With Pat Moffett, vice president, Audiovox Electronics

With Pat Moffett, vice president, Audiovox Electronics

Pat Moffett is vice president of global logistics and customs compliance at Audiovox Electronics Corp., a wireless communications and consumer electronics company based in Hauppage, N.Y. He has been with the company for 24 years, and earlier spent 10 years in the steamship industry with APL, "K" Line, MOL and Zim. He is the founder and chairman of the Long Island Import Export Association, and is the author of the forthcoming book, "Fortunate Soldier," about his experiences in Vietnam in 1968-69.

Q. How has the post-Sept. 11 security environment changed how you deal with Customs?

A. When everything went electronic, you didn't know who your import specialist was. It was a piece of paper. But as an old-timer, I always believe in keeping visibility, letting the people at Customs know who you are. Sit in front of the Customs people, present your company and changes in your product line, so they don't have to come and ask you. That's the key. I go to JFK Customs and spend time with them. I bring catalogues and annual reports. I say, "Here is what our plan is, our new countries of origin," new toys as we call them. They like that because they don't have to send me a Form 28, asking all sorts of questions. It's all there.

Q. What are you spending most of your time on this year?

A. The biggest thing was writing the compliance manual, which I finished recently. That follows from Customs' intention to have senior executives know what Customs issues are all about. I'm having internal meetings with upper management, CEO level, as well as departments such as purchasing and accounting. They have all been issued the compliance manual. They become part of the team, which never existed before. All they asked was, "Is my ship in? Has my product cleared? When am I going to get it?" Now they are learning about what Customs rules are about and why they are so important. DVD players have lasers, for example, and lasers could be detrimental to public health, and that gets the Food and Drug Administration involved. Those are the things they are learning now, the nomenclature of the whole trip, from buying to arrival. They never knew this before. They'd say, "You're doing a great job, things are terrific," but the only question I ever got was, "Where is it and when am I going to get it?" It's all about how you manage the business of Customs internally within your corporation - that is what Customs wants to know.

Q. How has your use of different transport modes changed?

A. Airfreight over the past 10 years has grown. We're spending $18 million per year on air; with ocean, we're probably spending $3 million to $4 million per year. Ten years ago it was more balanced. In the telecommunications part of our business, given the demand for cellular phones, you have to have product now. Verizon says, "I need 20,000 pieces next month." We have no time for a ship so it's air it, air it, air it. One of the other needs for air is that manufacturers sometimes have trouble meeting production deadlines. They say it will be ready on such and such a date, but then, guess what, it's not. But if you have committed to Target or Best Buy, you can't get out of that commitment. So the only way to get it to them on time is airfreight.

Q. Last month Audiovox announced that it had completed its acquisition of the audio business of Recoton Corp. How will that affect your end of the business?

A. Recoton moved about 2,200 40-foot containers a year before they went into bankruptcy. Their brands include Jensen, Advent and Acoustic Research speakers. We're going to be taking on a lot more volume, probably not the full 2,200, but we look at Audiovox, which has 1,500 40s, and we will probably double that.

Q. Are there other logistics strategy issues you're dealing with?

A. We brought in a consulting company to look at our customers in terms of where they are based domestically. We want to make sure our facilities are big enough to handle the business we ship to them. Maybe we should be closer to a port? We're a 100 percent import company. I want the option of mini-landbridge and all-water on ocean shipments from Asia. One of the reasons all-water is important is that we have gotten more into consumer home audio. With a home entertainment center that comes in a 7-cubic-foot box, there are only so many of them I can get into a 40-foot container. The gross profit margins aren't that big to begin with, so any savings we can get on the ocean side makes a big difference. Five years ago I probably didn't put one container all water. Now I'm doing 10, 15, 20 per month. It's a 40 percent reduction in freight costs as far as we're concerned. That contributes directly to the profitability of the company.