Issue link: https://iconnect007.uberflip.com/i/1493797
MARCH 2023 I SMT007 MAGAZINE 59 want, but it does mean that we won't lose deals based on a 2-3% difference. e fully landed costs are more important. For new launches, they will quote them worldwide with a preference for North Amer- ica if they can make it work. If it's an existing project that's up for renewal, they start to look for North American options; again, nobody's pulling up stakes and moving out of China in an emergency. ey're just working in a normal course of business. What do you think the price elasticity is with respect to moving back? There seems to be a value worth paying for in supply chain resil- ience. Can we monetize that? It's more expensive. Look, I ignored ESG (envi- ronmental, social, and corporate governance) as a topic until the last 12 months, but now it's showing up in bidding packages. ey're ask- ing not to just have a statement, but to cer- tify that you're not using abnormally low-cost labor or abusive labor situations. A lot of the ESG topics can now be measured with metrics. is is a new thing that I haven't seen until the last 12 months. It paints a picture for what's on the minds of our customers, that's for sure. Are you tracking your impact of the broker market on this space? I'm aware of one that was maybe $1.2 billion before the pandemic; now, they're about $5.5 billion. On CNBC recently, Ford CEO Jim Farley described being under a lot of margin pressure. Who did he blame? e component brokers. I do believe the big winners in the supply chain crunch have not necessarily been EMS com- panies, but rather the secondary distribution and brokers taking the opportunity to improve their margins just a little bit. We certainly work with authorized distribution as a preference because we get the best price and the best sup- port that way. We get a guarantee of conformity in the prod- uct, and we don't have to worry about coun- terfeit parts, but I can't think of a single cus- tomer of significant size that we've built in the last two years for whom we didn't need at least some of their BOMs sourced from either unau- thorized distribution or a parts broker. We've had to build up our practice inter- nally; we have a supply chain team that is now very good at sourcing broadly and in multi- ple theaters—both in the U.S. and Mexico. We shop through distribution in both places; we're thinking about setting up a distribution office for entering that market. It sounds like your world view is that this sort of multiple channel sourcing isn't going away. is is our new best practice. I'm getting it from the hyperscale server companies. Who does Foxconn build for? Apple, Google, any- body who's got a cloud. Where are they get- ting some of their parts? ey have to get them from some of the brokers. e Ford CEO mon- itors his brokers because he knows they impact his margin. e broker markets serve an important role. We buy from most of the reputable ones. It just changes the way you think about it. ere are professionals who have been doing this for 20 years and it was a difficult mental switch for them because their whole career has been, "Don't buy from anyone other than authorized distribution."