. “That helps to support domestic manufacturing. But when it’s steel, aluminum, copper, the raw materials,” the issue gets dicier.

“For us to spin off a new steel plant in America, it’s going to take decades. There’s this long lag time where it’s purely a pass-through.

“A smarter phase-up could have been better, maybe a long-term phase-up to incentivize investment in domestic steel,” Stark said. “And then there’s also the uncertainty: Tariff at 9 a.m., canceled at 3 p.m. It’s an interesting whiplash.”

“The intent is good,” said Heather Rubin, whose RapiCure Solutions makes epoxy reinforcements for infrastructure. “I think there’s an absolutely really good reason to have tariffs, particularly if it’s something that can be manufactured in the U.S. I completely understand tariffs when used in specific ways for specific products. That can have a lot of advantages.

“But a blanket tariff on raw materials, I don’t understand the advantage there. How we’re being impacted on the chemical side based on policy is something that we’re navigating daily right now.”

The erratic policy changes are also causing problems, she said.

“Every morning, there’s another email from the Department of Justice or there’s an email about where the tariffs are at now. Sometimes it’s even after procuring inventory.”

The biggest effect, she said, is on her supply chain.

“There are certain minerals and compounds that just don’t exist on U.S. soil,” Rubin said. “So although our product is a 100% U.S.-manufactured product, there’s two ways that that can impact us: One is the tariff imposed on any sort of thing that we’re adding into our product, and how the higher price increase could mean we don’t have access to them in the U.S.

“What we’re starting to see is equally as problematic: When the tariffs are imposed, the U.S. supply chain doesn’t always lower the cost,” she added. “If anything, they say ‘OK, now we can raise our prices because these companies are stuck paying for this.’ And so we’re not seeing a decrease in U.S. prices. If anything, this is allowing even the U.S. supply chain to increase pricing. So at the end of the day, for a small business, where margins are everything, it kind of puts you in a very difficult position.”

And how does a small business like hers submit a reliable bid given the uncertainty of on-again, off-again tariffs, she asked.

“It may take one to two years before a very large bid is contracted,” Rubin said. “So if you’ve already bid on a project and been awarded it for a very specific price, and then you have this volatility in the supply chain, that again can continue to hurt margins. For small companies, that’s a really big challenge. That can trickle down, and we have no choice but to charge more to our customers.

“And in our case, we’re creating a product that taxpayers are paying for.”

While acknowledging that “small businesses can’t plan for all this uncertainty because your margins are too thin,” Attorney Giovanni Ruscitti, a partner at Boulder-based event sponsor Berg Hill Greenleaf Ruscitti LLP, had some cautionary advice for Rubin and others at the table about bidding.

“I think you need to have this conversation from an apolitical perspective, because what I think is lost is that regardless of where you’re purchasing your products, prices are going up,” he said. “That is a truism that cannot be escaped.

“If you have bid on a project, you’re stuck in your bid price. Unless you have a price-escalation clause, you have no relief. And then with Customs, if a product is held up in Customs and there’s a delay, you might have a time extension. But for a contractor, engineering firm or manufacturer, part of the problem is that your costs are going up, your productivity is going down, it’s taking more man-hours to do the work, and those are not recoverable. So those are the practical things that I think are being lost in this tariff scenario that we’re in.”

Stark, however, countered that “it’s hard to negotiate a price and then put an escalation clause on the back end of that, because no one knows whether it’s going to be 10%, 30%, 100%.”

“I’m seeing both sides of the coin,” said Josh Robinson, whose company, Gator Kennels, makes pet enclosures.

“My competitors are in a much worse situation than I am because they’re making their panels out of straight-up steel, so they’re getting hit pretty hard,” he said. “Most of them are getting their product from China. They’ve had to raise their prices, so I’m getting more customers because of that.

“I’m getting more business, but I’m also getting affected by the lead times from my suppliers, so I’m burning through my material faster than I anticipated. And now I don’t have as much of a back stock as I anticipated,” he said. “That to me is a bigger issue than the cost increase.

