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Feeling the Supply Chain SqueezeJuly 19, 2021 | Nolan Johnson, PCB007
Estimated reading time: 3 minutes
Nolan Johnson speaks with Joe D’Ambrisi of MacDermid Alpha to gain insight into what he’s seeing in the market from his perspective as a specialty chemicals and materials provider.
Nolan Johnson: MacDermid Alpha touches so many different parts of the electronics manufacturing industry. Overall, what does MacDermid Alpha see with respect to pricing changes?
Joe D’Ambrisi: I’m sure your readers are very familiar with the current disruption in the supply chain. It’s apparent in not just the electronics industry, but in a host of other industries as well. We are certainly not insulated from a lot of the issues that we see in the supply chain. As primarily a specialty chemicals and materials provider, we’re most interested and concerned with the chemical markets where there has been a significant amount of disruption, which can be traced to a number of different factors. First, we’re still feeling the impacts of the Texas freeze in February, where some of the basic commodity chemistry producers of ethylene and propylene are located. Those commodity chemicals are the building blocks for many of the specialty chemicals that MacDermid Alpha uses to produce its products.
When you think of all the applications for specialty chemicals in not just the electronics industry, but in many different industries around the world, we’re actually a relatively small consumer of those specialty chemicals. While we have seen significant price impacts as a result of some supply and demand pressures in the industry, we have maintained a supply of every critical raw material that we need to produce products for our customers. To help us mitigate the potential impacts of being relatively small consumers of these specialty chemical raw materials, we have a global supply chain that is very well interconnected, and we have a program of providing both primary and secondary raw material sources for our most critical raw materials.
When you’re globally connected, and you have primary and secondary access to these raw materials, it’s challenging and expensive to stay ahead of it, but it can be done. I’m not so concerned about shortages or our inability to supply specialty chemicals and materials to our customers, but we are seeing significant price impacts to be able to maintain that supply chain.
Johnson: You cite two major factors: lack of availability thanks to the fallout from the Texas freeze, and then supply and demand price pressures with your incoming supply chain.
D’Ambrisi: Correct. Global transportation issues have also added a significant amount of cost and what we believe is a temporary complexity to our business. This has been well-documented in the industry where there has been a shortage of containers for just about everything. For us, that impacts not only some of the raw materials that we source in one part of the world and what is shipped to other parts of the world where there are shortages to alleviate that, but some finished goods that we manufacture in certain parts of the world that we ship internationally, and they need to be shipped in pretty stringent storage requirements. This might typically be refrigerated containers or, in the case of assembly materials, at sub-zero temperatures in which we ship these products around the world.
Johnson: How do you manage these pressures with your customers? What has been the approach up to now?
D’Ambrisi: Our approach up to this point has been to absorb many of these additional costs, where practical, and to pass some of these costs onto our customers. We believe some of these supply chain issues are temporary and short-term, and others will be long-term. The ones we believe are permanent, we will pass those increased costs onto our customers. The ones we believe are temporary, we’ve done a great deal of work, making sure that we simply absorb those costs in the short term and weather this like we believe many of our customers are doing.
To read this entire interview, which appeared in the July 2021 issue of PCB007 Magazine, click here.