Dr. John Mitchell: IPC’s Ongoing Efforts Related to COVID-19
On April 14, IPC president and CEO, Dr. John Mitchell, described IPC’s ongoing efforts related to COVID-19 with I-Connect007 Publisher Barry Matties.
From a standpoint approximately 30 days into the U.S. shutdown, Mitchell reported that 94% of the executives attending the executive forum are expressing concern. He also outlined many of the chaotic drivers and influences in the industry, including shifting over to different, mandated products; supply shortages; potential declining demand for normal products; and increased shipping costs. Worker and staffing shortages have also become an emerging concern.
Mitchell’s opinion was that there are numerous indicators that an economic comeback is in the offing, but with some “drag” on the system as it restarts. The industry is responding well overall.
While ventilator manufacturing is a high priority, only properly qualified manufacturers can build medical equipment. Nevertheless, Mitchell pointed out that there are shifts in the market that touch everyone. As the ventilator needs wane in the coming weeks, the market will likely move closer to normal. Mitchell noted that China today shows a market engagement closer to 90% or 95%—not quite fully recovered but well on its way.
Lastly, Mitchell shared his pride in the cooperative response to this challenge shown by the electronics manufacturing industry and offered a reminder to pay attention to the real numbers and the statistics—not just the fear.
I-Connect007 continues to deliver original reporting and coverage of the electronics design, electronics manufacturing, and contract manufacturing industries, including up-to-date information from the companies, associations, and supply chains globally. Find the latest news and information at www.iconnect007.com, and on our new topic bulletin board, “Industry Leaders Speak Out: Responses to COVID-19 outbreak.”
Barry Matties: Welcome. Today, I’m speaking with John Mitchell, president and CEO of IPC. During the global shutdown, which has reached about 30 days here in the U.S., we’ve talked to John several times regarding the state of the industry today. We’re getting another update. John, welcome, and thanks for taking the time for this interview.
John Mitchell: Thank you, Barry.
Matties: Let’s start with an overall update on the state of the industry, please.
Mitchell: As you know, we’re doing an executive forum where we invite the executives from across the industry globally to join us and share in a very safe environment the challenges they’re facing, their concerns, and what other people are doing so that the industry can learn faster from each other to respond to this pandemic crisis. At the one that we just finished, the concern at the executive level was higher than it’s ever been. We did a quick poll, and 94% were either somewhat or extremely concerned. That is way up, as you can imagine, with a lot of these shelter-in-place rules.
There are several things that the industry is concerned about. One, of course, is weak demand. We’ve seen a lot of shifting back and forth in terms of demand for specific products, but also having to shift focus over to different products that are in higher demand now and being mandated. You have a very large concern from the majority of the group on weak demand for their current products and services. There’s also a very strong concern about supply shortages.
Another thing is about a third of them are facing is worker shortages. Many are under shelter-in-place orders. Most of what I’ve heard from electronics manufacturing facilities and factories is they are making it optional for their employees to come and work in the factory. Now, they’ve changed the layouts of those factories to try to be safer and maintain social distancing within the factory. They’ve also changed boundaries for people as well as the timing of various shifts. Instead of having a half-hour to an hour overlap, you might have a half-hour to an hour gap between shifts, more staggered lunch breaks, and things like that to try to keep people safer.
But with that, we already were very strained in the industry. We have been for years in terms of having worker shortages. Now, this just adds more to that. If you have an employee who’s concerned, they might not want to come out during the shelter-in-place. And as we’ve talked about on other occasions, there’s still some confusion and disparity between states and the way certain shelter-in-place rules are being put into place; all of that is coming together.
The last area is shipping costs. We have one factory that has been asked to help build PCBs for the ventilator shortage that is happening in North America. They’re building those boards, but once they built them, they’re shipping them to another manufacturer in China to have them populated because they’re more capable of doing that. They populate them there, and then they’re shipping them back. With shipping costs being higher, not only does that add delays, but it’s also driving costs up as well. There’s a large, chaotic set of circumstances that are keeping the entire industry on its toes and making everybody’s life not only challenging but ever-changing.
Matties: That’s certainly the case.
Mitchell: That was a long answer.
Matties: That’s quite all right. It’s comprehensive, and as we’re moving into the conversation of the economy re-engaging, there are going to be new challenges. You’ve mentioned a few supply chain employees. What challenges, aside from those, do you think we’ll face as the economy re-engages?
Mitchell: I’m an optimist. I have to just say that upfront. My view of things tends not to be as doom and gloom as maybe some others might be. I’m actually seeing some rays of sunshine starting to sneak through the slats of people shuttering their doors—little positive signs where people are saying, “This is starting to happen,” or, “We’re looking to do this or we’re re-engaging in this fashion,” that I see as positive indicators that, in some states, people are claiming the curve has flattened. The cases are dropping, and the rate is slowing—that sort of thing. I’m encouraged that there could be a shift to come back. But even when that happens, there’s going to be a little bit of drag on the system. It’s not like everybody turns around and goes, “Great, everything’s normal next week. Let’s go back to the way we were operating.” As you mentioned, the supply chains have to make sure that all those products are available, and then demand has to pick up.
