The Best A Man Can Get: Made-In-India Steel For Gillette Blades? Here's Why

Procter & Gamble (P&G) has overhauled its supply chain for the specialized stainless steel used in its Gillette razors, shifting its sourcing to India. This strategic move is designed to help the company protect its profit margins amid the potential threat of tariffs that could be imposed by US President-Elect Donald Trump during his second term.

Sourcing Steel from Jindal Stainless in India

P&G has transitioned its steel supply for Gillette razors to Jindal Stainless, a New Delhi-based manufacturer, as revealed through US import records. This shift is part of P&G’s broader strategy to mitigate the financial impact of higher steel prices and potential tariffs that Trump has previously indicated. The new sourcing arrangement has come at a time when the Cincinnati-based company faces increasing pressure from global trade policies, especially with Trump’s focus on tariffs.

Cost-Efficiency and Strategic Supply Chain Adjustments

The stainless steel used in Gillette razors is highly specialized to prevent nicks and cuts, and it is produced in large quantities by only a handful of manufacturers globally. Historically, P&G sourced its steel from more expensive suppliers in Japan and Sweden, but the company has now turned to Jindal due to the significant cost advantage. Analysts estimate that Jindal’s steel is 20-25 per cent cheaper than its competitors, which provides a notable cost-saving benefit as P&G navigates the complexities of US trade policies under Trump.

Trump’s Tariff Agenda and P&G’s Response

P&G’s move to India comes as Trump has signaled potential tariffs on imports from China, Mexico, and Canada, which could affect the cost structure of consumer product manufacturers like P&G. Despite securing an exemption from steel tariffs during Trump’s first term, the company remains cautious about future trade developments. P&G’s Chief Financial Officer, Andre Schulten, acknowledged in November that the company would need to adjust its supply chain strategies based on how tariffs are implemented under Trump’s second term.

Jindal Stainless: A Key Supplier for Razor Steel

Jindal Stainless, the world’s largest producer of stainless steel for razor blades, has been supplying steel for the Indian market for over 20 years. Though Jindal has had a longstanding relationship with P&G, it only began exporting to the US in 2022. Since then, P&G has imported over 4,700 tons of stainless steel from Jindal, according to import data. Jindal’s cost-effective manufacturing process, particularly its labor-intensive production methods, gives the Indian manufacturer an edge over more expensive competitors.

Decline in Imports from Japan and Sweden

The shift to Jindal Stainless has led to a decline in P&G’s imports from its previous suppliers, Japan’s Proterial and Sweden’s Alleima. Import records show that P&G's imports from Proterial have dropped nearly 59 per cent in 2023 compared to the previous year, and the company has not received any steel shipments from Alleima in 2023. Despite long-standing relationships with these suppliers, P&G has adjusted its sourcing to optimize costs amidst fluctuating trade dynamics.

Grooming Segment Faces Challenges

While P&G’s grooming segment remains the company’s smallest business by revenue, it has faced increasing competition from start-ups like Dollar Shave Club and Harry’s. Additionally, the COVID-19 pandemic led to a decline in razor sales as more men grew beards and shaved less. However, P&G has worked to bolster its grooming business, and the cost advantages from sourcing steel from Jindal are expected to play a crucial role in improving the division’s profitability in the long term.

P&G’s shift to sourcing steel from Jindal Stainless underscores the company’s strategy to remain competitive and protect its margins in an increasingly unpredictable global trade environment. As P&G continues to optimize its supply chain, the company will likely maintain its focus on efficiency and cost control, particularly in its grooming division.

With Inputs from Reuters