The billionaire Koch family has poured cash into ads warning the public that President Donald Trump's trade war costs Americans money. They should know. Chinese tariffs are squeezing Molex, their Lisle-based electronic component manufacturer.

Molex relies heavily on sales to China, which accounted for nearly a third of its revenue in 2013, the year Kansas-based Koch Industries took Molex private in a $7.2 billion buyout. As tariffs have pinched trade flows between the U.S. and China, Molex has laid off employees and felt pain in pricing, administration and its supply chain.

CEO Joe Nelligan, who declined an interview request, was quoted last fall on the Koch website calling the situation "frustrating, because as a Koch company we strongly support free trade."

Nelligan's frustration isn't likely to end soon.

"We expect weakness in Chinese markets and related trade pressures will negatively contribute to overall revenue softness over the next year," analyst Matthew Jones at credit rating agency Moody's Investors Service wrote in a July report on Molex.

The company employs 45,000 worldwide. Molex spokeswoman Susan Armitage won't say how many employees were laid off, or where. In an emailed statement, she says Molex adjusts operations to meet changing demand from the market.

"Having a market competitive cost structure is critical for building a sustainable business," she writes. "Decisions like this are never easy, and we are committed to working with affected employees through the transition, including outplacement assistance and severance pay."

Moody's expects Molex to bring in nearly $6 billion in revenue this year from sales to customers like BlackBerry, Cisco and Bosch. The third-largest manufacturer in the $50 billion market for electronic connectors, Molex makes fiber-optic cables and connectors, sockets, antennas and other products. Just under a quarter of its revenue comes from makers of mobile devices and other consumer electronics, according to Moody's. That proportion is expected to shrink over the next several years as Molex sells more to customers in the automotive, information technology, industrial and health care industries.

Koch Industries is headed by CEO Charles Koch, who, along with his late brother David, has been a deep-pocketed force in conservative politics for decades. The Koch family has feuded with Trump since refusing to support his candidacy in 2016. In particular, the family has opposed Trump's tariffs. Nearly all Chinese goods shipped to the United States, valued at roughly $550 billion, are now subject to tariffs. In September 2018, the Chinese government retaliated with a 25 percent tariff on $60 billion worth of U.S. exports, including electronic connectors.

The family's political action network—comprising Americans for Prosperity, Libre Initiative and Freedom Partners Chamber of Commerce—has spent millions on an advertising campaign to persuade Americans that tariffs hurt their pocketbooks. Last month, the network conceded its strategy so far has failed to shift public opinion against Trump's trade policies.

NO BENEFIT

Charles Koch wrote an op-ed for the Washington Post in March 2018 saying that while his company sometimes profits from government subsidies or tariffs, "we consistently work to eliminate them."

"One might assume that, as the head of Koch Industries—a large company involved in many industries, including steel—I would applaud such import tariffs because they would be to our immediate and financial benefit," he wrote. "But corporate leaders must reject this type of short-term thinking, and we have."

Molex clearly isn't one of the Koch companies that benefits from tariffs. "Molex must now pay significant additional tariffs on U.S. imports from China, as well as any products it exports to China from the U.S. Those costs must be passed on to the consumers who buy new smartphones, vehicles, appliances or rely on advanced medical equipment," Koch Industries says in an essay posted on its website.

Molex has had operations in China since 1982 but started expanding in the country in the mid-2000s. With a factory in Dalian, Molex counts both that city's Hilton hotel and its Bank of China branch as customers. In 2005, then-co-Chairman Fred Krehbiel said Molex followed its customers to China.

"For the first time last year, over half of the electronics made in Asia stayed there," Krehbiel said. "We don't set the trend. We just respond to it."

While ratings agency Standard & Poor's expects Molex's operating cash flow to exceed $600 million this year, its profit margin trails competitors because it invests more in research and generates fewer economies of scale. Its margins typically range between 16 and 19 percent.

At least Molex has company in its struggle to deal with the trade war. Publicly traded competitor Amphenol, the world's second-largest player in the electronic connector industry, lowered sales guidance for 2019 from a range of $8.19 billion to $8.35 billion to a range of $7.92 billion to $8 billion.

CEO Adam Norwitt said in a July 24 earnings call that the U.S. ban on sales to Chinese telecom giant Huawei has heightened uncertainty and hurt demand across the market for communications equipment. He blamed the trade war for about half the expected reduction in revenue from communications customers.