Wang: Some of our clients are talking about moving their outsourced manufacturing, mostly to Malaysia or Vietnam, rather than other geographies. As we are a service company, we are expanding our service geography with more local resources and a better supply chain network to support clients regionally. However, the largest amount of demand is still in China because most of the critical and customized components are made in China. We are adding our supply chain resources to help clients organize and manage the sub-supply-chain so we can help to shorten lead time and speed up their supply chain.
EBN: What is the response of your clients to this issue and how can you protect them against the complexities of ever-changing international trade challenges?
Keith: Phil, if we could truly protect our OEM clients from ever changing international trade challenges, I would certainly not be here giving you an interview at 10:00 PM on a Monday night (nothing personal my friend). We can, and are, helping our OEM clients create a more transportable and more responsive supply chain. We are doing that 24/7 for most of our clients including a number of prominent unicorns and Fortune 100 companies. But until such time as we learn how to predict the future with a high degree of accuracy, the best we can do is cushion the blow, and create better responsiveness for our clients so that they can react more efficiently, and more quickly, to a rapidly changing and highly uncertain global trade environment. We can help shield them, but today our services don't yet make them bullet proof when the bullets are coming this fast and furious from so many random directions.
Kury & Yanez: All and all, and as we’ve discussed it together during one of our panel discussions at APEX in San Diego a few months ago, it comes down to the total cost of ownership. Tariffs being a consistent trend now for our industry, we must do the math and provide the analysis to our customers. I think it brings a reality check to a lot of industries and companies where the location of manufacturing was always China, by default. Now Mexico, maybe tomorrow we’ll see tariffs on Malaysia, Philippines or Thailand? If that happens… what country of manufacturing will be the lowest cost, landed, for a given product? What we can do is monitor the situation and provide our customers with valid information, to guide them to the right decision for each product. Transferring a product from one region to another can take from four to eight, or even ten months depending on the complexity of the products. And this might not make sense even with lower tariffs as some of the materials could still be coming from a country of origin subject to tariffs. All of this should be carefully reviewed before pulling the trigger.
Wang: Our clients are really concerned, especially those with consumer electronics products. Industrial and medical device brands are less concerned, because it’s not efficient to change supply chains. Clients are also applying for waiver of the extra tariffs. We are producing cost benchmarks, pros and cons, and SWOT analysis on business, manufacturing, quality, supply chain, etc., all to help them to make better decisions on their supply chain mapping or supply network design. We are also finding suppliers who either have international operations, or have a solid plan to establish new plants develop make joint venture in South East Asia to resolve these challenges.
We also asked the IPC’s Chris Mitchell, how can those concerned can access more information?
Mitchell: IPC is tracking these issues, and we are updating our website to provide a “cheat sheet” on all the issues in play. In addition, companies should track policy developments at on the website of the U.S. Trade Representative. For those companies with implementation questions, U.S. Customs and Border Patrol (CBP) is your best resource. Companies can reach out to the CBP’s Electronics Center of Excellence and Expertise.
How are tariffs affecting your supply chain? What are your chief concerns? Let us know in the comments section below.