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Trump’s tariffs will come back to haunt him: The US will end up as the isolated party if it ignores the scope of China’s trading potential

Chris Wootton, CEO, Chemigraphic

“As the trade war between the US and China ramps up and President Trump continues to threaten to impose tariffs on imported products from China, businesses across all industries are naturally starting to feel nervous about the implications of such a move. Tariffs will no doubt lead to a multitude of complications across import, manufacturing and retail sectors and the effects will be felt by many.”

“The latest development in the tariff debate has seen China attempt to calm the waters by offering to buy US goods to the tune of $70 billion over the next year if the tariffs are called off, so a resolution may be on the horizon. It seems inevitable that at some point, Trump will have to back down and come back to the table to discuss the issue further, even if it’s not immediately.”

“If the Chinese tariffs are imposed, costs of goods in the USA will increase and, although the consequences won’t be apparent immediately, within 12-18 months, the landscape will change, consumers will start to see the prices rise and there will be unrest and backlash.”

“The fact remains that no country is self-sufficient and the isolation of any nation, whether physical or in terms of trade, is a dangerous proposition. China itself is too large and too successful to be isolated; it makes too much and we buy too much of it for it to be effectively cut off. Even if the US administration does go ahead with its plans, other nations will no doubt take advantage of the low costs, better pricing and widespread manufacturing capabilities that China offers. This in turn will drive the success and popularity of other low-cost regions, and effectively, the US itself will become the isolated nation as countries start to shift their focus elsewhere.”

“As an EMS, the benefits that China offers in terms of manufacturing and sourcing electronic components are too extensive to ignore. We opened our new sourcing office in Shenzhen in January and already, our customers are benefitting from the higher volumes and lower costs  of component parts thanks to the access to China’s pricing structures we can now offer.”

“With regards to the future, I’m sure the situation will produce some fireworks for some time to come, as political tensions rumble on and industry faces the consequences of decisions made by the US leadership. But I’m also confident that it will normalise and calm down over time. Probably via a change in that very leadership….”

Q&A: Graham Hill, Facilities Manager

1. How long have you worked in this industry?

I began my career in 1976 as a 16 year old apprentice with the Mullard Radio Valve Company in Mitcham, Surrey.  Mullard was later taken over by Philips.  Following the successful completion of the four year Philips apprenticeship, I got a job in the factory as a quality and repair technician in the Electronics Assembly Department. After around five years, I changed direction slightly and joined the Central Materials Laboratory running the photography department. Photolithography was how Printed Circuits were produced before the CAD systems we use today were available.  Philips closed this factory in the late 1980s and I continued working with PCB design at PT Barkley and company in Coulsdon.  Wanting to get back to a more manufacturing based job I had the opportunity to join Chemigraphic in 1994 as a production engineer and the rest, as they say, is history.

2. Why did you choose to work in this field?

I was never going to be a great academic, was not interested in performing arts and wasn’t particularly sporty, so it was always going to be some sort of practical occupation for me. I considered farming, civil engineering and building trades but in the 1970s hobby electronics was all the rage and I had the opportunity to build my own hifi amplifier whilst still at school. Having loved this project, I decided that a job involving electronics was the way to go.  The part of the process that appealed to me most was putting things together, which explains my fondness for manufacturing. The best days are always the ones where at the end you can stand back and say “I made that today”

3. What do you love about your job?

The variety. My role at Chemigraphic is very diverse and wide-reaching, and I can honestly say that I can never tell what the day is going throw at me until it starts.  Part of what I do is to define what others are going to be making, be it via technical drawings or via written instruction.  Then there is the face to face part of the job, involving helping our teams assemble things in the best possible way either directly, by observing difficulties or helping them develop techniques to overcome these issues.

4. Describe a ‘typical day’ for you

A typical day will be spent at Crawley ensuring that as another month draws to a close, targets are met, all systems are working, all customers are satisfied, and all staff are comfortable in their roles. Not an easy task, but one I enjoy pursuing!

5. What have been the proudest moments in your career so far?

The successful completion of any project is always something to be proud of. Obtaining the final sign-off from building control for the Mezzanine floor that houses our SMD, PCB and Test departments was certainly one of my proudest moments. This required managing third parties including the local authority to confirm that all regulations regarding fire control, lighting levels, air handling and emergency access were all correct and met legal requirements.

