How Manufacturing CEOs Are Rebuilding Strategy Amid Tariffs and Talent Gaps
Tariffs, shifting costs and talent gaps are reshaping the math for small and mid-sized manufacturers. Mike Sibley explains how smart CEOs are reworking pricing, workforce and investment decisions instead of waiting for stability.
For many small and midsized manufacturers, 2025 brought a steady but familiar drumbeat of challenges: volatile material costs, shifting tariffs, persistent labor shortages and increasing pressure to justify each investment.
For financial strategist Mike Sibley, the way that small and mid-sized manufacturers react to these pressures is highly revealing and typically breaks one of two ways: Either company leadership views these conditions as signs of decline, or as catalysts to change how they run the business. It’s a classic glass-half-full-or-half-empty binary, but with deep consequences.
“Cash flows have been good,” Sibley says. “But there’s a continuing concern about pricing pressures.” As a partner and board member at James Moore — and leader of the firm’s Manufacturing Services Team — Sibley advises manufacturers across the country on pricing, investment and overall financial health.
I recently sat down with Sibley to talk about how top-performing manufacturers are rethinking pricing, tariffs, supply chains, workforce and capital investment — and why the CEO’s mindset is so often the deciding factor
When Pricing Is Built on Moving Ground
From Sibley’s vantage point, most small and mid-sized manufacturers (for our purposes, SMEs) are not in freefall. Their balance sheets look decent, if not solid. Instead, the tension shows up in how they make money — especially when it comes to pricing.
The pressures facing SMEs have been persistent: Raw material costs are shifting. Skilled labor is becoming both more expensive and harder to replace. Tariff exposure varies part by part and machine by machine, yet customers expect quotes they can live with throughout 2026. The result is a quoting environment that feels fluid and unpredictable. “It’s probably the most flurry I’ve ever seen in terms of communications going back and forth between vendors and customers,” Sibley says.
Ignoring the issue or treating these conditions as background noise only puts margins at risk. The stronger response, he says, is to use the pressure as a motivating force: Update your cost assumptions, examine how overhead is being absorbed and — with your customers — align your operations and financials around a shared picture of reality. The goal is to identify a pricing model you can defend, both internally and, crucially, with your customer.
When Pricing Is Built on Moving Ground
Tariffs are the clearest example of this shift from reaction to integration.
When a fresh round of tariffs was announced in April, Sibley says most of his clients assumed it was temporary. “I don’t think I had a single client that didn’t believe by the fall these tariffs would start going away,” he says. That assumption shaped behavior: use up inventory, push through on price and absorb some of the hit, then wait it out.
By July and August, it became obvious that these conditions weren’t temporary. “The wait-and-see game is now over,” Sibley says. At that point, tariffs stopped being a political talking point and became part of the cost structure. Or at least in hindsight they should have.
For many manufacturers, that meant rethinking the basics of how they run a business. A common pattern Sibley saw was material being received into ERP systems at base price, with tariff costs dumped straight into their profit and loss (P&L) statement. “They were just pushing [tariffs] off to their P&L, again treating it like it’s this temporary thing that’s going to go away,” he says. “Now it’s a total landed cost. And this really needs to become part of your inventory cost — expensed out as you’re selling it in a proper time frame.”
At the same time, manufacturers that had never needed to think about import classification suddenly had to get conversant in Harmonized Tariff Schedule (HTS) codes — a tall order for teams that are already stretched.
Some of Sibley’s clients now quote with explicit tariff disclosure line by line: these parts carry a tariff, these do not. Those quotes are not always the cheapest, his clients admit, but they are clear, and that clarity builds trust. “The companies who are adjusting well are going to give themselves a competitive advantage,” Sibley says.
Supply Chains: Beyond Panic But Not Beyond Risk
Lead times for some materials and components are still measured in months, and customer forecasts range from detailed, data-driven planning to rough guesses that are hard to use. In that environment, the pre-COVID version of just-in-time doesn’t really work the way it used to, with most manufacturers carrying more buffer and being more deliberate about where they take that risk.
“Ever since COVID happened, the whole just-in-time thing has really not been as big of a factor,” Sibley says. Many shops built up safety stock in response to tariffs and earlier supply scares, then slowly worked those inventories down. “By and large, I’m not seeing them come away saying, ‘Hey, we’ve got a whole new supply chain piece,’” he says. “We’re just having to accept what it is.”
In practice, that often shows up as manufacturers holding more safety stock, lengthening promised lead times in some cases, and getting more explicit with customers whose forecasts are too vague to plan around.
Competing on Culture When You Can’t Compete on Pay
Workforce is often where these pressures land the hardest.
