Switch prices should stay stable

Despite high costs of raw materials, prices won’t rise

By Jim Carbone -- Purchasing, 9/4/2008 12:14:00 PM

Switch prices likely be stable for the next six months because of high raw materials costs. The good new for buyers is prices won’t increase despite the higher costs that suppliers face.

“We are faced with higher materials costs, but prices will be stable,” says Kiyoko Toyama, president of NKK Switches in Scottsdale, Ariz. “They are not eroding either.”

She says suppliers are absorbing a lot of the costs.

“When you absorb material costs you have to increase your manufacturing efficiencies. That’s what we have done. It has been challenging,” says Toyama. “We’ve have also shifted some production to cheaper labor areas.”

David Webber, director of product management at C&K Components in Newton, Mass., says the price of raw materials is affecting business more than the economic slowdown. “We use a fair amount of gold and now it is $800/oz. The price of plastic has hurt us more than anything else,” he says.

C&K works with its suppliers to try to get a better price and issues blanket orders for materials.

“We also look at plating thicknesses and evaluate whether a product has to be a certain thickness for a certain application,” he says. In addition the company has moved some manufacturing from Newton to Costa Rica and China to reduce cost.

Suppliers are also focusing on value-added services with switches such as cable assembly in an effort to combat higher raw materials costs and maintain or improve margins.

Also see: Switch makers cut leadtimes through process improvements