Issue link: https://iconnect007.uberflip.com/i/1513227
12 PCB007 MAGAZINE I DECEMBER 2023 go from here? ere is concern that the U.S. market will slow. We've had interest rate hikes across the globe, not just from the Fed- eral Reserve, but from the European Central Bank and others. Ultimately, this means slower growth, and a potential recession. ose risks remain acute. Second, as we head into 2024, in every region—and certainly in the U.S. and Europe— there remains a big open question about shi- ing supply chains. Even with all the talk about building greater diversity and resiliency into supply chains, so far, the shis have been quite subtle. What does that mean for the type of investments a company makes and when? What conversations should they have with their sourcing partners or distributors? ere are still a lot of open questions. ird is the topic of inventory management. In the aermath of the pandemic, there was an idea we would move away from just-in-time to just-in-case. But, of course, just-in-case has a cost and it's a harder one to face when interest rates are high—presumably carrying costs are higher, and demand is slower. Company lead- ers should be fine-tuning their inventory man- agement strategy as we move into 2024. is applies not just to inventory, but to equipment as well. Ask yourself: What's my near-term demand? Long-term, what will happen to my demand in the years ahead as my company and custom- ers look to potentially changing their regional exposure? Nolan Johnson: Where do labor and staffing fit into these dynamics? Overall, the demand for workers is starting to settle, but labor costs remain high. Infla- tion rates surpassed wage rates last year and much of this year. Labor groups are trying to recoup some of the purchasing power they've lost, which means that as we look ahead, wage rates will probably accelerate faster than infla- tion. Even when inflation comes down, we will probably continue to see wages moving up. Another facet of higher labor costs is the higher cost of doing business overall. For exam- ple, UPS workers renegotiated their labor con- tract this year. e new deal increased wages and benefits by 3.3% over the life of the agree- ment, but 46% of that will show up in the first year. is will inevitably result in higher trans- portation costs for businesses. Johnson: Shawn, what's your take on how we compare to U.S. manufacturing, in general? On one level, a rising tide lis all boats. Man- ufacturing has done well. We've seen job growth, an increase in output for many sectors, and general improvement across the manufac- turing economy. e defense and aerospace sectors have been growing pretty well, and that has benefited elec- tronics manufacturers in the U.S. because we have pretty high exposure in those areas. Con- sumer electronics did very well right aer the pandemic but have faced more headwinds this past year, and probably will next year as well. at impacts Asia more than the U.S. because it has more exposure to consumer electronics than the U.S. does. In some ways, all manufac- Shawn DuBravac