Issue link: https://iconnect007.uberflip.com/i/1447212
40 SMT007 MAGAZINE I FEBRUARY 2022 listed, and any of the above will work." Now we're seeing not only a willingness to look at the fourth or fih option that we can pro- pose, but an appreciation for the fact that we're even proposing it. It has shied greatly. ere's some verification and validation, some testing before we load hundreds or thousands of them as a drop-in replacement. Now we're seeing that mentality move out of the passive realm into some actives and con- nector systems, and other places. at's where it gets interesting. It looks good on paper, but there are nuances. ere's so much out there that is not direct channel, or authorized distribution. ere is a lot of pressure to go to sources that aren't veri- fied or validated, which likely will lead to other problems in the marketplace. When major systems were compromised due to counterfeit components or haphazard engineering changes in the past, they typically happened in this kind of environment, where getting product to market starts to weigh more heavily than safety and security, rather than a resilient supply chain that's trusted and veri- fied. We forget over time those lessons and we unfortunately relearn them. Matties: ose are tough lessons to learn or relearn. O'Neil: You just hope they don't cost lives; that it's your flashlight that doesn't work, not your airplane. Matties: Exactly. If you look at per- centages, what sort of percentage and increases do you think you have on your input cost? O'Neil: Overall? at's tricky. We've got anecdotal stories of the penny part that now costs $2. A 200 times increase overall is not what we've actually seen. ere are the one-offs, but on the material side, it's somewhere between 5–10%. It might be a little less, but that's the trend we see as we finish up budgeting for next year. On labor, insurances, and other labor related costs—the traditional items getting cost reduction atten- tion—it's still in that 5–10% range. e rate of change is also surprising. For example, the rate of obsolescence is increas- ing. We have customers with legacy products, or longer-life capital equipment-type prod- ucts, where they'll have the same design in pro- duction for five to 10 years, or longer. ey are getting hit hard because the component man- ufacturers seem to be dedicating their capacity to newer projects. Component manufacturers are cutting off the tail more aggressively, ded- icating their limited capacity to their higher revenue, or higher margin, newer products. ose long-life programs will be seeing up to 20% increases. We do a ton of NPI prototype work and there's no increase per se because it's the initial cost, and the baseline is set higher. Matties: Are you seeing a reduction of NPI work? Or is there still a growing demand for that? O'Neil: We saw a pause as the pandemic started; everyone trying to figure out if there was a market to go aer. I don't know if that contributed to pent-up demand, or it was just that the economy took off, but there is defi-