Nerves of Steel

Classic's VP of Construction, Dave Groen, gives his thoughts on the impact of tarriffs and how to mitigate the risks with customers and staff. Published May 1st, 2025

Costs come in various shapes and sizes. They also have different effects on a business’ bottom line. Over the course of these past two months, companies with business and staff on both sides of the border have benefitted from an invaluable reminder that will make us stronger in the long run. While the actual price – or cost – of our products and services matters, there are other factors that play an even greater role in business outcomes: employee morale and communications.

Dialogue with our clients has seldom been this intense or mutually appreciated. Throughout this period, we have sought out their feedback and insights before, during and after making business decisions. In response, they have expressed to us that their greatest fear revolves around the unpredictability of construction costs. Many are seeking reassurances that pricing can be locked in despite market volatility. Their feedback has allowed us to focus on proactive planning, supplier collaboration, and additional rounds of transparent communication to minimize this apprehension. In many cases, we have been able to collaborate with suppliers to avoid unexpected cost spikes. In other cases where cost increases have been unavoidable, we have provided clients with risk analyses to show the potential increase they may incur so they can in turn make informed decisions.

At the end of the day, the main concern of our clients is not the absolute cost of a project, it is not knowing which materials might be impacted and how much contingency funding they should allocate.

In the construction side of our business, we have seen a growing hesitancy to start new projects. Developers in the pre-construction phase have paused or delayed some of their projects due to uncertainty over material costs as well as the overall economic landscape. While new project proposals continue, companies are wary of breaking ground without a clear understanding of pricing stability. Uncertainty over tariffs is making companies rethink their manufacturing strategies, with some considering shifting operations to the U.S. to mitigate future risks.

Despite these challenges, certain sectors remain strong. The government’s pipeline of large-scale infrastructure projects, for example, including transit systems, military and defence and mining developments, is expected to proceed as planned since funding for these projects is independent of trade fluctuations.

Accustomed to price volatility and the experience of the pandemic, companies in our industry have already experimented and developed effective strategies for buffering against uncertainty. Our company has tapped into this experience to stay ahead of potential cost increases and maintain relatively stable price levels for our clients. We understand the levers we can pull to manage material price swings, and where adjustments are not possible, we communicate openly with clients to ensure they are prepared for potential cost implications.

Our primary go-to strategies for reducing price fluctuations have been: (1) Pre-purchasing and stockpiling materials – ordering materials in advance to lock in prices before potential increases; (2) Tariff-proof contract language – incorporating tariff-related clauses in contracts to reflect fluctuating costs and protect both the company and our clients; (3) Risk assessment on U.S. materials – recognizing that only about 8 per cent of a typical construction project budget is composed of U.S. materials, thereby limiting overall tariff exposure.

Beyond client and financial considerations, maintaining a strong, unified workforce across Canada and the U.S. has been among our most important goals. Working with the leadership teams of our subsidiaries – Apex, Northern Sprinkler Design and U.S.-based Edge Fire Protection – we assessed early on that any division or “chill” between our personnel, even if only among teams working seldomly together, would be detrimental to staff morale and our corporate culture. Price fluctuations and political instability are bound to happen – but it’s through a robust and united workforce and equally strong corporate culture that we can successfully navigate through these. After all, trade tariffs are not the only issues we’ll face as a team. And so we’ve actually increased and improved our cross-border communication across the board. Canadian employees continue to work on U.S. projects, and our U.S. team is fully integrated with our Canadian leadership through virtual project meetings as well as monthly in person meetings for support and collaboration. It’s precisely this teamwork, characterized by ongoing discussions at all stages of a project or process, that has helped us keep costs under control for our clients and keep them informed throughout.

While the threat of prolonged tariff disputes remains a challenge, this approach is helping staff and clients stay resilient, positive and focused on the end goal: delivering our respective missions above and beyond price volatility. By leveraging industry experience, maintaining strong cross-border teamwork, and prioritizing client and internal communication, we can all more successfully navigate the unpredictability that is threatening our businesses and markets.

Newsroom

Canada's fastest-growing fire and life safety company relies on open communication to mitigate risk of losing clients, deflated staff morale