May 31, 2019, Vancouver, WA: Local electronics manufacturer ControlTek hosted the New York Times this month to discuss the continuing U.S. and China trade tariffs, which affect many of the components frequently found in our electronic products. Today, President Andy LaFrazia was again featured on CNN’s Newsroom.
With 140 employees employed at the company’s 38,000 square foot manufacturing facility, ControlTek is one of many local manufacturers facing the uncertainty the tariffs have raised. Unlike larger multinational manufacturing companies, U.S. manufacturers are greatly affected by tariffs imposed on China and must move quickly to address the impact on their customers’ supply chain.
By the Numbers
First 800 items affected by August 2018 tariffs for 25% tariff; another 10% tariff has affected other materials used in the assembly of electronics
COGS have gone up 3% as of fall 2018; they were raised another 2% in the winter, prior to the latest tariff announcement
ControlTek has already taken several steps to protect the company and its customers, including transitioning material purchases from China to other countries like Malaysia and Taiwan, as well as updating the company’s ERP system to include country of origin and harmonized tariff codes to track ongoing costs.
“The tariffs can be viewed as a political challenge, but to us they pose a new business opportunity,” says ControlTek President Andy LaFrazia. “The new tariffs are an obstacle to overcome for our customers.”
This approach requires frequent, open communication with customers. Candid conversations around which costs will need to be passed on as well as which components can be swapped out and replaced with alternative parts are necessary in order to stay ahead of rising costs.
“Transparency with our customers has never been more important,” adds LaFrazia. “We can only maintain our customers’ trust if they know exactly what we’re doing and why. That means total honesty, so they’re never left feeling like we are hiding costs.”
The Pacific Northwest electronics manufacturing industry is of particular interest as it pertains to the tariff discussion because of its geographical proximity to China and electronics being its number one export. ControlTek in particular was selected not only because of the company’s size, but also the proactive stance the manufacturer has taken in dealing with the tariffs.
Founded in 1971, ControlTek is a Service Disabled Veteran Owned Small Business (SDVOSB) that provides custom electronics design and manufacturing services for aerospace, medical, semiconductor, military and consumer markets.