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Ivey on the U.S. CE Recession, China’s Inflation and Protecting Free Trade

July 2008 By Loyd Ivey, Chairman and CEO of Mitek Corporation
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(As told to Janet Pinkerton):

The electronics industry has been in a recession for over six months.

There’s going to be great opportunity in our industry today, but there’s going to be two kinds of businesses this year and next year: the quick and the dead. If you’re not totally involved in your business, I’m recommending you get out quick.

They (higher prices) have been hitting, but (U.S.) retailers have refused to accept the price increase so distributors and manufacturers are being squeezed out. The large big boxes are continuing to dig in their heels, saying ‘We do not to accept price increases.’ They’re squeezing their vendors to the point of collapse. I expect to see severe implosion in our industry, and all the small companies will disappear. You will see this in mobile audio during January CES. In the North Hall, you will see an incredible amount of open space.

The next thing China will deal with is incredible inflation. The price of copper is going up 400 percent in China. Labor costs are outrageous and they are increasing. They’re talking about cutting power during the Olympics, talking about shutting down factories for four months in order to clean the air, to show China has clean air. Because of the Olympics and the factory closings, we’re facing a severe product shortage when the holiday season gets here, and the prices are going to be outrageous.

All this rhetoric that we’re hearing in the Congress, in the Senate, during the elections-about ‘we’ve got to build a wall around America. We’ve got to stop free trade, protect the union jobs of America.’ When I saw Barack Obama and the president of the Teamsters Union James Hoffa Jr. in Hershey, Pa., sharing the same stage and the same microphone, talking about how to bring back American jobs and empower the unions to make America better-it’s very scary.

I’m talking about peace through trade. We’ve got to have free trade and fair trade.

I had a (global distributor) meeting in Germany recently. We had Israelis, Iraqis, and Iranians. They all sit at one table, and they talk about how we can work together and sell our product throughout the Middle East. We had people from France, Italy, Spain, North Africa at that meeting. You don’t shoot your customer. Real trade and fair trade break down all the political rhetoric.

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