Brown Deer-based water meter and flow instrumentation products manufacturer
Badger Meter will soon increase prices for certain products to mitigate the impact of tariffs, but company leadership remains confident the business will be able to withstand any economic disruptions in the long term.
Ken Bockhorst, the company’s chief executive officer, said Badger Meter will “adeptly” manage what it can control, just as the company did through the COVID-19 pandemic.
“What we know for sure is that uncertainty and volatility due to tariffs remain likely,” he said.
He outlined the company’s tariff mitigation plan during Badger Meter’s first quarter earnings call on Thursday.
Badger Meter operates a facility in Nogales, Mexico. It serves as the primary assembly site for the company’s residential meters and radios. Most of these products qualify for exemptions from tariffs under the United States-Mexico-Canada Agreement, Bockhorst said.
The components that are imported to the Mexico plant come from a “wide range” of countries, Bockhorst said.
“We will continue to manage component sourcing into Mexico, which limits our exposures to a certain degree,” he said.
At Badger Meter’s American facilities, the company could face import tariffs on electronics and related components from China, southeast Asia, and Israel. This means products made in the U.S. will likely face higher tariff-related input costs under the structure currently in place.
“We will institute targeted pricing offsets to manage this potential impact,” said Bockhorst.
The company has not yet informed customers of any price increases, Bockhorst said Thursday, but they will go into effect soon.
Badger Meter could also face tariffs on the finished goods it imports from its European manufacturing facilities. This includes flow instrumentation and water quality products. This segment represents a relatively small portion of Badger Meter’s sales, but targeted price increases could also be needed for these products.
A lesser-known challenge Badger Meter is navigating is the export controls on certain chemical and rare Earth elements recently introduced by China.
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Ken Bockhorst[/caption]
“Bismuth is an element that’s included in these supply restrictions,” said Bockhorst. “While bismuth happens to be a small component of our brass meter recipe, the price has increased nearly tenfold since early this year.”
Because China provides 90% of the Bismuth in the world, a pivot from sourcing the element from China is not plausible.
Badger Meter is still forecasting long-term revenue growth regardless of any impact from tariffs.
The company has not heard from customers pulling back on ordering products, said Bockhorst. Badger Meter relies heavily on the “replacement nature” of its products, which tends to be largely unaffected by macroeconomic conditions.
“Our history of strong operational execution, particularly in the management of our supply chain, manufacturing footprint, and value-based pricing strategy, underscores our proven ability to control what we can control in a turbulent economic environment,” said Bockhorst.
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