By Wayne Cochran
CEO, RM2
April 2, 2025, had a name: Liberation Day. For the White House, it marked the opening of a new American trade order. For RM2, it was the day it became clear our business model would not be successful going forward. A change was required immediately, with no guarantee it would work.
We manufacture smart composite pallets built to outlast a wooden pallet by a decade. Our products move through the supply chains of retailers, food distributors, and logistics companies across North America. On Liberation Day, we were manufacturing in Mexico. We spent years building that operation, employing hundreds of skilled workers and optimizing the factory to meet customer demand. The economics made sense. Lower labor and supply chain costs, established operations, and proximity to the U.S. border.
Then the tariff math changed, and nothing was the same.
If You Care About People, This Is Hard
While Mexico and Canada were largely exempt from broader tariffs as USMCA members, tariffs of 25 to 50 percent still applied to goods lacking rules-of-origin certification. The complexity of our inputs created exposure we could not eliminate. The moment tariff risk applied to every unit we shipped north, the economics of staying in Mexico collapsed.
The decision to move manufacturing to North Carolina was not a celebration. We are proud to design and manufacture in the United States, but that decision meant eliminating hundreds of jobs that people depended on. A community was directly impacted. There is no playbook for shutting down a facility, qualifying new equipment, rebuilding a workforce, and redesigning a product for a new cost structure while continuing to supply customers.
Reshoring is not free. It requires capital to support employees through transition, invest in new equipment, upgrade facilities, and manage the gap between old and new operations. We are working through each of those realities every day.
What Moving a Factory Actually Costs
• Equipment disposition, relocation, and qualification. Machinery must be evaluated, moved, recalibrated, and proven out in a new facility. New equipment must be sourced and validated.
• Workforce rebuild. Skilled labor does not appear overnight. You recruit, train, and develop both technical capability and cultural alignment.
• Product redesign. The move required a new pallet architecture aligned to a different cost structure. That meant re-engineering, re-tooling, and re-testing.
• Customer continuity. Any disruption creates a trust gap that can take years to recover, if it can be recovered at all.
The product redesign is the part that receives the least attention in reshoring discussions. You cannot take a product optimized for Mexico and expect it to perform the same in a U.S. cost structure. Labor costs are fundamentally different. Mexico can reduce total manufacturing costs by 30 to 50 percent depending on labor content. When that advantage disappears, you engineer around it.
You rethink materials, automation, and factory layout. You tighten tolerances to reduce waste. You ask more from some employees and say goodbye to others. It is a clarifying process.
Then Another Punch in the Mouth
We moved manufacturing to control tariff exposure and strengthen our supply chain. Then the two materials that define our cost structure, petroleum and steel, became their own geopolitical variables. You cannot engineer your way out of the price of oil.
RM2 pallets are made from HDPE and steel. That makes our cost structure fundamentally tied to energy and metals. HDPE is derived from petroleum. U.S. pricing has been driven up by feedstock costs, constrained availability, and steady demand. In the first quarter of 2026, pricing was around $1,143 per metric ton and fluctuating in ways that make forward planning difficult.
Steel presents a second challenge. As of April 6, 2026, steel articles are subject to a 50 percent duty on full customs value. Previous frameworks allowed partial separation of material value. That is no longer the case. For manufacturers relying on steel components, pricing becomes uncertain until the invoice arrives.
25 to 50 percent tariffs on Mexico and supply chains disrupted the previous model.
A 50 percent duty on steel increased structural costs.
HDPE pricing remains volatile and tied to global energy markets.
Here is the reality. We moved to North Carolina to reduce tariff exposure, and it was the right decision. At the same time, our primary input costs increased for entirely different reasons. There is no safe position. There is only a different set of risks.
What This Moment Requires
Companies that operate successfully in this environment share a common trait. They do not treat cost structures as fixed assumptions. They treat them as active variables that require constant attention.
We are still working through that variability. The North Carolina operation is producing our next generation Gen5 pallet. The product is stronger. The team is skilled and committed. That matters.
At the same time, pressure from HDPE and steel is real and ongoing. Every day requires decisions about what can be engineered out, what can be absorbed, and what must be passed through.
Manufacturing in 2026 is more complex than in previous years. It is an ongoing negotiation with forces outside of any one company’s control. The best approach is to stay disciplined, adaptable, and honest about cost structures while continuing to build and deliver.
At RM2, we are doing exactly that.
