We talk to Eric J. Halvorson about how the distributor DigiKey is affected by the current political tensions between the US and China, how supply chains are nevertheless to be secured and how the company intends to continue offering its products at fair prices.

Which (new) products and technologies does Digikey offer specifically for plant and mechanical engineering – and how do they support the trend towards digitalization?

Eric J. Halvorson: As an e-commerce distributor, DigiKey works diligently with our best-in-class supplier partners to ensure we carry the inventory on the products customers need, when they need it. From sensors to drives, customers can find it at DigiKey. We now offer products for smart manufacturing to help future-proof designs. Whether that is a TeSys Giga smart motor starter from Schneider Electric, or a V20 Drive from Siemens, DigiKey carries the products needed to support smart factories of the future.
 

How does Digikey support customers in plant and mechanical engineering in the implementation of automation solutions and the integration of IoT technologies?

Eric J. Halvorson: We support the customer in several ways. First, DigiKey has a one-to-many approach when it comes to providing technical support and assistance. We offer the customer the ability to self-serve through documentation available on our website in the form of data sheets, CAD models, instruction manuals, videos, articles, blogs, webinars and especially our TechForum. Here customers can help each other, talk to technicians and engineers at DigiKey and, in many cases, even talk to the supplier directly. There are FAQs, how-to guides and much more. Customers can also speak with one of our technicians or engineers live on the phone and through webchats. DigiKey has a variety of tools to help customers do their jobs - from punchout catalogues to APIs, we support customers with their designs and connect them to the technical support they need.

DigiKey also carries a wide variety of IoT products to support plant and mechanical engineering customers including cellular plans, gateways, routers, RF Cable builders, antenna builders and more.

To what extent do the current political tensions between China and the USA affect your supply chains? How do you continue to ensure a stable supply chain?

Eric J. Halvorson: Our strategy does not waver as various geopolitical tensions arise. We want to be the first choice for all engineers when they start their designs and new product introductions. We continue to work with our suppliers to ensure DigiKey has the widest selection of inventory available to sell, regardless of the geographic markets they serve, supply chain constraints and any other issues the industry navigates.

Regarding supply chain stability, DigiKey offers a robust supply chain management system to ensure the timely delivery of components. Our supply chain offerings include visibility into orders, returns, forecast constraints, inventory, shipments and invoicing. We provide this via the web or an API, enabling flexibility and resiliency throughout the entire product life cycle, beginning with new product introduction (NPI) and working through production and end-of-life (EOL).
 

What measures are you taking to minimize risks from potential trade restrictions or tariffs?

Eric J. Halvorson: Navigating tariffs can be challenging, especially with recent and upcoming changes, but DigiKey is here to help. DigiKey’s dedicated team works with our supplier partners to develop mutually beneficial import solutions, reducing financial impact and safeguarding your bottom line.

Partnering with DigiKey’s Foreign Trade Zone (FTZ) program allows DigiKey to become the Importer of Record (IOR), handling paperwork, declarations and tariff management, resulting in lower costs and more competitive prices.

The new 301 tariffs, which took effect this year, will not impact European customers. We will continue to monitor and evaluate any new tariffs to ensure minimal disruption, and we’re committed to keeping our customers informed.  

We are buying ahead when it is appropriate based on current stock. It’s essential for our customers to recognize that tariffs are a tax mandated by the government and not an additional charge from us. We are committed to providing products at fair prices, and these adjustments reflect only the unavoidable costs of tariffs, not an increase in our margins.
 

Are there alternative suppliers outside of China that you are considering?

Eric J. Halvorson: For all the geopolitical issues affecting China, one silver lining is that many of the surrounding countries, like Vietnam, South Korea and Malaysia, are benefiting. We continue to stay nimble, focus on where people need us, and show up when they need us to. 
 

Which components are currently most affected by price fluctuations?

Eric J. Halvorson: Price fluctuations are a natural and expected part of any market. Supply and demand and external factors like tariffs and supply chain issues can influence the price of goods. Over time, we have experienced price fluctuations in a variety of components. The market is continually changing and we haven’t seen a specific component type see the most fluctuation.
 

What strategies are you pursuing to ensure price stability for your customers?

Eric J. Halvorson: To support our customers and offer them as much price stability as possible, we focus on supplier collaboration, inventory management and proactive planning. We maintain regular communication with suppliers to receive timely cost updates, ensuring pricing strategies reflect current market conditions while avoiding unexpected fluctuations. Holding inventory helps mitigate the volatility of immediate orders, offering customers consistent pricing despite market or supply chain variability. We work closely with suppliers to anticipate cost changes and develop plans that minimize disruptions to customer pricing.

Additionally, we continue investing in our web tools and digital solutions, including scheduled orders and myLists, to make searching and purchasing easier and more cost-effective.
 

How do you assess the current economic situation of the mechanical and plant engineering industry in Germany?

Eric J. Halvorson: The economic situation in Germany has been difficult for the past five years. Like many industries, this has affected the mechanical and plant engineering industry, specifically the automotive industry. Rising energy costs, inflation, stronger competition from the US and China, and the looming possibility of tariffs have contributed to stagnant growth.

However, the German mechanical and plant engineering industry is poised for significant growth in the near future. While navigating current economic headwinds, the sector is embracing innovation and digital transformation to emerge stronger than ever. Key drivers for growth include Industry 4.0 and 5.0, the growing global emphasis on sustainability, and the expansion into new and growing markets, particularly in Asia and Africa.

By leveraging the power of Industry 4.0 and 5.0, embracing sustainability, and partnering with companies like DigiKey, the German mechanical and plant engineering industry is well-positioned to thrive in the future.

What impact are the economic challenges having on demand for electronic components in this sector?

Eric J. Halvorson: Right now, there is still a lot of uncertainty, particularly in the semiconductor space. There is more inventory in the channel than has been in recent years. There are pockets of optimism but with inflation still rather high and concerns for the current geopolitical climate, we expect this will continue to fuel uncertainty through the first half of 2025 and possibly beyond. 
 

How do you support your customers in mechanical and plant engineering in managing economic uncertainties?

Eric Halvorson: We support our customers the way we always have during good times and difficult times. As a stocking e-commerce distributor, we can weather geopolitical and economic turbulence by leaning into that strength. Whether the customer is looking for a capacitor, or a motor drive or even a robot, DigiKey continues to be the reliable source in providing the customer quality products at a quality price and in a timely manner. (agry)