Powering Through: Electrical Equipment Provider Weathers Tariff Shocks

If Southern States LLC is doing its job, you may never hear about the company. 

In 1940, Birmingham, Ala.-founded firm relocated to Hampton, Ga., a Henry County town founded with industry at the epicenter. 

Soon, it was making munitions to support the military during World War II.

“This used to be called the bomb factory by the locals,” Executive Chairman Raj Anand says of the plant set up in 1915 to wind motors and maintain transformers for Alabama Power and, soon after, Southern Co. 

Since then, it has consistently churned out switching systems for substations and power transmission equipment, keeping electrical grids humming across the region and around the world.

Reliability, then, has translated into a lack of notoriety, even as the factory has remained one of the largest employers in town, with some 600 workers. 

“We are a pretty low-key, under-the-radar type company,” Mr. Anand said. 

But despite seeing domestic utilities as its bread and butter, international trade has become an integral part of its business, a testament to how global trends can affect even the most seemingly mundane domestic enterprises. Southern States also provides an example of how crafting a proactive international strategy can be a hedge against unforeseen headwinds. 

When Mr. Anand, a graduate of Indian Institute of Technology Delhi and a veteran of the sector, arrived nearly 30 years ago, the company was struggling. Since then, it has been built into a web of global joint ventures and subsidiaries, an electrical empire that has served the company well in the current upheaval. 

In 2023, the company’s growing engagement with India netted it an audience with then-Ambassador Taranjit Singh Sandhu, who stopped by the factory on a trip through Atlanta.

By that time, India was a long-established sourcing base for items like machined castings, gearboxes and interruptors, and it had also outsourced some engineering services to the country. The watershed moment was 2008, when the Chinese government shut down factories near Beijing to clear the skies in the runup to the summer Olympics. Southern States found itself squeezed. 

“We decided that the Chinese were not reliable suppliers for us, so we started moving a lot of our purchases to India,” Mr. Anand said. 

While the company doesn’t want to break out import figures by each particular market, Southern States estimates a $10 million overall hit to the company’s bottom line from tariffs. 

“We use a lot of material,” Mr. Anand said. “India (tariffs are) hurting us a lot. China is hurting us a lot.” 

That’s the case even though the inputs for disconnect switches, the product that makes up half of Southern States’ business, are sourced 90 percent domestically. Southern States also benefits from serving just a few deep-pocketed customers that can absorb higher prices. 

“We sell to utilities, so we just raise our prices. Some said, ‘Raise your prices and give us a new price.’ Some said they would pay it as a surcharge, and some said, ‘Go to hell, we’re not going to pay.’” 

That leakage is where the financial hit is being felt, along with the added stress of managing an increasingly complex sourcing equation. 

Plans to substantively grow trade with India, both from the U.S. and European subsidiaries, are being delayed until a resolution in a trade spat that has seen the U.S. impose levies of up to 50 percent. 

“We can’t even look at it unless this thing is resolved,” Mr. Anand said, pushing for more urgency from the Indian government. The U.S. is unlikely to blink, he believes, since India trade is such a relatively small part of the overall U.S. economy. 

Metals tariffs are also raising prices, and smaller sourcing locales like Vietnam also have also seen their so-called reciprocal tariff rates raised, even if less than initially expected.

Still, Southern States has never been content to wait around for things to change. Starting in the 1950s, the company started send product to places like Mexico, Brazil, Canada and beyond. (Some of them have never asked for spare parts to this day, Mr. Anand notes with pride). In this millennium, the famed Three Gorges Dam in China licensed some switching technology from Southern States.

More recent investments in the company’s global network and product offerings, like mobile power substations deployed during outages, have further boosted its resiliency.

Southern States Investment Holdings has investments in group companies in the U.S. Mexico, Canada, Italy, France, Hungary and South Korea. With varying electrical standards across the world, it makes sense for some of those outside markets to serve the others, and a complementary product portfolio has enabled order fulfillment from the most trade-advantaged locations. The Italian branch, a joint venture with Siemens, where Mr. Anand previously spent nearly two decades, serves much of the world. India is looking to buy more railroad switches like those produced by the Southern States affiliate in France.

Southern States promotes such cross-pollination during a fall meeting each year, the latest taking place in metro Atlanta in November. 

“We bring them all in, and we encourage them to do business with each other,” Mr. Anand said. “If you can buy from your sister company at the same price as you can buy it from somewhere else or make it, then buy it from them.”

Group companies are also licensing intellectual property across international lines, utilizing the group’s 65-plus patents. GE Vernova, for instance, is licensing CapMD, a solution developed within the group to enable the monitoring of capacitors at power substations. 

Such growth seems poised to continue as demand for power skyrockets in the U.S. and around the world in the AI age.

Now out of day-to-day operations, Mr. Anand now has to whip out his calculator to figure out how much the revenue has multiple just since he arrived: “We’re like 25 times more in revenue than when I started, just in Hampton.”