Sibley’s clients are competing in a labor market where large manufacturers employ a majority of the workforce and can often outbid smaller players on salary and benefits. Smaller shops can’t win that kind of numbers game. But they can compete on environment.
“One of the things that we’re seeing with a number of my clients is some boomerang effects,” he says, meaning employees leave for a big plant only to circle back later. These stories are familiar: the pay increases, but so does the pressure. “The pressure and the culture at the small- and medium-sized businesses are not nearly what it is at these large manufacturers,” he says.
That contrast is — or should be — exactly what smart shops lean into. There are still KPIs, utilization targets and margin goals. But there is also a level of access and flexibility a 2,000-person operation often can’t match. “Take salary off the table, and culture trumps everything else,” Sibley says.
Culture, Sibley says, has two main components. The first is how people are treated day to day: visible leadership, reasonable expectations and a sense that management is paying attention. The second is opportunity. There are several great examples of U.S. manufacturers building pipelines from high school technical academies through to internships and full-time roles. Inside these companies, he sees more emphasis on training and cross-skilling. “The training programs are key,” he says. “Giving that opportunity for growth is part of that culture.”
The Retention Problem No One Quite Owns
To a degree, there is a usable script for recruitment strategies. Retention, on the other hand, often feels like improv.
“I don’t see a lot of necessarily great retention strategies,” Sibley says. “I think, ‘OK, we got them in here. We’ve got a good culture. Let’s train them and treat them well.’ But turnover still tends to be higher than you want.”
When retention isn’t treated as a distinct strategy, costs can surface quickly. At one client, a large intake of replacement hires showed up almost like its own expense category. “Training costs — you could see it on the P&L — just through the roof,” he says. All the downtime from bringing in a large cohort of trainees showed up right away.
Part of the issue is structural. “They’ve got to focus on manufacturing,” Sibley says. “They’re trying to keep their people 85–90% utilized in terms of the production process. So it’s really difficult.” When every hour is loaded with production work, it’s hard to make room for intentional development or mapping out internal career paths.
Sibley also sees the opposite case: a small plant where the CEO spends significant time on the shop floor, pays fairly, and keeps expectations clear and fair. “I bet you 30 of them have been there for 30 years,” he says of the roughly 35-person team. “They just don’t leave.”
For business leaders, the question is simple but potentially uncomfortable: Do we treat retention as something we hope for, or something we design?
Raising the Bar on ROI
Capital spending is another area where Sibley has watched manufacturers grow up quickly.
“Years ago, you would see companies sort of buying a new machine or a new technology, and not necessarily think through: What’s the benefit I’m going to get?” he says.
Today he starts his conversations about planned capital expenditures differently. “My first question is, how does this fit into the overall strategy, and what benefits is it supposed to supplement for you?” he says. What problem does the equipment solve? What part of the business does it change?
In the fractional CFO role he plays for many clients, Sibley sometimes pushes them to move beyond the promises of “more throughput, less scrap,” and focus on specific performance expectations they can actually quantify. “I’m challenging their logic,” he says. “Making sure they’re not using pie-in-the-sky, this-is-going-to-revolutionize-the-business thinking when maybe it’s not.”
Sibley is also quick to point out where ROI calculations sometimes fall short. Facility build out, integration work, training and especially the ramp from equipment testing to full productivity are often left out of the equation. He cites one example where a client paired an expensive new extruder with a key new hire — an engineer who understood extrusion and was quickly running the machine to its full potential. “If they didn’t bring in this engineer, I’m not sure they would have maximized the benefit on that piece of machinery,” Sibley says.
The CEOs Who Want Feedback, Not Confirmation
Whether discussing tariffs, supply chains, workforce or ROI, Sibley often comes back to the same theme: leadership mindset.
“The CEOs who thrive are the ones working on the business, not just in it,” he says. They still know what’s happening on the floor, but they don’t let themselves get stuck there. They carve out time to plan, bring in advisers and actually act on what they hear. They ask their teams for data and respond to what it shows.
Sibley has a simple internal test when he meets a new client: Are they looking for feedback, or confirmation? “Those who operate like that — who really want feedback — are doing well,” he says. “And in areas where they’re not doing well, they’re working on fixing those things.”
That mindset shapes hiring, too. In a tight labor market, he agrees with the shift away from hiring purely for current skill in favor of hiring for potential. “Give me somebody with analytical abilities and common sense, and I can teach them everything else,” he says — as long as leadership is willing to invest in training and give people a chance to grow into their responsibilities.
“The companies that are thriving right now aren’t doing everything right,” Sibley says. But they are doing the right things intentionally. In other words, there are leaders who hope things settle down, and those who are already acting as if they won’t.
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