Issue link: https://iconnect007.uberflip.com/i/1513227
DECEMBER 2023 I PCB007 MAGAZINE 13 turing has benefited from the changing senti- ment in the world. Matties: I'm curious about risk factors as we move into 2024. What should assemblers and fabricators take into consideration regarding investment strategy? e number one risk factor is the significant shi in the economic environment. We have seen interest rates move higher and more quickly than in the past. Monetary policy tightening has been pronounced, and it oen takes about six months for interest rate hikes to transmit fully through the economy. ere is a significant risk of a real slowdown in eco- nomic growth next year. However, I'm opti- mistic there are still a lot of investment dol- lars in certain areas and electronics may ben- efit from that. A second risk concerns the major geopoliti- cal risks in areas like Ukraine and the Middle East. China is also facing some real economic headwinds with high unemployment among its youth. Companies are looking to shi their supply chains to investment in new geographic areas, like Southeast Asia and Mexico, which puts China at risk. Matties: Let's talk about board pricing. I often hear fabricators say they're getting beat up on price, so does the price of boards match reality? What do you see? ose battles will probably continue. e cost of materials, inputs, and labor is still high. We know that any destabilizing factors in the geo- political environment can drive prices higher. Oil prices are high, and I don't think we will get back to the pre-pandemic level of $35 a barrel anytime soon; the new norm is maybe $60–$70 a barrel. We see these dynamics playing out as input costs push higher while companies try to contain costs. All these fac- tors contribute to a continued con- versation about board pricing. Matties: Everything you're saying suggests now is the best time to focus on operational effectiveness. Lower your costs because, inherently, there's a lot of waste in the man- ufacturing process for those companies that aren't paying attention. That's one thing that you can absolutely control to drive costs down. at's right. As demand continues to improve in North America due to supply chain resil- iency goals, companies will begin adding capacity, and by definition, the newest tech- nology. It all means companies will be more productive and efficient. Keep in mind that the U.S. and Europe aren't just competing with Asia like they were five to 10 years ago. Now you're competing against other companies in your part of the world that are building more efficient capacity through newer equipment. When you think about becoming more efficient with your resources, consider the cost perspective as well as what other companies in your geography are doing. Johnson: There's a lot of discussion here about the potential to grow through invest- ment, but banking right now is somewhat unpredictable. What's the best way to handle this situation? Banking costs have gone up. It's not like the 2008-09 financial crisis, where big banks cut back on their lending. During that time, I would hear almost daily from companies that were having lending issues with banks. For example, a company would have a loan on a