D&H Co-President Dan Schwab On Tariffs: ‘Don’t Hit The Panic Button, But Be Smart And Make Educated Guesses’

‘First, we try and get as much information as we can from our manufacturers about their strategy and inform our partners because we don't want surprises. It’s our job to insulate them from surprises so they don’t have surprises for their end users. So to me, what’s paramount is communication,’ says D&H Co-President Dan Schwab.

IT distribution, like much of the rest of the IT industry, is facing a number of issues that could impact their business, including new tariffs potentially leading to supply chain issues.

Dan Schwab, D&H co-president, recently spoke with CRN to discuss some of these issues and the impact he expects, and his top message is that the distributor’s business will continue to grow regardless of any new outside pressures.

[Related: D&H Co-President Michael Schwab On Tariffs, 2025 Opportunities And AI PCs]

D&H, which is unique in its focus on the SMB IT business versus the enterprise focus of its peers, has been around for 107 years and remains an employee-owned company, Schwab said. That, combined with the fact that it remains a private company, means Harrisburg, Pa.-based D&H has the flexibility to bend with any contrary winds, he said.

“With most distributors, especially the bigger ones, the vendors have to align to them because they’re really big entities, $50 billion entities,” he said. “D&H is very nimble. We’re almost like a small business in how we run it. Even though we’re pushing toward being a $7 billion company, we still act like a small business, and we never want to lose that.”

For instance, Schwab said, when it comes to the potential shock caused by the Trump administration’s tariffs, it is important to take a deep breath before making any big changes.

“We see this as, don’t hit the panic button, but be smart and make educated guesses,” he said. “Who knows if this gets reversed for any country. You can’t forego everything you’ve done, but instead you start making calculated adjustments. And because this is the third iteration, I think it’s more turning dials than everyone making a hard left.”

Here is what Schwab had to say about a range of issues.

How’s D&H?

D&H is strong and vibrant, and it’s a little bit of our renaissance. And I say that because we’ve been in business for 107 years. How does a company that’s been in business for 107 years have a renaissance? I think that we’ve evolved and survived long enough that we’ve really become a differentiator in the marketplace. Our business in January grew more than 25 percent [over last year] in a challenging market. What we are seeing in the marketplace is more and more opportunities for us to differentiate ourselves with services or with training our partners, whether it’s the Windows 10 end-of-life and helping our partners migrate that, or helping them embrace Copilot and figure out how they can start tying AI into their businesses. Enterprise partners have been doing that for years. They’ve been doing machine learning. It’s very, very difficult for small partners to use small language models. We’re continuing to help partners build out business practices to become MSSPs, or managed security service providers.

I think our model is standing out in the marketplace because vendors have made changes which [means they] rely on distributors more than ever. There’s been consolidation in our industry, and I think D&H is a little bit old school in how we go to market. We’ve been able to hire some fantastic talent to mix with our great tenured team. Mike [Schwab, co-president of D&H] and I are as optimistic for 2025 as any year in the past two decades.

You said vendors are making changes. What kind of changes?

Vendors are doing one of two things. Many are trying to manage costs effectively. Some are looking at their coverage and they’re pushing more in distribution. Instead of managing their partners, they’re actually having distributors manage more of those partners. And there’s other vendors trying to change their business model to perhaps focus more on migrating partners to be more services-led or to sell more value portions of their portfolio versus the volume portion. In making those programmatic changes, they need people such as D&H to help partners evolve their business models so they maximize the opportunities. As Wayne Gretzky would say, ‘They’re going to where the puck is going.’ So we spend a lot of time, even though it doesn’t necessarily help our sales today, investing in our partners so that they are future-proof and vibrant for years to come.

How does a vendor invest in D&H to build its SMB and midmarket business? What kind of things do they do?

With most distributors, especially the bigger ones, the vendors have to align to them because they’re really big entities, $50 billion entities. D&H is very nimble. We’re almost like a small business in how we run it. Even though we’re pushing toward being a $7 billion company, we still act like a small business, and we never want to lose that. We go to manufacturers or vendors and say, ‘What is important to you? How do you hit your goals this year? What is strategically critical for your company?’ And then we align our entire organization to help them hit their goals. I think they start by saying, ‘We want everyone to help us hit our goals,’ and then realize someone like D&H is willing to roll their sleeves up and actually produce measurable results. Whether it’s signing up net-new partners or helping partners get certified, they invest in D&H on things like demand generation, helping partners move up the stack and sell more advanced solutions. All distributors do these functions, don’t get me wrong. But D&H does it better than anyone else, and most of the manufacturers will tell you that that is a forte of ours.

This differentiator is also intrinsically tied to us being a private and employee-owned company. If you’re a public company, that type of heavy lifting does not help your quarterly results at all. If anything, it may hurt them because you’re investing for the future. We have no problems with that. Everything we do is for three to five years out. We don’t have the 90-day shot clock pressures that public companies have. We can do that heavy lifting even though it’s not going to help us this month or this quarter. We like that because it creates incredible loyalty between partners and ourselves because we put them in a new business. We help them build a practice. We help them take costs out of their equation. We really help them change their business. We really help vendors accomplish what they’re trying to do. So we build loyalty on both sides, which makes us a little bit stickier down the road.

