Issue link: https://iconnect007.uberflip.com/i/1512467
DECEMBER 2023 I SMT007 MAGAZINE 25 Pine: We see it from the standpoint of com- panies bringing in high-end inspection equip- ment vs. inspecting or reworking manually. Also, if they get the high-end assembly auto- mation, there is potentially less hand work, and companies can potentially run a machine or a line with one or two operators vs. multi- ple people. Carey: You do whatever you can to minimize some of the labor impact to compete with overseas manufacturing. If we look back about 20 years ago, we saw the exodus of manufac- turing here in the United States. I think there will be a need for labor with skills that enable them to integrate with the new technology. at means there are still great opportunities for people seeking a career in electronics man- ufacturing. Johnson: Amy, you described educating your lenders so they're knowledgeable of the industry in which they're participating. How do you do that, and how does that improve the financing process? Pine: We provide a write-up to our funding partners on the EMS market as well as provide a diagram of an SMT line and how each piece of equipment works within the manufacturing line. We explain the nature of a contract manu- facturer, that they typically are not tied to one product doing well; they have many different customers driving their business, which diver- sifies the credit risk. is type of information, along with our aged portfolio history, allows credit to move more quickly and confidently with the approval process. Johnson: In those conversations, what is unique about our industry that they definitely must know? Carey: It's the dynamics of change. If you allow yourself to submit to the change—this gets back to technology—then you're better apt to go forward. Manufacturers tend to do a better job at budgeting and paying. At the end of the day, a lender has all these avenues and types of industries to finance. ey analyze how well the various industries are performing and see that our industry has performed very well. Matties: So, you're in the middle, working for both the lender and the contract manufac- turer. How do you qualify your customers on the manufacturing side? Carey: We actually serve three masters here: our funding source, customers, and the ven- dor. We really need to incorporate all three. Pine: When we're referred into a transaction, or when a customer contacts us, we do a cur- sory credit review, looking at their time in busi- ness. ere are credit reports we can access to see how they've done financing in the past. en we have a conversation directly with the customer to learn more about them. What is the justification for the purchase? Where are they at financially? We review our programs to determine what will work best for them. Brian and I both came from a direct fund- ing source. When we started Innovative Cap- ital in 2002, we branched out and found sev- eral different funding sources to partner with. e benefit is we have funding partners who work with more challenged credits, as well as sources who work with high-end customers who demand better terms. If the opportunity doesn't fit in one box, we can take it to another, whereas direct funding sources can't provide that. Aer our research, we can put together a proposal that will best meet the customer's needs and offer them the best terms available. Matties: Credit standards have tightened up significantly. Do you see that in equipment leases? Has that also become a higher standard? Pine: We've been fortunate, and that's based on our portfolio history. Even through COVID, many of our clients stayed open, we didn't have a big default rate. Over 20 years,