Who is Being Served in Market Downturn - Customers or Shareholders?

We operate in an exciting industry. Thriving on the technology development from many of the best brands in the world, the electronic components industry has generated periods of phenomenal growth for many of us. That said, there is no question that after a robust two-year stretch, the industry has entered a down cycle. It’s not the first, and it likely won’t be the last.

In fact, since 1980, we’ve been through 14 down cycles. During times like this, you should look closely at what differentiates your design chain partners. You know how they react when things are going well. But more importantly, perhaps, how do they respond when things get tougher for them? Are they looking for ways to continue to serve you, or are they inwardly focused on their own bottom line? Are they laying people off and removing support structures to prop up their bottom line to satisfy their shareholders?

For DigiKey, profits will be down considerably in 2019 compared to 2018, and yet we won’t lose any sleep over that fact. Because the best way to accelerate the turnaround in the market is through innovation and new product and technology introduction from you, our customers. We are counting on it by investing in:

• Even greater numbers of new products
• Adding more and more relevant content online
• Accelerating the completion of our new distribution center
• Expanding our capacity and automation
• Continued investment to improve the user experience of our website

We have no plans for any layoffs or cutbacks. Our people are a huge differentiator, and we have no intention of diminishing that competitive edge for our customers. We have been through this with you before.

Contrast that with some others in the industry, with headlines that include:

“Advance our effort to reduce working capital” (code for slash inventory)

“Drive efficiency” (layoffs of people that were previously supporting you)

“Remain committed to returning cash to shareholders and buying back our own stock” (instead of investing in customer-facing resources?)

Therefore, the real question is whether a distributor can simultaneously serve their shareholders and their customers? And if they can’t, who do you want to be partnered with?

We are trusting you, our customers, will innovate and create the new products that will ultimately improve the overall market conditions and we are here to support that effort. We’re here to serve our customers, not shareholders!