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

Cisco’s Job Cuts

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Cisco yesterday announced it an 8% cut to its workforce. Although the company did not say when the layoffs would occur, the suggestion is that some 6,500 workers will find themselves without a job at some point in the future.

Or will they?

The last time the networking giant announced layoffs was August 2013. At that time, it said it would pare 4,000 jobs from its global workforce of 75,049 workers. And just five months earlier, Cisco had indicated it would cut 500 other positions. Yet as of July 2014, the close of its 2014 fiscal year, the company had about 74,000 staffers worldwide. While numbers for its fiscal fourth quarter aren’t yet available, the firm cut just 1,200 jobs through the first three quarters of its fiscal 2014.

Even accounting for open jobs that Cisco may have decided not to fill and offsets from acquisitions, the number of announced layoffs do not seem to match — that is, fall well short of — what Cisco says it will eliminate.

This is a trend.

As of July 2012, Cisco employed 66,639 workers. That month, it said it would cut 1,300 jobs. A year later its headcount had increased by more than 8,400 workers.

Even the last major bloodletting wasn’t as, well, bloody as predicted. In July 2011 Cisco announced it would ax 6,500 jobs, or 9% of its 71,825-man staff. A year later the headcount stood at 5,186 less, a significant number to be sure, but not as bad as what was forecast.

I’m not suggesting Cisco is being intentionally disingenuous about its plans. Certainly many companies respond to predicted downturns with layoffs, and perhaps in most of these cases business has been stronger than what was expected, thus sparing many people the ax. A cynic might say these moves are done less for the actual bottom line and more to pump up the stock price. So be it.  Nor is Cisco alone, for that matter. But it goes to show that job security, even in the volatile tech sector, is likely better than one would think from just reading the headlines.

 

Why Soldering’s Loss was Design’s Gain

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Catching up on your summer reading? Consider Dickie: Memoirs of a Mad Scientist, by Richard Nedbal.

Though not seen around the industry much anymore, Rich, many longtime readers will recall, revolutionized CAD and CAM software as founder of P-CAD, which at one point boasted the world’s largest ECAD installed base, and Advanced CAM Technologies (ACT), which developed the still popular CAM350.

Rich has spent the better part of his post-ACT days working on bettering engine injection systems. (He also was inducted into the Dieter W. Bergman PCB Design Hall of Fame last year at PCB West, which coincidentally takes place in September at the Santa Clara Convention Center.) In his spare time, he has written a startlingly funny and self-deprecating book about his childhood and early adult years.

Rich spins great yarns about growing up in Chicago, his occasionally inspiring parents, learning about electrons (which he mastered) and soldering (which he butchered), first jobs, monkey races (seriously), starting college, and joining the Air Force, where he escaped the hated “Dickie” moniker of his youth, only to be recast by an angry Air Force sergeant as “Airman Kneeball.”

A lifetime love of math and science took him to Carnegie Mellon, where an engineering manager tapped him to help with digital logic design, launching his Hall of Fame career in electronics.

Rich’s wit, intellect and most of all, never-say-die attitude are on display in spades throughout this charming tale, released this summer by Strategic Book Publishing and available via Amazon. I would have expected nothing less.

Does Rising Nationalism Pose Threat to Electronics Supply Chain?

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The amount of geopolitical discord around the world at present is stunning: Thailand, Vietnam, Korea and other major electronics manufacturing hubs are seeing a rise in nationalism and severe internal tension over how to address foreign pressure.

Thailand in May endured yet another military coup — its 19th since declaring independence from its monarchy in 1932. Some observers feel the military wants a permanent seat in the national parliament, a move that could hinder its democratic movement.

In Vietnam, citizens are outraged at what it feels is Chinese strong-arm tactics. Its Northern neighbor has provoked many Southeastern nations over the past few years, often by occupying seaborne territory that others had staked claims to in the past. (The Philippines have a similar complaint dating to 2012, when China evicted Philippine fishermen from their long-held fishing grounds.) Lately, Chinese oil rigs took up in Vietnamese waters, leading to riots at Fittec, Foxconn and elsewhere, where domestic workers took aim at their Chinese* employers.

