Issue link: https://iconnect007.uberflip.com/i/1494936
MARCH 2023 I PCB007 MAGAZINE 23 Morgan: What's different now compared to 20–25 years ago, when we had the last sort of big downturn business-wise? Of course, back then, the supply chain was local, so we had glass fiber. We had copper foil. We had resins all local to Europe, so there was no need to ship that in. In the last 20 years, the sup- ply chain has extended; now, the supply chain is in Asia for both European and American producers. ere's no sign of that changing, by the way, so that's an impact. What actually matters in the end is the container price—that's criti- cal. What you put in your containers, and the value of that material, is what really makes the difference. We talked with one of the other logistics guys, and he said, "ey call this the barbe- cue effect." If you're selling a small number of Chinese-made barbecues, a container to ship them might cost $1,000, but that won't fill the container. If you can fill the container, you can make money. Until you hit $10,000, you can't ship those cheap barbecues, because you cannot make money on them. You can- not charge a price for them that offsets what you need to pay, and that's the issue. When you have a downturn like we're seeing now, the commodity business gets hit the hardest. e biggest impact is on the low end of the market. Goodwin: inking about this in terms of lam- inate, a 20-foot GP container of rigid laminate is somewhere between 4,000 to 4,400 sheets, depending on copper weight. You hit weight before you hit bulk volume. Let's say it's 4,000 sheets. e impact of the price rise on the ship- ping containers for that amount is between 35–40 cents per square foot. at's more than the margin in rigid laminate has ever been in my working life. Morgan: If you're selling a reefer or selling a 20-foot container of mixed, high-margin (or high-value) products like polyimide—low-loss material—it doesn't matter. You don't get a uniform effect across an industry, but a very specific effect. ink about the business in Europe, in general. We still have a big dependence on the low-end materials, espe- cially for automotive, in Europe. Automotive is a relatively high material content business, and that's what's been affected the most. e other issue we're facing is, due to the logistics issues, people have started stocking more material. As Mark said, you build the stock level up by spending cash, but then you've got to borrow more cash to run the business. Inflation's running high, so instead of 2% interest, now it's anywhere from 5–12%, which makes getting cash expensive and, on top of that, the market has soened as well. Folks in the commodity business are feeling the squeeze the most because they're having to deal with high inventory costs, high cost of borrowing money, and now, reducing markets. Goodwin: With the specialty business, I couldn't have afforded to make a rigid four-, six-, and eight-layer material available through- out the pandemic. I could only do that because I have an IMS business. It's a high-margin business. Morgan: We are a high-mix vendor. ere are a lot of specialty requirements, and Ventec has a good slice of all of those. Goodwin: at business subsidized our FR-4 business during the pandemic—not the other way around. Morgan: Sometimes in business, it's nice to have a specialty, to focus on one thing and do it Alun Morgan