“Supply-chain issues are probably our No. 1 concern at the moment, even though we’ve been sourcing U.S.-produced materials. Since other companies are also sourcing to U.S. materials, those costs are also adjusting to that.”

He added that, “because my suppliers are having longer lead times, I’m forced to extend mine.”

Stark’s startup company makes packaged heat pump oilers for electrifying and decarbonizing steam in manufacturing.

“We make things that are very large, built out of steel, aluminum and copper, these are all things that are being tariffed, and supply chain is our No. 1 concern,” he said. “We’re also active in the European market, so expert and retaliatory tariffs are a big concern for us.”

Paul Aitken, CEO of Drone U., echoed the concerns about tariff-related Customs delays.

“We’ve had the same issue with a lot of our clients who have purchased aircraft that get stuck in Customs,” Aitken said. “I just got an email yesterday that said unless we provide proof that these aircraft weren’t built by slaves, I can’t get them.

“We’ve had things held up in Customs for months, and after three months, Customs just gives up and sends them back to China. Our clients get a refund check and say, ‘Wait a minute, I thought this was going to be here by now.’”

Ed Van Dyne, CEO of Plastics 2 Green, whose company “takes waste plastic, rips it up into its atoms and turns the hydrogen into ammonia for fertilizer and the chemical industry,” worries about the new administration’s antipathy toward renewables and hydrogen in particular.

“We thought we had a million-dollar military contract. They’re looking at ammonia as an alternative fuel. But now nobody will tell me if it’s canceled, not canceled.”

Perhaps hardest hit by the new administration’s policies was Jeff Donner, a semi-retired orthopedic spine surgeon who started a pair of companies, SI-Technology LLC and BMAX Medical LLC.

“First it was COVID and now it’s chaos, and that’s what we’re up against now,” he said.

“One of our technologies that we had made is in Customs right now, waiting to come in from China, so that’s become a real issue.”

Pointing to the markedly different attitudes toward health care from new Health and Human Services Secretary Robert F. Kennedy Jr., Donner added that “obviously the health care is a bit upside down, too,” especially in the field of regenerative medicine.

Donner pointed to the development of “a unique biologic product from your own bone marrow that has characteristics that allow for better healing and the anti-inflammatory properties. We’ve been networking with a variety of other local resources” including Colorado State University, and “had our own in-house lab until COVID.

“We have a lot of momentum but we don’t know what’s going to happen because all of the people who were getting the funding to help us, all of a sudden have gone crickets. I think they’re all panicked about what their future is.

“To get commercialized, especially for new products, you need people to collaborate with, but at universities, they’re dependent on grant funding,” Donner said. “They’re very worried about their own skin, let alone helping a startup company like me get some work.

“I get it. They just don’t know what their situation is for their own lab, their own studies,” he said. “I can’t do it myself. I need the resources. Jeff Donner from Johnstown is not going to carry the day to get a grant. You need to have the big hitters, people who have the resources, and right now they’re scrambling.”

Tariffs, he said, were “too much and too late. It just paralyzed us. We didn’t have the time to catch up. Now we’re stuck. We don’t have a product. It’s just shut everything down.”

Rubin, however, remains hopeful.

The new administration’s shifting priorities, she said, “can help reinforce partnerships, how we’re going to work together to figure this out. Seeing people come to the table not with their arms up, but rather, like, ‘This is the new challenge. How do we all work together on that? For a small company, that partnership is everything.

“What we’re working on here in Loveland is going to have a global impact,” she said. “We’re not against each other. We’re not against China. There are things they do very well, there are things we do very well.

“Regardless of where you sit politically, where you sit on these different topics and how they impact you, the key is how do we now change our viewpoint and think about how we create those partnerships.”

Also attending the Roundtable were representatives of organizations that sponsor the event: Paul Watkins, senior commercial loan officer at Elevations Credit Union, and Mike Grell, a partner at Plante Moran.

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