What is D&H’s DEI policy?

D&H has our own moral compass. D&H has been very comfortable and proud of our diversity, not because it was a government mandate, but because we believe in diversity of thought and experience, and that’s part of what made us successful. In fact, I talk a lot about the Socratic method at D&H: We are not a top-down-driven company. We’re a bottom-up company because everyone has different optics and different experiences. The Socratic method means you get varying viewpoints from lots of different people. You amalgamate it together, and you make a decision as a group, and having diverse experiences and thoughts allows for better decisions. And not only that, employees are all in because you value their opinions.

The new U.S. administration is already starting to impose tariffs, which could impact IT products. What is D&H seeing? How are you preparing for this?

I see this as the third phase in the global supply chain diversification. Phase one happened during the tariffs imposed during the first Trump administration that forced people to review their supply chain. It then became exacerbated in the second phase, which was during COVID. So today, I think supply chains are much more resilient and diversified than they were at that time. We view this as more of a near- and midterm impact versus a long-term impact because many of the manufacturers that before only manufactured in China now may be in the Philippines or Vietnam or other countries. No one knows how this will evolve. …

First, we try and get as much information as we can from our manufacturers about their strategy and inform our partners because we don't want surprises. It’s our job to insulate them from surprises so they don’t have surprises for their end users. So to me, what’s paramount is communication. Second, this is one of those ‘this too shall pass’ things because many of these manufacturers have already been through this. They already have the ability to stand up a new manufacturing center, or shift more volume, or kit it in a different country. So we see this as don’t hit the panic button but be smart and make educated guesses. Who knows if this gets reversed for any country? You can't forego everything you’ve done, but instead you start making calculated adjustments. And because this is the third iteration, I think it’s more turning dials than everyone making a hard left.

How about what’s going on at Intel? How is that looking from D&H and its partners’ viewpoints?

D&H has been through world wars, recessions and depressions. Intel, according to the pundits or the news, has had struggles, and other people have had innovation or share gains, whether it be AMD or Nvidia or Qualcomm. However, my impression is that things ebb and flow. Intel is still a very important part of our industry. Intel’s not going away, and I wouldn’t be surprised if you read an article years down the road about Intel’s renaissance and they’re back and better than ever. In the semiconductor space, things happen in many-year cycles. So if you make a wrong turn, it’s really hard to correct the course. But we’ve been through enough different cycles and seen enough challenges, and then the next thing you know that person’s back on top down the road. So I wouldn’t bet against them. If you’re not in that business, you don’t realize the capital expenditures and the time needed.

What are you seeing in the macroeconomic environment for 2025 that might impact distribution?

I can give lots of variables that will impact distribution from the macroeconomic. Are interest rates maintaining instead of dropping? What about tariffs and retaliatory tariffs? What about the presidential administration’s changes that will have different levels of effect on different organizations? I would call this about as dynamic a time as we could have. But at the same time, I always say economists were created to make weathermen look good because my crystal ball is no better than anyone else’s, and those that consider themselves to be best in class are right 50 percent of the time.

We at D&H tend not to really concern ourselves with the macroeconomic. We don’t know if GDP is going to grow 2 [percent] or 3 percent. We don’t know if the IT spend is going to grow 3 [percent] or 5 percent. What we focus on is what’s within our four walls and what we can do to control our own destiny and help our partners win. And that’s how we outpace GDP. We outpace the North American IT spend by doing that. So we’re cognizant. We’re very well read and knowledgeable on those macro factors. We won’t consider ourselves bold enough to predict, but we do consider ourselves nimble enough to respond faster than anyone else when those conditions do change.

What are D&H’s strategic priorities for 2025?

The good news is D&H doesn’t change our strategic priorities year after year. Some companies do that, like when you have a company that basically decides to go from a hardware company to a recurring revenue company. We pride ourselves on having lots and lots of monthly, weekly and daily evolutions. It doesn’t matter if it’s in our budget or not if it’s the right decision, it’s approved. I hate to give you a non-answer, but we don’t have strategic priorities that are any different than the year before. I will say that, for a public company, your No. 1 goal is you are respondent to shareholder equity. You exist for shareholder equity.

D&H doesn't have that. D&H has three priorities. They were the same last year, the same 10 years ago, same when I started at D&H 30 years ago. Our priorities each year are to figure out how we can help our partners grow and make money, figure out how we can help our manufacturers achieve their goals, and hire the best people and stay out of their way, empower them, motivate them and reward them. And we always say, if we can take care of those three priorities, the company takes care of itself. We’ve been in business for 107 years. We’ve made money for 107 years. So it’s not rocket science. But I think it’s a luxury as a private and employee-owned company to think that way.