Korea is losing business to Vietnam, aided in part by its own OEMs: Korea is now the largest investor there, pumping in nearly 23% of all outside investments in the first quarter this year. As Samsung relocates its cellphone manufacturing there, Vietnam is on track to produce 250 million handsets this year, versus 200 million in China and just 30 million in South Korea. As the linked article indicates, as of March 2014, Samsung Electronics subcontractors had invested an aggregate $2 billion in Vietnam. Meanwhile, while Samsung buys a reported 53% of its parts from Japan, South Koreans now view Japan as their second-leading military threat, next to North Korea, and resentment from World War II is rising once again.

Indonesia is suffering through a contested presidential election, one that involves an ex-general and the possibility of an overturned ballot result.

Japan, my friend Dr. Hayao Nakahara tells me, has essentially stopped investing in new manufacturing sites in China, with the only new developments minor capacity add-ons to existing plants. The two nations have been at odds over everything from possession of uninhabited islands in the East China Sea to a rehashing of wartime atrocities.

Southeast Asia is home to the bulk of the world’s electronics production, and holds the majority share of products built for the consumer, industrial/instrumentation, telecommunications, PC and peripherals end-markets (not to mention the vast majority of the raw materials and components supply). We’ve absorbed several of nature’s bullets of late — flooding in Thailand, the typhoon in Malaysia and of course the 2011 earthquake and subsequent tsunami in Japan. I am told that the media reports have exaggerated what’s happening on the ground in Southeast Asia, and that on a day-to-day basis little dissent is noticeable. That may be true, and to be sure, the self-inflicted disruptions have thus far been held to a minimum. Given the number of countries involved — unprecedented in recent times — and the enormity of what’s at stake, we can’t help but feel it will take some luck if the next supply-chain breakdown is only as bad than the last.

*Fittec is based in Hong Kong, Foxconn in Taiwan, but most employees and manufacturing for both companies are in China.

How Far Should Sustainability ‘Standardization’ Go?

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My longtime friend and industry colleague Pam Gordon blogged today about the role trade associations should play in driving the industry toward sustainability practices. In it, she writes

Associations will not necessarily push members to the next level of sustainability practices. But members can raise the baseline through their involvement and commitment — emphasizing that the industry’s continued profitability and continuity rests in good part on meeting customers’ increasing efficiency requirements, avoiding dependence on dwindling materials, and reducing costs through design-for-environment principles.

I agree with all that. But Gordon also mentions a colleague’s discussion of the possibility of trade groups offering certification in supply-chain sustainability, suggesting that those that do not are behind the curve. There, I’m very reluctant to concur.

I am a huge fan of standards, but I also recognize their limits. I view sustainability as an extension of innovation. And innovation is not something that can be standardized. Those companies that consistently adapt fastest to market demands are always the winners in the long run. I think the same will be true with design for recycling and reuse and other such initiatives. Companies will either pursue that course or not, but to add a layer of bureaucracy in the form of yet another pursuit of paper isn’t the way to go.

Pam writes that some associations help members raise their own sustainability goals above the level of current regulations by giving them workable frameworks, such as the codes of conduct from the Electronics Industry Citizenship Coalition. I have long felt the EICC’s code of conduct is a sham. Under Labor, for instance, the first rule is, “Participants are committed to uphold the human rights of workers, and to treat them with dignity and respect as understood by the international community.” Yet EICC members include Foxconn and Pegatron, which are routinely cited by watchdog groups for worker abuse. It may be a code, but its toothless.

Pam is tuned in to the industry and always makes her readers think. Her note that the industry lacks roadmaps for best practices in sustainability is dead on. A roadmap isn’t a certification, however, and that’s where I call on trade associations to draw the line.

Jerry Shore, RIP

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I didn’t know Jerry Shore, except by name, so I can’t really comment directly on his passing this week at the age of 88. But he was a significant force in the printed circuit industry for decades, founding Park Electrochemical in 1954 and building it into a laminates powerhouse up until his retirement, in 2004.

