Author Archives: Mike

About Mike

Mike Buetow is president of the Printed Circuit Engineering Association (pcea.net). He previously was editor-in-chief of Circuits Assembly magazine, the leading publication for electronics manufacturing, and PCD&F, the leading publication for printed circuit design and fabrication. He spent 21 years as vice president and editorial director of UP Media Group, for which he oversaw all editorial and production aspects. He has more than 30 years' experience in the electronics industry, including six years at IPC, an electronics trade association, at which he was a technical projects manager and communications director. He has also held editorial positions at SMT Magazine, community newspapers and in book publishing. He is a graduate of the University of Illinois. Follow Mike on Twitter: @mikebuetow

60-Minute Simulation

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Even for a software company, I’m sure it will be no simple task to analyze customer use and assess the ROI on the so-called “elastic licensing” Ansys just rolled out to enable customers to adjust on-the-fly to meet peak demands. I can’t imagine how crazy life will be for the poor soul who gets the hopelessly thankless task of sorting through all the customers who take advantage of this.

But the one hour rentals, the electronics simulation software company’s latest pay-per-use model, is less interesting for what it allows than for what it might foreshadow.

If I understand Ansys’s offer correctly, this is a bolt-on option for existing licensees, not a standalone offering. Useful? Certainly. Groundbreaking? Not so much.

But could true pay-for-play software be far behind? Reports have surfaced over the years of such licenses being available to certain subsets of users and in certain geographies. I’m unaware of it being rolled out on a wide level, however. It’s kind of like paying for a digital song that then disappears after five or 10 plays.

The emerging legion of new hobbyist/DIY and unconventional startups may be too attractive and otherwise too difficult for the larger players to land, however, unless they try something different. Many of these companies are not interested in paying thousands of dollars for a tool seat. They aren’t designers. They are hardware enthusiasts, and design is just a step in the process (or for some, a hurdle) to realizing their vision.

Even if the margins are weak or, more likely, the revenue elusive, will the sheer size of that audience be too tantalizing for the major ECAD companies to hold fast to their current licensing models?

 

Your ‘Common Cause Floor’ will Help Define a Reasonable DPMO Target

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Let’s look in on Patty; it has been a very long time …

Patty left her house in Woodstock VT very early on her way to Ivy University. She chuckled at the darkness of the early morning; it reminded her of a book she was reading.  In the book, Gray Girl, Jan Wishart is a young woman in her first year at West Point. The cadets use military time, so, for example, 9:00AM is referred to as 0900 hrs. When it is so early that it is still very dark, the cadets simply call it, “0 dark thirty.”

She had to admit that, even though she occasionally had to leave at “0 dark thirty,” she loved being a professor at Ivy University. She had just finished teaching a statistics class and had submitted the grades – she was ready for the holiday break.  As she drove past the Woodstock Green, she noticed that Christmas ornaments decorated Woodstock’s covered bridge. The entire town was getting ready for Wassail Weekend.

“What a great place to raise a family,” Patty thought.  She, her husband Rob, and their twin 7-year-old sons just loved it there.  It was a very wholesome place for the boys (all three), with many outdoor activities.

She was going in early to meet with The Professor, but, before that, she had to hit the gym for her daily workout.  As she approached the Taftsville Bridge she decided to venture across and take the back road. This route was a mile longer, but crossing the bridge and riding on the back road was more uplifting to the soul.  The back road went along the river and was more picturesque and peaceful than the bustling Vermont Route 4.

The bridge in Taftsville, VT, is a pleasant sight on the way to Ivy University.

Wild turkeys near Taftsville, VT.

After crossing the bridge and driving a few miles, she suddenly had to hit the brakes as a flock of wild turkeys crossed the road – just another reason to like living in Vermont.

 

Before she knew it, she was in the faculty parking lot.  As with almost all universities, parking was a challenge. But, the sun was just rising on this late November day and the lot was mostly empty – except for Dean Howard’s car.

After her workout and shower, she was in The Professor’s office with her long-term sidekick, Pete.  Her husband Rob would join them soon after getting the boys off to school.  The four of them spoke Spanish and, when together, agreed to converse in this romance language to keep their skill sharp.  If Pete wasn’t there, the three would speak Mandarin Chinese, a language he didn’t know.  No one knew for sure how many languages The Professor spoke, but it was rumored to be about 18.  His parents were missionaries for Wycliffe Bible Translators, so he lived in many countries as a youth.

“Hola a mis amigos, la razón por la que les invité aquí fue a discutir DPMO,” The Professor began.

(The remainder of the text will be in English for our non-Spanish speakers.)

“Gee, I haven’t heard people talk about DPMO in years,” Pete responded.

“Remind us how it is tallied,” The Professor requested.

