Distributors warned over cost bases

Distributors warned over cost bases
Mick Elliot Distributors were warned last week that they must tackle cost bases as their margins continue to take a battering. The message from Brian Rooney, v-p sales for Burr Brown was blunt. “In 1990 margins were 30 per cent, in 1998 they have declined to 20 per cent.” Rooney believes the industry has not seen the end of this decline. Rooney told distributors at the gathering of members of the industry trade association Afdec that one route to improved margins was producing proprietary products and moving away from commodity. “We must try to move the customer up the technology chain by designing in a proprietary product which eliminates any competition,” he argued. He was also concerned about the role of contract manufacturers. “They have no perceived value of the work which we may have done to a design. They can beat the price to death and they need to,” said Rooney.


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