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Viasystems Group, Inc. (NASDAQ:VIAS), a leading provider of complex multi-layer printed circuit boards and electro-mechanical solutions, today commented on the potential effects of supply issues related to the recent natural disasters in Japan and increasing costs of materials and labor.
“Our company has been working with many other companies in the electronics industry to determine the near-term and longer-term impacts of the interruption of the supply of electronic components from Japan,” stated David Sindelar, Viasystems’ CEO. “While we expect only minor impacts on the flow of supplies directly into our operations, the possible impacts on our customers’ future order patterns have been more difficult to assess. Reports of temporary cessation of production in automobile and other factories suggest that component sourcing matters unrelated to our business may result in customers deferring orders of printed circuit boards and assemblies produced by Viasystems.”
“Developments related to Japan can only compound the cost environment challenges which I highlighted in my comments about the results of our final quarter of 2010,” continued Sindelar. “In addition to mandated minimum wage increases in China, that government has begun imposing employment based social taxes on foreign-owned enterprises like ours. And, a continued tightening of labor resources in parts of southern China is resulting in our company experiencing unusually high levels of overtime pay costs for the workers we have retained. Similarly, sustained high demand for electronic components has allowed materials suppliers to command higher prices for their products, on top of the upward market price effects of globally traded commodities like copper and gold.”
“Our sales & marketing teams and our supply chain management teams are heavily engaged with customers and suppliers to work through the current and longer-term issues stemming from the tragedies in Japan,” concluded Sindelar. “And, at the same time, we are also heavily engaged in negotiations for selling price increases for our products to compensate for the labor and materials cost increases.”