My friend Gene Weiner did know Jerry well, however, and he offers his thoughts on his blog here.

To the entire Shore family, including son Brian, who has been running Park since Jerry stepped down as CEO in 1996, our sincere condolences.

Robots and the Law

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In the April issue of PCD&F/CIRCUITS ASSEMBLY, I wrote about the need for a balance between autonomous machinery and human-operation equipment. I wrote the piece in the aftermath of the Malaysia Airlines Flight 370 disappearance, and referenced, among other things, the Toyota sudden unintended acceleration problems and the self-driving cars that are beginning to appear on US streets.

Seems I’m not the only one working their way through this. On May 5, a pair of researchers at the Brookings Institution began a series of papers (The Robots Are Coming: The Project On Civilian Robotics) that considers the legal ramifications of driverless cars.

That led me to Google, which uncovered a few more references to potential tort roadblocks.

While my work considered the technical and emotional issues that always factor into to any major technology shift, the legal aspects are equally in play here. For those interested in the subject, the Brookings Institution project is especially worth a read.

 

 

 

 

Could Foxconn Deal Bite Apple?

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The notion that Foxconn might take a large stake in a major Taiwanese telecom equipment company poses a litany of interesting questions for its largest customer — Apple.

For example, Foxconn, which gets 40% of its revenue from Apple, could now be in position to become both a major Apple supplier and a major enabler, since millions of iPhones and iPads would conceivably be connected via Asia Pacific Telecom’s network. What influence could Foxconn thus have over Apple’s ability to operate in key Southeast Asia markets? Would it possibly seek to leverage that network by negotiating with Samsung to force better pricing from Apple? Will other major EMS/ODMs that play heavily in this space (Jabil, Pegatron, Compal, Wistron) follow Foxconn’s lead?

The EMS/ODM model continues to evolve. Foxconn seems intent on speeding that evolution ever faster.

 

 

 

A ‘Worthington’ Idea

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EMS firm Worthington Assembly last week announced a deal to market its EMS services via CircuitHub.

WAI is a small EMS company located in Western Massachusetts. Like many in the sub-$20 million space, WAI’s owners double as its salesmen, and the firm relies heavily on word of mouth (and engineers changing jobs) for prospecting.

CircuitHub developed a universal parts library and is offering that, along with BoM, bare board and assembly quoting. PCD&F did a piece on the company last year.

Chris Denney, WAI’s CTO (and a sometime CIRCUITS ASSEMBLY columnist) explains the partnership here.

Clearly, more opportunities to order boards from a variety of suppliers via a single website are popping up, with the site typically offering free software in order to gain visitors (FabStream, for example, offers use of a PCB CAD tool capable of up to 12 layer boards, and SnapEDA offers simulation).

I would not anticipate larger EMS firms would go this route. But for smaller ones, whose cost of sales would be proportionally high relative to its income if it employed direct outside sales, using app-based vendors could be a creative and low-cost way to find new customers.

Quiet Flight

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The mystery over the whereabouts of Malaysian Airlines Flight MH370 is a very serious and tragic matter. That the 777 was equipped with sophisticated tracking devices and could still disappear confounds me.

Let’s assume the pilots turned off the transponder. This is a serious question: Why are the transponders manually operable? Is there any value to a commercial pilot or navigator being able to “go silent?”

Perhaps there is, but I don’t see it.

 

M&A is Here to Stay

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There’s been a flurry of EMS acquisition activity of late, with Natel’s acquisition of EPIC Technologies and Benchmark’s pickup of Suntron and CTS among the larger deals. Lincoln International, an M&A advisor, counts nine transactions in the fourth quarter alone, out of 24 total for the year. While Lincoln’s numbers shouldn’t be considered absolute – my guess is that worldwide they are off by well over 50% – they do provide a reasonable snapshot of the industry at a given time.

While I dare say Nam Tai will be the largest EMS company to close its doors in 2014, when all is said and done, I predict we will see a record number of shops close or be bought out in asset deals.