Good interview. Talks about many subjects that the US audience would do well to hear, pundits and pols especially.
Can't emphasize enough the downstream impact of manufacturing inputs and spare parts. US manufacturing very often has a "layercake" structure with independent specialty businesses stacked up. Pricing locked by multi year contracts, and exposure to key components becomes concentrated for individual suppliers at component or subassembly level. So scenario where there's a "golden screw" type of input, the end manufacturer might happily pay 10x for something that's 0.05% of *their* BOM cost, but they're not the ones buying it. And the situation is different for the tier 4 supplier who imports the unique item, and the tier 3 supplier who purchases it for a subassembly (or a manufacturing tool needed to commision new production lines!). Esp in cases where the unique item is 20%+ cost in the tier 3's BOM, ie enough to put the tier 3's business case in question too. So they can have a complex negotiation involving both upstream and downstream biz partners. Re-opening the price question during what's widely expected to be an inflationary period! Or they can declare an informal force majeure, pause shipments, and wait for the whole crisis to get called off by the White House via skillful diplomacy - or alternatively wait for third-country tariff evasion trade to get set up. Net result: delays, extended lead times, and at the end a price shock.
So all this takes time to manifest, and that goes to the question of China's willingness to compromise in the short term (months) timeframe. Beijing I think should logically expect their negotiating position to improve in a quarter or two, when the effects on the US side manifest themselves in full. IMHO a fast deal requires a near total walk-back by the Trump team, which might be more than their conception of the US position can bear. IOW we're likely going for the ride.
The intense competition and profit margins being driven to zero rings true. I’ve heard stories of small firms taking deals they know will lose them money so that they can get a foot in the door and hopefully make money on future business. The first deal is like an audition.
Mr. Collins is a very knowledgeable and interesting guy, making for a very interesting conversation. One thing I found interesting was that you both claim to be MAGA, but you often describe how wrong Trump's policies are. To me, Trump is in way over his head. He is narcissistic, a blowhard, and you can not trust anything he says. He seems to operate on a stream of consciousness.
Good interview. Talks about many subjects that the US audience would do well to hear, pundits and pols especially.
Can't emphasize enough the downstream impact of manufacturing inputs and spare parts. US manufacturing very often has a "layercake" structure with independent specialty businesses stacked up. Pricing locked by multi year contracts, and exposure to key components becomes concentrated for individual suppliers at component or subassembly level. So scenario where there's a "golden screw" type of input, the end manufacturer might happily pay 10x for something that's 0.05% of *their* BOM cost, but they're not the ones buying it. And the situation is different for the tier 4 supplier who imports the unique item, and the tier 3 supplier who purchases it for a subassembly (or a manufacturing tool needed to commision new production lines!). Esp in cases where the unique item is 20%+ cost in the tier 3's BOM, ie enough to put the tier 3's business case in question too. So they can have a complex negotiation involving both upstream and downstream biz partners. Re-opening the price question during what's widely expected to be an inflationary period! Or they can declare an informal force majeure, pause shipments, and wait for the whole crisis to get called off by the White House via skillful diplomacy - or alternatively wait for third-country tariff evasion trade to get set up. Net result: delays, extended lead times, and at the end a price shock.
So all this takes time to manifest, and that goes to the question of China's willingness to compromise in the short term (months) timeframe. Beijing I think should logically expect their negotiating position to improve in a quarter or two, when the effects on the US side manifest themselves in full. IMHO a fast deal requires a near total walk-back by the Trump team, which might be more than their conception of the US position can bear. IOW we're likely going for the ride.
The intense competition and profit margins being driven to zero rings true. I’ve heard stories of small firms taking deals they know will lose them money so that they can get a foot in the door and hopefully make money on future business. The first deal is like an audition.
Mr. Collins is a very knowledgeable and interesting guy, making for a very interesting conversation. One thing I found interesting was that you both claim to be MAGA, but you often describe how wrong Trump's policies are. To me, Trump is in way over his head. He is narcissistic, a blowhard, and you can not trust anything he says. He seems to operate on a stream of consciousness.