SMT007 Magazine

SMT007-Feb2022

Issue link: http://iconnect007.uberflip.com/i/1447212

Contents of this Issue

Navigation

Page 35 of 115

36 SMT007 MAGAZINE I FEBRUARY 2022 Feature Interview by the I-Connect007 Editorial Team Barry Matties and Nolan Johnson speak with Joe O'Neil, CEO of Green Circuits, about some- thing that seems to be on everyone's minds— the rising cost of, well, everything. Joe's back- ground in marketing and finance, as well as his leadership at Green Circuits, positions him as an expert on managing costs related to labor, facilities, lead times, employee training, and the future of the industry. But what rising costs actually surprised him? is is a must-read for us all. Barry Matties: Joe, costs are going up and fab- ricators have tried to compress the cost, to not pass it on. But you can only compress for so long. In the past, you might have seen a fluctu- ation in a particular material or some compo- nents, but now it seems to be everything from shipping to labor to utilities. Is it everything? Joe O'Neil: It's not everything, but it is most things and they're the big things. From an EMS provider standpoint, 60–80% of every dollar of revenue is materials, depending on the sec- tor or region you're serving. e supply chain is strained, inventory levels are down. We're at the beginnings of the bubble of double and triple ordering. Everyone has horror stories about price gouging. Customers are suddenly okay with taking broker risk, as long as you test and do other things to mitigate the risk. Two years ago, it was, "Absolutely not," and now it's, "Whatever could make that two-year lead time turn into tomorrow, we're open to look- ing at it." ey're salvaging bone yards and pulling parts—so that's the material piece. ere's definitely a cost increase in labor. Entry-level jobs around here are $20 an hour and that's if you just want to flip burgers. If you have somebody who will be dedicated, show up every day, and learn a trade, you expect to pay more. One area going the other direction is selling, general and administrative (SG&A) expenses. ere's an opening of the mind- set to accept remote workforce, which allows you to contract out your workforce to areas where costs are lower. Our industry was late to Supply Chain's Risky Behavior

Articles in this issue

Archives of this issue

view archives of SMT007 Magazine - SMT007-Feb2022