“Well, in electronics assembly, each lead that is assembled is counted as a possible soldering defect ‘opportunity,’ so you count the end of line defects and divide by the opportunities,” Pete began.

“Don’t forget that you normalize to parts per million,” Patty added.

“That’s where DPMO (defects per million opportunities) comes from,” Rob chimed in as he stuck his head in the door.

“And don’t forget to add one defect opportunity for the component itself,” The Professor added.

“Why the concern for DPMO?” Patty asked.

“One of my clients asked if a DPMO of 20 was good enough.” The Professor answered.

“With continuous improvement, shouldn’t they be striving to improve?” Pete asked.

“Well, to a point. But does anyone have a counter-thought?” The Professor answered, always trying to make a learning experience.

“Well if all special cause defects have been addressed and only common cause variation is left, it may be too expensive to improve significantly,” Patty commented.

Pete opined, ”I remember about 20 years ago, I worked for a large OEM and they were at a DPMO of 20.  They tried to get to 5, but it cost a fortune in engineering expense.  A DPMO of 20 hit their ‘common cause floor.’ It costs much more in engineering expense to try to get below the 20 DPMO than the small amount they would be saving in rework costs.”

“Hitting your ‘Common Cause Floor’ sounds like a new expression that you just created Pete— congrats,” Patty said.

Rob had been busy on his laptop and he suddenly chimed in, “I found an article that suggests that 20 to 50 DPMO is a reasonable goal.”

“Let’s do a shirt-sleeve calculation,” the Professor suggested.

“My client has a DPMO of 20. Each product has about 2500 leads and components. It costs $2 to repair a defective device. And, they make 1 million devices with a value of $100 each and a net profit margin of 5%,” The Professor went on.

“So, 20 DPMO times 2500 equals 50,000 or 5% defects in the 1 million units,” Patty started.

“That means 50,000 reworked devices out of the million manufactured for a cost of $100,000 or 2% of the $5 million net profit,” Rob added.

“Getting the DPMO to much less than 20 will cost millions a year in engineering expense,” Pete stated.

“So, let’s sum it all up,” the Professor suggested. “The ‘Common Cause Floor’ will be different for different manufacturers, but hoping to get a DPMO near 0 will likely be too expensive in engineering costs.”

“And, Pete will become famous for inventing the term, ‘The Common Cause Floor,” Patty joked.

They all ended the meeting with a laugh and a slap on Pete’s back.

Cheers,

Dr. Ron

OEM/EMS Barrier Permanently Cut

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For years we’ve been told that EMS companies are in the service business only and would never develop their own products. In one of the first interviews I did, back in late 1991, then IPC director Tony Hilvers — a leading proponent of the then-emerging CM industry (it wasn’t even called EMS then; that term was coined by Sue Mucha the following year) — insisted to me that contract assemblers wouldn’t go down the product development and branding path because it would put them in position of competing with their customers.

We can bury that old saw. With today’s news that Foxconn has, at long last, bought Sharp (for the low, low price of $3.4 billion), the loop between EMS and OEM has been drawn taut.

Not that this is ground-breaking in practice. Certainly, many, many EMS companies have, through acquisition or otherwise, developed and marketed their own products. Our 2009 EMS Company of the Year had a healthy, branded keyboard product line. And we estimated in this space in 2012 that 15 to 20% of the (then) 2,400 companies listed in our EMS directory did some degree of ODM/OEM work.

Going further, we wrote in 2015 we felt the line between EMS and ODM has been “permanently crossed.” But the Foxconn-Sharp marriage takes it to an entirely different scale.

Whether the Sharp name stays on its product lines, which range from Aquos televisions to smartphones to solar panels, and includes the OLED technology so prized by Apple that it compelled Foxconn to write the check in the first place, remains to be seen.

Either way, there’s no going back. EMS is now OEM. Going forward, who is the customer they will serve? And knowing the line keeping their suppliers from their end-customers has been permanently breached, will this spur OEMs  to reestablish their assembly operations?

Good Talk

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The big story out of IPC Apex Expo last week – about the only story, really – was the introduction of an open communications standard by Mentor Graphics’ Valor division, followed by the rapid response by more than two dozen assembly equipment providers and software developers over shared concern that the solution to machine-to-machine communication might end up residing in the hands of a single company.

At the heart of the matter is the so-called Industry 4.0. Also referred to as IIC (US), Made in China 2025 (China), Industrial Value Chain Initiative (Japan), Manufacturing 3.0 (South Korea) and other names, it stands for the capability for different equipment, made by different OEMs, to share bi-directional data over an open, yet secure, platform. Done right, it’s a major step toward permitting manufacturers to pick the best machines for their specific needs, versus being beholden to a single line solution. Fundamentally, it’s at the heart of a fully beating Internet of Things; some feel the fully automated factory can increase production efficiency by more than 30% over time, adding billions or more to national GDPs.

