The year 2025 is the year of the Wood Snake. In the Chinese Zodiac, the snake represents wisdom, transformation, calmness, and creativity. The wood aspect emphasizes flexibility and creativity. The current year already seems to be one of transformation though it is doubtful, at this point, that there is much of a chance that this year will be calm. Every business is going to have to be creative and be wise to make it through the rest of the year. Here is our advice on how to handle this year and use it as an opportunity for transformation.
Don't Panic!
Of all the aspects of the year of the Snake, calm seems like the most unlikely aspect to be true. It is only February, and there have already been many dramatic events from the rise of DeepSeek that may unseat the leading AI models, plane crashes, ongoing wars, new regimes, and rocky economic environment. The rapidly changing situation makes it difficult to predict what will happen over the next year and what the second and third order effects might be, yet every business will have to creative and flexible to remain competitive and thrive in this environment.
Before you become too concerned, just remember: Don’t panic! While the global economic system may be the opposite of calm, it is not a new situation. Few would argue that the last few years have, since COVID at least, have been anything approaching calm. There are a lot of opportunities in these tumultuous times. We are already seeing it as a number of our clients are breaking away from old models of doing business. It is a time for creativity and transformation.
Tariffs
We know that 2025 will be a chaotic year for companies, especially American ones. The primary reason is tariffs. Every one of our clients asks us about tariffs. The new administration is fickle so it can be difficult to predict when, if, and how much the tariffs might be. A tariff of 25% may be possible but it could just as easily be removed. Our recommendation is that you always assume that the highest tariffs might be passed. Doing so will prevent a nasty surprise when the situation becomes worse.
The key is to be calm and make wise decisions. Instead of focusing on the tariffs themselves, focus on your specific costs. Remember our blog about companies choosing to stay in China despite tariffs? Understanding your costs throughout the supply chain will help you make smarter decisions and not rush to an ill-advised decision.
The rush to leave your current manufacturing location needs to be balanced with the costs and difficulties that entails. Also, consider the environment. Smaller companies are at a disadvantage as many larger companies are moving back to North America and their larger orders will displace smaller more complicated orders. American capacity is increasing but it is set against hard limits on available labor and capacity and ramp up time.
We would certainly prefer a pre-tariff world, but it is important to understand the one we live in. We have seen many companies transform their operations by understanding both the limits and the opportunities that are presented.
Focus on Tools and Process Improvement
The labor problems throughout the world are only likely to become worse. While that will cause a lot of pain for companies as they struggle to find the people to meet their needs, it does present an opportunity for transforming operations to reduce labor needs.
Reducing labor needs may require automation yet we find just as often it’s a matter of improving process. Remember: automation of poor processes simply automates waste. Strategic automation with good processes and process control will pay significant dividends. These can be a simple automated welding to reduce quality defects and move products more quickly through the system. That will save the manual welding to the more value-added operations that cannot be easily replicated by machines.
American businesses are likely to feel the labor market pinch the most as potential mass deportations will severely limit the available labor force. Even in a greatly reduced form, deportations could remove millions of able-bodied workers from the labor force, including many highly skilled ones. It will be difficult if not impossible to replace these workers. Automation may be the solution, but another viable option is to assess your current manufacturing processes and see where the weaknesses might lie. It is a good time to be creative. We recommend engaging outside assistance and using the staff you have available.
Existing staff often have great ideas on how to improve operations. If you are not already doing so, now is a great time to let them be creative and help operations. It will not only improve operations, but it will also increase morale.
Riding the Snake
The Year of the Snake is a great time to transform your business to thrive in the complex and ever-changing business environment. It will be a chaotic year yet the companies that remain calm and use creative solutions will thrive.
We have seen it ourselves with our clients. Many are taking the opportunity to become better, stronger organizations. It is not an easy task though the results are often impressive.
What are your goals for the Year of the Snake?
How can MTG help you navigate tariffs in the trade landscape? Click below to learn more.
