Procter & Gamble, the maker of familiar brands like Tide, Pampers,
Gillette and Bounty, has been knocked around the past few years by lackluster
sales and new competitors.
Its latest headache is President Donald Trump's trade war with China. Two
weeks ago, the company lobbied to have more than a dozen imported goods left
off the list of more than $200 billion worth of Chinese products subject to
the trade penalty, which takes effect next week.
Like hundreds of other companies, it was brushed off.
Tariffs bite P&G, the country's leading consumer products
manufacturer, at a challenging moment for the industry. Raw material costs
are rising. Profit margins are declining. Pricing power is under pressure
from retailers. Upstart home and grooming brands are hot. And sales growth
has stalled in the face of weak demand.
P&G has plants across the United States and makes more than 90% of
what it sells at home. But like so many other American corporate giants,
P&G relies on China for parts and materials to manufacture and package
its brands. No one in the United States makes those components.
P&G is also building a $500 million plant in West Virginia. The plant,
which will support 1,800 jobs, "represents the manufacturing site of the
future" for the company. It is automated and digitized, and will allow
P&G to reduce costs and make products like Dawn dish soap and Head &
Shoulders shampoo more efficiently.
But some of the plant's infrastructure — pipes, tanks, containers — is
produced in China. No US manufacturer produces the specialized components,
and tariffs will make it more expensive for P&G to build and operate the
plant.
"These new P&G jobs in West Virginia will be undermined by
proposed tariffs," Jackson wrote. "As the tariff impact ripples
through P&G's manufacturing cost structure, P&G will be under intense
pressure to increase the price of finished goods."
The White House did not respond to a request for comment.
