Detroit Axle has found its fallout from the tariffs takes an unexpected turn—after being on the verge of laying off its 102 employees at its Ferndale facility in Michigan and closing its doors.
The details: Mike Musheinesh, CEO of the online parts supplier—which saw its monthly tariff costs skyrocket from an average of $700,000 a month to $7 million a month—has since seen his woes from the levies flipped into a new opportunity, as reported by the Detroit Free Press.
After raising prices by an average of 15%, estimating a 40% to 50% drop in sales, Detroit Axle’s customers did the exact opposite—they accepted the price increases, keeping sales steady.
On the other hand, many of the supplier’s competitors have been unable to sustain their operations amid the higher tariff costs—enabling Detroit Axle to pick up their customers.
Musheinesh also implemented some cost-cutting measures early on that didn’t require laying off employees—though he didn’t specify exactly where or how those trims were made.
Either way, the strategy has enabled Detroit Axle to avoid having to lay off employees—though the company certainly isn’t out of the woods yet, as the auto industry braces for a much wider scope of levies to take effect.
What they’re saying: "I think we’ll be OK. It’s unfortunate to say, but it’s almost like we’re living off the woes of others,” said Musheinesh (via Detroit Free Press).
Why it matters: Detroit Axle’s newfound success in the thick of the tariffs could signal some silver lining in the clouds for companies that dig in and find ways to mitigate the challenges and face the headwinds.
Between the lines: However, Sam Abuelsamid, vice president of market research at Telemetry, told the Detroit Free Press that Detroit Axle’s apparent turnaround should be kept in perspective, standing firm on his earlier position that the tariffs will cost jobs and drive up inflation.
“Not everyone will be able to absorb the price hikes and while Detroit Axle may survive for now, it’s going to be a smaller market overall…"
"While Detroit Axle will pick up some customers from competitors, it will likely lose some of its existing customers that can’t afford the higher prices."
Bottom line: Detroit Axle appears to have turned a potentially devastating tariff hit into a competitive advantage by passing on costs, retaining customers, and absorbing rivals’ market share—avoiding layoffs in the process. However, the supplier’s win comes in a shrinking market, and broader industry fallout from escalating tariffs still threatens long-term stability.
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