Timothy L. Main: We would like to see consistent results first and keep the pressure on the people that run that sector for us and so we need to see more than one data point on the chart. But it certainly fits with our strategic outlook and there’s no reason that it cannot conform to our financial objectives. We have a high level of commitment to make this work but to be fair, we’d like to see two or three quarters of improving results before we would take the pressure off the people running that business.

Alexander Blanton (Ingalls & Snyder): Reuters reported on the weaknesses in Foxconn and Commpow and blamed it on possible labor cost increases and other cost elements in Asia for those Asian companies and your competitors. Could you comment on how that might affect you and what the differences might be between what their experience would be?

Timothy L. Main: One of the dynamics that happened after the 2001 to 2002 recession is there was a headfirst move to China as companies legitimately uprooted to reduce costs and rationalize the supply chain. A very attractive solution was a fixed base of operation with everything in one place. It is about building in the cheapest location in the world and exporting from there. What we will see going forward is OEMs really desiring to have a more diversified global footprint.
Therefore the companies that fail to invest in global IT systems, sophisticated demand/supply management tools, order fulfillment capabilities around the world, develop the capability to transition production from one location to another globally, either for cost or customers to opportunistically generate market share within targeted markets like the BRICs, will reap no benefit going forward.
Aside from the escalation of taxes and labor costs within China, is a fundamental increase in logistics costs around the world and as fuel prices continue to increase, logistics costs will increase and OEMs will offer to reduce their carbon footprint around the world and they will continue to get pressure from NGOs and others to reduce the complexity and the amount of logistics that they employ to get their product to market. All this will play into fundamentally strong broad-based global footprint supported by the world-class sophisticated IT systems. Looking forward, the types of strengths that Jabil can bring to the table will compare very well against the other choices in the marketplace.
I don’t know if that has anything to do at all with weakness in stock prices in North America or China, or Taiwan. However, if you invite me to get on the soapbox and talk about a relative advantage or disadvantage, that would be my point of view on it right now.