Estimated reading time: 4 minutes

It's Only Common Sense: What's Fair is Fair

Editor's Note: To listen to Dan's weekly column, as you've always done in the past, click here. For the written transcript, keep reading...In the past month I have heard no less than three times about companies asking--demanding--that their PCB suppliers take 20% off the price of their boards. Not just the new part numbers, mind you, but the part numbers they've been building for years. Really? Are they serious? Have they already forgotten the beating down they’ve done to get the price they’re getting currently? Do they really think these board shops have another 20% to cut? Do they think that margins are already so high there will not be a problem taking another20% out? What do they think our margins are anyway?

That's just the point: They don’t want to think about it because they know better. The front line guys who purchase the boards know full well that we don’t have another 20% to give them. Hell, they still have fresh blood on their hands from the last time they squeezed it out of us! They know that if we had another 20%, their job as professional squeezers hasn’t been very effective. And, yes, they know that isn’t the case.

The guys buying boards from us know better; they know we don’t have another 20% to give, so that when we squeal and cry and tear our clothes and gnash our teeth, they just point to the man upstairs. No, not the "Big Man" upstairs, but their big bosses, the guys at the top, the guys who only care about making their bottom line look sweeter by squeezing the sweat out of their low chain of command vendors--vendors like PCB fabricators. Those proverbial heard, but seldom seen, corporate leaders that get out of bed one day and declare their company needs to take 20% out of costs across the board (pun intended). That’s where this edict comes from, an edict that, in terms of the board fabricators, makes no sense at all.

But these big corporate leaders don’t know what 20% means to the freshly-squeezed vendors at the bottom of the chain. And they don’t want to know. Like the Sheriff of Nottingham, they just want more and more out of those below them--no matter the consequences.

I know that sounds a bit dramatic, but is it, really? I sometimes have to ask what the difference is between our customers’ edicts to get another 20% out of us and the fast food corporations who so underpay their workers to the point that they recently started giving them advice like, “Cut your food into smaller bites and it will last longer,” or "Cash in any Christmas presents you get and add the money to your budget,” or this gem, "Don’t complain and your life will be happier.” These quotes are all accurate and taken from real documents that McDonald’s and their friends have been giving to employees. There's not that much difference between those guys and the guys who want us to take just another measly 20% out of our prices, not in my book, or in my column.

Maybe those guys, our customers, should issue a document to us? I see all kinds of “helpful” suggestions they could make to help us lower our costs an thus meet their prices. Here’s one that might work, “Go to your vendors and have them lower their prices to you by 20%.” Or “Put more part numbers on a panel regardless of the exposure that will give to your quality level.” Or “Bring your employees’ hour wage back down to the minimum wage allowed by the government,” or (here’s a great one), “Stop it with the employees’ health insurance; once you have them on minimum wage they can qualify for Obamacare,” or "Look the other way on that ITAR thing; we won’t ask and you won’t tell.” I think they're already using that last one.

All great suggestions to get that price of ours down to the 20% they need from us. Yes, all very helpful indeed. After all, as they’ve been telling us for years, they only want to help, they're only looking out for us, and they're our partners, aren’t they? At least until we stop lowering your prices.

But, then again, they don’t much care what happens to us. If you own a board shop and you go out of business, so be it--you just weren’t smart enough to compete in today’s world market. You just didn’t have what it took to make their grade as a supplier. And, as far as some of your customers are concerned, you’re just another one in a long line of American PCB vendors to bite the dust and they’re used to that. And when you’re all gone…well, there’s always China, right? It’s only common sense.