Let’s start with the Mentor specification. Two years in the making and announced just prior to the annual IPC trade show, it was released at the Las Vegas event as OML, which stands for Open Machine Language. Having years of experience writing translators for various assembly line machines, Valor took those translators and installed OML in front of them, and packaged the combination in a black box. Thus, in a relative instant, a solution to a much-discussed electronics assembly problem was at hand; OML satisfied the need for machines to talk to each other, and the box handled any connectivity issues.

Mentor planned to make OML available to any company through a partner program and would retain ownership over the protocol while relying on the partners to help shape the future direction of the specification.

In Las Vegas, of course, everything’s a gamble. Once word got around the show, equipment vendors said “not so fast.”

Mentor’s angle was to multiply the use of IoT through OML, thus exponentially expanding the market for its Valor tools. Perhaps worried by the legalese, or the potential for a single “owner” to license and potentially change or even shut out competitors, roughly two dozen assembly OEMs met over the course of two days to hammer out an agreement that reshapes the trajectory of the specification. Several equipment OEMs PCD&F/CIRCUITS ASSEMBLY spoke with agreed OML is technically sound but felt the business issues inherent in licensing a corporate spec could pose a host of problems. Up against this strong front, Mentor pivoted and offered OML as a starting point for a to-be-determined IPC standard.

In one sense, then, bi-directional communication goes back to the drawing board. Some 15 years ago an IPC committee published a shop floor equipment communication standard labeled IPC-2541 and colloquially known as CAMX. One presenter at the Apex sessions demonstrated how IoT could work using enhanced CAMX. The early take – and this has yet to be finalized, as not even the charter is on paper yet – is the task group will study a combination of OML, CAMX and perhaps other, yet-to-be-written software as part of its IPC mission.

All sides agree there will be an emphasis on speed. If nothing else, OML forced the industry to confront the fact that not only is a standard needed, it was needed yesterday.

Going forward, it will be up to each software company and manufacturer to leverage the IPC standard as they see fit. It remains to be seen if Mentor will ultimately concede OML or whether it will attempt to go it alone.

Some will recall a similar scenario with the data transfer formats for printed circuit board designs. Various specifications sat mostly idle for years, IPC-D-350, IGES and EDIF among them, until the powers behind Valor’s ODB and IPC’s GenCAM formats squared off. Valor donated the XML version of ODB to IPC in 2008, yet continues to maintain its ODB++ format. GenCAM evolved into IPC-2581, and upon Mentor’s purchase of Valor, finally gained traction among worried software competitors and OEMs who feared being shut out of markets or forced to switch tools.

Regardless of the back story, this is where the industry stands today, and a basically workable plan is being formulated. The speed with which the industry moved – and Mentor should be thanked for spurring action – screams the need is present and widespread, and there is general consensus on the solution. That’s a great story. After all, in electronics, how often does that happen.

Goldman Moment

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Congratulations to my old friend — as in “long-term”; I would never dare call her old — Patty Goldman, who was inducted into the IPC Hall of Fame this week (long overdue). In doing so, Patty becomes the first woman inducted to receive IPC’s highest honor (also long overdue).

I was on the IPC staff when Patty was chair of the Technical Activities Executive Council, which sets the priorities for all IPC standards activities. She ran that group of unruly engineers with an iron fist (well, really a gavel), demonstrating that not only could some sense of order and civility be brought to the Council, but that their meetings didn’t have to last four hours, either.

Way to go, Patty!

Linc’d In

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I never worked directly for Linc Samelson, but it’s safe to say I wouldn’t have had a career writing about electronics design and assembly were it not for him. I certainly wouldn’t have many of my good friends.

Linc passed away last weekend at the age of 89 following a car accident. He was a lifelong entrepreneur, going from engineering college student to a career in the Navy, followed by a degree in journalism from the University of Illinois in 1948.

After some time in the electrical insulation manufacturing industry, Linc recognized the need for a trade publication. That prompted he and his father to launch, in 1955, a company called Lake Publishing, named after Lake Forest, the town north of Chicago where their first offices were.

Their startup magazine, Insulation, grew and eventually was renamed Insulation/ Circuits. The electronics trade publishing industry would never be the same.

Fast forward to 1991. At that time, Lake Publishing had relocated to a far north Chicago suburb of Libertyville. To his group of journals Linc had added a number of titles — Microelectronics Manufacturing and Testing (MMT), Hybrid Circuit Technology (HCT), and eventually Surface Mount Technology (SMT).

SMT started as a seasonal supplement to HCT, then grew into a standalone publication. And in 1991, just one year out of college, I joined the magazine as associate editor.

