Hartford Business Journal

26 HARTFORDBUSINESS.COM | OCTOBER 19, 2026 Driving Growth for CT's Makers & Manufacturers We're More Than a Bank. We're Your Community Manufacturing Partner. We take pride in being truly local. We've served Connecticut businesses through eras of industry change with consistent, reliable banking support. No matter if you're a small machine shop or a growing production firm, you'll receive the same exceptional service: quick decisions made by people who understand your line of work, honest answers to your financial questions, and a relationship built for the long haul. When regional and national banks are focused on Wall Street, we're investing in your Main Street success. 860.283.1874 | ThomastonSB.com/Manufacturing Member FDIC Equal Housing Lender FOCUS | MANUFACTURING EXPERT'S CORNER How manufacturers can protect margins as costs rise By Mary Wisenski W hile auditing manufac- turers across Connecticut this year, I keep seeing the same picture: many businesses are succeeding, but margins are thinner. Rising overhead and supply prices, tariffs, freight cost increases and the unreliability of the supply chain are cutting into margins, and some of the year-end projections for 2026 that I'm reviewing are short of what was expected in planning discussions. A year and a half ago, before tariffs and fuel costs wreaked havoc on supply chain management, one particularly innovative manufacturer I work with had set up their operation to run with essentially zero inventory. They would buy materials, build and ship to order. They didn't want inven- tory on hand because of the potential for obsolescence. Technology is rapidly advancing in their field, so they eliminated the risk of having product in their warehouse they couldn't sell. This experiment, successful at first, has been completely reversed. They now have a ton of inventory. Rising costs made the savings of buying in large quantities more appealing. And the risk they most wanted to avoid was not being able to get all the materials they needed due to shifting tariffs and supply chain disruption. These maneuvers increased stability, but significantly cut into margins compared to their previous build-to-order approach. This has become a trend. Inventory is an asset on the balance sheet, so it's not bad to have it there. But it ties up cash, and if it's slow moving or becomes obsolete, you'll be looking at a reserve against it. This is an especially big risk for aerospace and advanced manu- facturers, which make up a lot of Connecticut's base. What can manufacturers do when prices continue to rise and any poten- tial areas to cut have already been explored? Here are some potential ways to increase margins. Renegotiate supplier contracts. If you're making big purchases of materials because you don't know when you can get them next, you may be able to get better pricing on the larger quantity. You and your suppliers may have become used to particular pricing based on previous order volumes, but it may be time to revisit. Pass costs on where you can. Renegotiating customer contracts to pass through cost increases is an obvious move, but how much can you actually pass on? Supplier relationships with large original equipment manufacturers are often highly competitive, making it difficult to raise prices. It's worth calculating the potential tradeoffs here. If you raise prices and lose 25% of your business, that may be OK if you make it up on the other 75%. Know which products make money. Many manufacturers have higher margins on certain parts and lose on others. Sometimes the losers are add-ons to keep customers happy. That works as long as they're keeping a pulse on it. When margins are this tight, it's worth asking when to pull the plug on work that isn't making money. Rethink overhead. Fixed costs like insurance feel like things you can't do much about, but cost-optimization consultants make a living renegoti- ating those contracts to find savings. Manage cash flow deliberately. Extending payment terms with suppliers while shortening terms for customers is a classic tactic to ease cashflow in times of instability, though larger customers generally dictate their own terms. When it comes to equipment, it's still worth investing if it's necessary or drives expansion, and financing through a bank line of credit may make sense right now, even for manufacturers who typically self-fund equipment upgrades and purchases. What works for one manufacturer may not for another. The manu- facturers I see with the strongest margins this year are those that have both a great deal of visibility into their financial picture and a willingness to get creative and do things differently than they have in the past. Mary Wisenski, CPA, is a partner at accounting and advisory firm Fiondella, Milone & LaSaracina LLP (FML CPAs). Mary Wisenski

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