A new project which is just starting now is our Apprenticeship training scheme.  Getting this up and running and seeing younger people successfully complete the scheme and secure good technical jobs will be a very big achievement and one I look forward to.

6. What’s the biggest change or development you’ve seen since working in the industry?

It has to be the digitalisation of almost every aspect of what we do.  In 1976, when I started my career, companies produced PCB assemblies which were every bit as intricate as we do today but just using very different techniques and without a single computer of any sort.  All the way from the board blank layout which was done by line film and photographic techniques to the assembly which was completely carried out by hand.  There were no word processors, no spreadsheets, and no e-mail: things still got done but just in different ways.

Chemigraphic takes steps to mitigate market slowdown in passive component delivery

Chemigraphic, the global design-led EMS provider, is working closely with its supplier network and customers to combat an industry-wide delay on the manufacture and delivery of passive electronic components. Lead times for MLCC SMD Capacitors and SMD Resistors have been experiencing extended lead times or allocation times for the last few quarters, and in some cases lead times are now exceeding 50 weeks.

Through continuous market monitoring and analysis, Chemigraphic has been able to stay on top of this issue and secure large amounts of stock on behalf of its customers to provide sustainable supply. However, the market has tightened further over the last few weeks with many manufacturers of these parts no longer taking additional orders. The uptake in demand is also having a negative effect on pricing, with some prices increasing beyond 75%.

In order to maintain supply levels and keep to product delivery timeframes, Chemigraphic is talking directly to its customers to ask that orders are placed as early as possible to ensure the best possible outcomes and avoid delays and interruptions to the supply chain.

John Johnston, NPI Director at Chemigraphic, comments: “Having once been easily accessible, staple electronic components, these parts have seen a huge increase in demand due to growing markets such as smartphones and electric vehicles. As a result, other industry sectors are seeing a huge squeeze on the availability and delivery times surrounding these components, as well as adverse pricing trends.

“We always ensure we regularly monitor the market to stay on top of such trends, and this has enabled us to increase our stock holding of these parts as this issue develops. However, as our analysis indicates these conditions are unlikely to ease for at least the next 12 months, we are asking our customers to work with us to stay on top of demand and allow us to forward plan as far in advance as possible.”

The above news story has also been featured in the following trade publications:

 Design Solutions

 eeNews Europe

 Electronic Specifier

For more information on this subject, read Jemma’s blog on five steps to efficient EMS sourcing.

Early design engagement with EMS providers is crucial in product development

John Johnston, NPI Director

For years, OEMs across all sectors have traditionally used huge networks of suppliers, all specialising in different areas and working to varying timescales. Now, driven by rapidly developing technology and increasingly demanding consumers, these businesses are being forced to change their supply chain strategies. In turn, they are putting pressure on their suppliers and partners to design and develop products in ever-decreasing timescales, delivering both quality and cost-efficiency.

EMS partners which manufacture customer’s electronic products on a subcontract basis are often presented with a fully-developed and fixed “Design Package” which defines every aspect of the build. Once supply chains are created and commitment is made to EMS processes, material stocks and supplier tooling (which can be expensive in the case of moulded enclosures and specialist metalwork), further significant design changes can be prohibitively complicated and costly.

The most cost-efficient route to market is to establish crucial early engagement between the EMS teams designing and manufacturing the products and the OEMs’ design departments. Getting manufacturing suppliers involved early on in the design process allows them to fully understand the OEM’s business objectives, and apply its own knowledge to positively aid the product development process, identifying and eliminating potential pitfalls and delays.

In electronic manufacturing, a design for manufacture (DfM) approach is essential, as complex components and processes must be handled with skill, to ensure products are both efficient and profitable. In certain sectors, such as defence, security or power for example, additional pressures exist such as hazardous or hostile environments or the need to protect national security. For medical equipment, many of the products created have life-critical uses and so it’s vitally important that they are thoroughly tested at the prototyping stage to ensure excellent performance.

By driving early stage engagement to partner customers through the latter design and product development stages, EMS providers can make sure products are created with optimal efficiency in mind. By proposing sensible, practical, and often relatively minor changes to a product, this approach delivers substantial tangible benefits without disrupting or prolonging the design process or cutting corners in terms of efficiency or quality.

To find out more about early engagement in design, read about our newly opened Chemigraphic design centre.

A more detailed version of this article by John can be found on the Design Solutions website