Issue link: https://iconnect007.uberflip.com/i/1379105
JUNE 2021 I SMT007 MAGAZINE 57 Johnson: Returning to the Americas for man- ufacturing, it seems the primary drivers are shipping costs and tariffs. Is that correct? Are there other dynamics going on? Harts: at's correct. However, we also see a gradual increase in the cost of labor in China. It's not dramatic, but it's there. China is still your best option for electronics parts, and circuit board manufacturing is a toxic man- ufacturing process, so there are reasons why China will be a big player for many years to come. However, as the manufacturing process becomes more automated and labor costs can be reduced, countries like Mexico and other low labor cost-providing countries become very competitive. Being aware of that allows us to react to those types of demands. I oen tell people we can provide any sorts of tools or products that a Fortune 500 company would have, yet we can still react like a startup; this means we have people in place, and we can be online very quickly on behalf of our customers. Our sourcing capabilities allow our customers to ask, "Hey, this is what I'm looking for. Can you help me find a provider for that?" We can react very quickly for them, and that's some- thing they can't even do themselves. It's a big value. Johnson: Why do you believe that China still seems to be the best value. And as market changes happen in other regions, do you see a point where that balance shis? Harts: Not soon, for sure. China will always be competitive. Asia has the largest amount of raw materials used in this industry, which allows them to be competitive well into the future. eir labor costs also remain low, even with a rising middle class. e Chinese govern- ment can incentivize factories to make it more cost-effective for them to do business. For instance, the government can incentivize the build of a brand-new factory. ey can entice factories to add on for little to no cost where, domestically, a manufacturing company must go out and buy property and build a factory. And when that can be subsidized by the gov- ernment, it allows them to be com- petitive long term. In addition, they benefit from the world's most exten- sive experience in the manufacture of electronic components. For nearby countries that aren't impacted by tariffs, such as Tai- wan, ailand, Vietnam, and other emerging countries, their raw mate- rials will most likely still be provided by China. I don't think we will see a mass exodus from there anytime soon, but we constantly monitor it, just to make sure that we always have Quality at the heart of manufacturing. Strict control of raw materials and lead times.