Issue link: https://iconnect007.uberflip.com/i/1069358
JANUARY 2019 I PCB007 MAGAZINE 27 frame where the orders shot through the roof for us. From my understanding, what has happened in the industry is each of the OEM customers, etc., had to decide where they were going to build and sell their product, so they don't get overleveraged on tariffs. Basically, they end up paying tariffs for products that are not going to be sold in the United States. Thus, they had to do a calculation to find out if it's cheaper to bring in the piece parts or the assembly into the U.S., and what percentage of their product was sold in the U.S. Before that, they held off on their purchasing. As we entered the third quarter, that started to release, and orders increased greatly. Johnson: Given that the buyers are having to figure out product-by-product, company-by- company, how does NCAB help customers get through these parts availability analyses? Antal: There are a couple of different things. We've added capabilities for offshore quick- turns, which competes with domestic. It's not going to compete with the turns under five days, but for those above five days, we're starting to get offshore quick-turn reliability. We will also take possession of the boards before they get to the customer site, so they don't get hit with the direct 10% tariff on the price; they only get hit with the 10% tariff on the cost, so we save them a little bit of money on that side. That's another value-add and selling point for us. Johnson: Right. By working within NCAB and plugging in to their expertise, you can help customers be more cost-effective. Antal: That's right. We get hit on the tariff on our cost versus their price. Johnson: That must be of great value for some of your customers. Antal: Definitely. When you think about, a lot of mid-tier companies are not in a good position with their cash flow to have more of their dollars tied up for one, two, three, or sometimes four months before they get that return back when their invoices are paid. That's where a lot of the companies with less healthy cash flow are really feeling the pinch. Some of them are struggling to survive right now because they don't have that cash flow to hold up. One of the things that we do is reduce that burden on them. We'll also hold inventory as well for them sometimes. Johnson: NCAB can do that, but not all of your competitors are as able to do so. Antal: Right. We have a warehouse in Hong Kong where we can hold inventory for a while and not have any tariffs on it until it actually ships to us. We have warehouses here as well, so it depends on how big the opportunity is and how sensitive it is to lead times. We have many different tools in our toolkit to help our customers try to mediate the traditional peaks and valleys of production. Johnson: Wayne, what's your opinion on the component shortage issues that are going on, whether this situation is long-term, or whether it's just a blip in the supply? Antal: I plug into some of the major component suppliers. I bump into them at my customer sites and ask them similar questions. They don't see an end coming, and they don't know when the end of this will be. I spoke to people in the industry who have been doing this from a component purchasing standpoint for a long time, and they said this is the worst they've seen it. Some people have been in the We have many different tools in our toolkit to help our customers try to mediate the traditional peaks and valleys of production.