Issue link: https://iconnect007.uberflip.com/i/1069358
30 PCB007 MAGAZINE I JANUARY 2019 tariff on 100% of the items, they don't think that's economically feasible to do. So, they move the production out of the United States so they don't have to pay tariffs, on a certain percentage of their overall spend. Johnson: It's easier now to stage final assembly someplace in, say, Mexico, where you can think globally, and minimize the overall tariff burden by only paying the tariffs under terms for Mexico—not on China or U.S. terms. Antal: Right, so they can have things shipped into Mexico at zero tariff, have the assembly built up, and if they're only selling 70% of their product into the U.S., they only pay a tariff on that 70% of stuff rather than on 100% of it coming in if they were assembling it in the United States. Johnson: Makes sense. Antal: That calculation is going on in all industries and in all levels that are being affected by the tariffs, which is just about everybody. Johnson: For every product that's affected. Antal: Yes, and that's where, to me, the rubber meets the road. Their decisions are being made based on that, so if their calculations show that it's cheaper to import an assembly into the United States, then they will build that product outside of the U.S. and import it in as an assembly versus importing the piece parts in at a tariff on each of those items and assembling it here. As I said, I don't know the pieces that go into that calculation; they are going to be product and industry specific as well. Johnson: That's incredibly insightful. Thank you. Antal: It's interesting how it plays out because I don't think anybody who I have spoken to recently knew how the full effects of the tariffs were going to play into this as well as the component shortages. That's another piece that has a tremendous effect. Johnson: Is there anything that we should discuss? Antal: NCAB has a very unique position here. Although this is a difficult time for the electronics industry itself, I think NCAB is positioned very well to help our customers and any potential customers as much as we can to mitigate a lot of the heartache they're facing from the circuit board side due to the tariffs and component issues. We work with our customers very closely. From where we stand, it's quality first, then strong relationships and full responsibility that build this company up. Part of doing that is helping our customers mitigate risk and being a team player. We are an extension of our customer's manufacturing, so we are a member of their team. As long as we stay that route, we will grow by helping our customers mitigate the challenges they face in the industry. Johnson: I think that's true, especially in these times. A relationship and a perfect track record in helping mitigate risk is extremely valuable. Thank you for your time, Wayne. Antal: Thank you. I really appreciate it. PCB007 We work with our customers very closely. From where we stand, it's quality first, then strong relationships and full responsibility that build this company up.