Issue link: https://iconnect007.uberflip.com/i/1069358
16 PCB007 MAGAZINE I JANUARY 2019 more short-term problems, though. I don't think those are going to be a long-term issue for this. The tariff issue has just really made a bad situation even worse. We track the tariffs because we're global and deal with tariffs from all different directions. One of the things we found out was since we're primarily a distribution customer is that all of the distribution inventory is warehoused in the U.S. Even though Canadian companies warehouse all of their goods in the U.S., that makes them subject to tariffs. In our China facility—because we have U.S.-based customers—there is special manufacturing pricing that can only be obtained if we buy it through the U.S. We have some programs that we still have to buy parts out of the U.S., which are now subject to the tariffs. List 1 caught the electromechanical and the LED—not the diode, but the LED. List 2 has pretty much caught all of the electronic components out there, so it's now affecting all of them. Through the distribution channel, they are working on mitigation strategies for Canada, Mexico, and China, so they won't have the tariffs pass through. We have three main ways the tariffs are coming at us. Right now, we know of 14 manufacturers who are the importer of record and are embedding the tariff increase as a price increase. We've seen price increases on some components as much as 80%, so they're putting the price increase and tariff together. We have some parts that the distributors are the importer of record. They are mitigating most of those through doing a free- trade zone, duty drawback process, or utilizing a warehouse in Guadalajara, depending on who the distributor is. The last way the tariffs are coming at us is that the manufacturers are the importer of record. They invoice the distributors, who invoice us. In that case, where it gets complicated is that the manufacturers that are invoicing are invoicing at the book cost—not the debited or final cost. Where you may have a special price for 75 cents, the book cost is $1.00. Martin: We had that problem last summer where they couldn't get the foil sheets to build the laminates because they were going toward batteries and electric vehicles. We haven't had a lot of fabrication issues recently. Most of our suppliers in China are back to near normal lead times—about six weeks for those. They had jumped up to over 10 weeks last summer, and prices escalated. The prices have come back down and stabilized a little bit and the lead times dropped down. Most of those, at least with our suppliers, have been fixed on that end. However, we continue to run into trouble with passives, resistors, capacitors, and discrete items like MOSFETs, diodes, and those types of devices. That's what's giving us a lot of hard work. Barry Matties: Some companies anticipated the shortage for the capacitors and started stockpiling in early 2017—maybe even before. When you look out, what other shortages should we be looking at that people should consider stockpiling? Martin: Right now, the resistors and MOSFETs are the next thing, which have just come up as being real problems (other than Vishay and Panasonic, which have been a problem all along). I think you're looking at the discrete items. Their lead times have jumped up a lot, which we're starting to see. We've had quite a few MOSFET issues pop up. I think those are