Issue link: https://iconnect007.uberflip.com/i/1475010
34 SMT007 MAGAZINE I AUGUST 2022 at stimulus drove demand, but you also saw shiing demand because people were moving away from services toward durable goods. ey moved away from going to the theater. ey moved away from the amuse- ment parks. ey moved toward products that they could put in their homes. At the same time, every business had to go online, so the demand for cloud storage and hardware shot up. ese things were tied together when you started to pull the string. Where does that leave us today? COVID remains a major concern, but in much of the world, we're operating alongside it. People have gone back to buying and partaking in services. Demand for travel and hospitality has been very strong. And there has been an equally abrupt shi in the purchase of lots of these durable goods that did so well in the first 18 months. If you look at the big retailers, like Target, Walmart, Best Buy, they're all feeling over-inventoried on the consumer side. At the same time, you have unprecedented inflation rates that are impacting consumers. It's a nar- rative of shiing focus, priorities, and desires among consumers, and the headwinds that they face. When you look at other parts of the industry, though, demand still looks at least somewhat resilient. ere's pent-up demand for what I'll call supply, pent-up demand for production capacity. at produces this residual demand, a backlog that can feed future months. Now, that can change very quickly. But if you look at the industrial side of the economy, the demand is very strong. ey have not been able to meet demand. It looks like that strength should con- tinue at least through the fourth quarter of this year and probably into 2023. I've talked to big industrial companies, and I'm sure you have these conversations too. ey're saying, "We have backlogs that will take us well into 2023." us, there ends up being these two compet- ing narratives. In one narrative, demand is slowing. In the other, demand remains solid because of a strong backlog of orders that are waiting to be fulfilled. For the consumer narrative, high inflation is what gets the headlines. We have officially ended the bull market and we have started a bear mar- ket. Every day there's a crypto platform that implodes and that is keeping the attention. But operating behind that is an economy that thus far looks resilient. Unemployment is obviously very low, and the demand for those areas that our industry supports is holding up quite well— industrial, for one; and clearly defense demand should remain strong. e defense industry has drawn down inventories because of sup- port for Ukraine. At the same time, there's con- cern about other geopolitical uprisings or other geopolitical dislocations. ere is a demand, at least in the U.S., to build up some of that defense industrial capacity, and defense inven- tory to have ammunitions and equipment avail- able to us should we need it. Johnson: What I would expect a vice president of sales in the PCB marketplace to respond back with, "Okay, so our production schedule may end up with some holes for our consumer clients, but there is industrial business to fill that space. We're still going to be at capacity." Shawn DuBravac