At that time Linc was in transition too, having sold the company to a subsidiary of Information Handling Services. (According to lore, IHS bought Lake with the idea the magazines would serve as a monthly advertising vehicle for its component catalogs. Unfortunately for IHS, no one from the corporate offices in Denver ever bothered to send the ads.)

As an owner, Linc seemed to understand the nature of people. He had a racquetball court installed in the building and tennis courts outside. On Fridays came happy hours, with a keg of beer tapped to celebrate the weekend. (This was a different era for a lot of reasons.) His employees were never going to get rich working for him, but he did invest strategically, be it in equipment or brand positioning, always making sure there was an army of staff representing the company at trade shows.

Linc married my former colleague at Lake/IHS and longtime friend Jennifer Samelson (nee Read), with whom he raised seven children. Besides his wife, Linc is survived by 16 children, 19 grandchildren and three great grandchildren. He continued working into the late 1990s.

Through the years, Linc remained a favorite topic for me and former colleagues, some still in the industry, most now out. He brought us together, and in many ways launched us on our careers. I will always be grateful for his foresight and vision.

Wooden Thinking

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Were you as shocked as I was Saturday when Sparton announced CEO Cary Wood had resigned?

Since he took over as president of the company in 2008 (he was named chief executive months later), the 48-year-old Wood has been a shining star in the EMS sector. He reshaped and reinvigorated Sparton. In 2006, the company’s sales were just over $170 million and the company was in dire need of restructuring. By 2011 it had turned the corner, and today sales top $430 million, with consistent profits. He led the buyouts of Electronic Manufacturing Technology, Onyx EMS, and Hunter Technology, among others, firming up its presence in the medical and defense markets.

The reason(s) for Wood’s sudden departure are murky. Sparton isn’t talking, although it did praise (albeit somewhat tersely) his contributions. The rumor mill is speculating the move was prompted by an exchange on the firm’s quarterly conference call last Wednesday between Wood and some hedge fund managers who felt the company should be far more valuable for shareholders and even suggested a breakup would be in order. One went so far as to say his “16-year-old daughter and small pack of Norwich Terriers could probably get the stock up 50% to 100% before the end of the quarter.” (Cue to the 27:50 minute mark for the quoted assertion.)

Another frankly asked why a couple Sparton customers are considering moving production in-house.

To his credit, as the exasperated fund manager called for the board buy back stock or step aside, Wood kept his cool throughout. He noted that the board has evaluated all the alternatives about how to deploy its capital, put a pause on M&A and is moving to optimize SG&A and performance.

This exchange gets at one of the tensions inherent in being a public company today. The market is controlled by institutional and hedge fund investors, not private citizens. It’s a cliche, but the goals of a short-term investor are fundamentally different than those of a manufacturer, especially one that generates a big chunk of its revenue building other companies’ products. There’s a fundamental disconnect between needing to invest for long-term survival and trying to squeeze the last bit of blood from the body before moving on to the next victim. Yet coming up with the financing to fund expansion and acquisition without ceding near-total control of the company can be near impossible without going public.

Sparton has spent north of $150 million in EMS related acquisitions in the past eight years, including $55 million for Hunter Technology last year. It is exceedingly difficult to live in the $100 million to $300 million or so market in the EMS industry today.  Companies have to grow, and they typically have to come up with revenue streams beyond just soldering components.

Sparton is in better shape today than when Wood took over, and there’s no reason to think that will change in short order. But the industry needs to take pains to protect its good managers, because just building things well isn’t enough for long-term success these days, at least not for public companies.

Addendum: Here’s a link to a Crain’s Chicago Business article on Wood’s departure.

In Memory of Steve Chidester

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Steve Chidester was a class act.

EDA software can be a cutthroat place, but good luck finding someone who would even think of saying something unkind about Steve.

Known inside Cadence as “Mr. Allegro,” Steve could as well have been called Boomerang for the way over three decades he always returned to the software company. Steve did three stints in all at Cadence, totaling 17 years. He had only recently returned to the company when he passed away from cancer last week at age 55.

While I had met Steve years ago, I didn’t really get to know him until he joined Zuken as head of product marketing in 2010. He was instrumental in getting the IPC-2581 data transfer format off the ground after 40-plus years in the mire.  At Steve’s invitation, I spoke on the topic at Zuken Innovation World that year, although I resisted his repeated urging to present at the company’s user conference in Tokyo. Something about not being fluent in Japanese always held me back.

Little details like that could never stop Steve, however. He was an eternal optimist, never one to get down either on a situation, himself or others. Colleagues tell me that even after learning, in late November, that he had a particularly aggressive form of cancer, he downplayed it, saying it was treatable.

He spoke often of his family — he had nine children plus several grandchildren. That always appealed to me as well, as I like going beyond the regular job-speak and getting to know the folks I work with around the industry.

In an industry filled with generous people, Steve was a particularly kind soul. I will miss him dearly.