There’s been a big scare across the globe, especially as you think about consumer products. People have to get comfortable with, “I can act normally again,” as opposed to, “I’m just trying to worry about whether I can buy toilet paper.” Some of those attitudes have to change for things to flow back. But I am confident that we are responding well. There are still areas that we need to improve. I use the example of ventilators. There’s still a demand for those, and there is a challenge in trying to find qualified manufacturers that can build the parts for it in the proper way. It’s not like you can go down to any board shop and say, “Build this for us.” You’d need to be doing it in the proper way because you don’t want to have that ventilator break down on you.
There are still challenges, but we are hopefully moving more toward handling those challenges and then soon thereafter, trying to move things back to a little bit more normalcy. The challenges will be in, first—as the industry pointed out—how quickly will the demand return will be the big question. Once you have the demand, getting the right parts going forward will be a concern.
Matties: We’ve mentioned it several times, but ventilators and medical products are strong drivers in our industry right now. And those orders will start to subside as the curve flattens and the need for ventilators diminishes. What sort of forecast does IPC have for once that happens?
Mitchell: We don’t have a specific forecast for that. That’s a great question. Maybe it’s something that I can ask in our upcoming meeting in terms of how you will respond if you’re not building ventilators. Not everybody is building ventilators, though. Let me maybe respond to it in that fashion. There are only certain organizations that have the credentials to work on these products. As far as I’m aware, no one has come out and said, “We’re willing to release our quality standards on ventilators so that anybody can build them,” because that’s not going to help anyway. If your life depends on a ventilator, and suddenly it fails because it didn’t go through the right reviews and quality regulations, then that’s a problem. Only certain organizations can do that, but there are a lot of shifts that are going on in the marketplace. If that changes in two weeks or a month and we suddenly have enough, a million ventilators will have been created, and supply will be at parity.
At that stage, there will be a little bit more calming in the market, and people will start shippingf their normal goods. With the workforce shortage will, I don’t expect things to go back to 100% right away. I just shared an update on the China piece on LinkedIn. Today, China is somewhere between 85% and 98%. In February, they were trying to get to 50%, and in March, they were flirting with the goal of 80%–85%. Now, we are mid-April, and they’re still not 100%, so it’s going to take some time to ramp up for all those same reasons. People don’t want to have a relapse of the virus, so there’s still limited transportation and changing how you work, but it will come back.
Matties: Regarding ventilators, it’s not just the actual bare board fabricators, but it’s the base materials and components. It’s a strong driver throughout the entire supply chain for us right now. It will be interesting to see what your committees or teams come up with to that forecast or what impact they feel it will have. I know you’re an optimist, but what sort of concerns do you have for the industry right now?
Mitchell: One of my concerns is that right now, people need to pay more attention to the real numbers as opposed to the fear. It is a disease or a virus or a pandemic that can impact you. But when we look at the actual numbers, the U.S. has become the most infected country in terms of cases. But what are the real risk factors, and how are we mitigating those? We’ve seen several different, more famous people in the news saying, “So and so has contracted it.” I haven’t seen any case where those people have died from it. We’re figuring out how to manage it. If we can manage that fear, then we can come back. But if we can’t manage that fear, it’s just going to slow things down. And my concern, frankly, is fear sells in the larger news pieces. If we can’t start reporting on here’s how to be safe, such as success stories and survival cases, then we’re just going to propagate that fear even further, longer.
Matties: Do you have any closing thoughts or stories of humanity, if you will, that you want to share?
Mitchell: At some point, this is going to touch all of us personally. I have a nephew and a cousin who contracted it, and they’ve weathered the storm. I joked with them and said, “We need to get your little antibody badge so that you can walk around and everybody can say, ‘That person is safe.’” Please don’t take my advice as being from a medical professional at all. We’re all going to be impacted in some way by this, I imagine. We need to recognize that. In our case, fortunately, no one has been fatal in our organization. I am impressed by and proud of this industry. We are stepping up and helping be part of the solution. People aren’t quibbling about, “This is my business or that business,” at all. The industry is sharing best practices with each other in trying to help each other.
Now, this is not an unusual thing. This has been going on, but in this time of crisis, we’ve seen it highlighted even more in how the heads of these organizations that build the electronics, save lives, make our day to day better and are working together to try to make sure that everyone as an industry is successful so that, in turn, the world can get back to being a safer, happier place.
Matties: Those are great thoughts, John. Again, thank you very much for taking the time to help keep our industry well-informed.
Mitchell: My pleasure.
Matties: Once again, you’ve been listening to John Mitchell, president and CEO of IPC.