Zuken has compiled a number of touching sentiments from friends of the late Alan Finch, credited with developing the first shape-based autorouter.
Finch, of course, wrote the landmark paper that followed up his Racal-Redac colleague Ulrich Lauther, who conceived a router with no defined cell size.
Look closely and there’s a mention of Pete Waddell, UPMG president and an admirer of Finch.
It’s been awhile since I used this space to make any predictions about the coming months, but the end of the year is always the logical (if cliched) time to do so.
So here goes:
Even the most pessimistic industry-watchers should be curious at least over the shifting attitudes toward bringing production back to the US.
The New York Times today published an extensive piece looking at the top-down change — from President Obama on down — in the nation’s outlook toward manufacturing. Researchers at MIT and elsewhere are promoting the benefits of keeping makers and thinkers together. “The manufacturing process itself is going through an innovation revolution,” said Stephen Hoover, chief executive of Xerox PARC, noting the emphasis on smaller numbers of highly skilled techs who run sophisticated and heavily automated lines.
Earlier this week, Mike McNamara told listeners at an investment conference that higher (and unabating) labor costs in Southeast Asia is making the decision process over where to put its plants “more interesting.” The Flextronics chief executive said he could see production coming back to the US. “[O]ver time, as [labor] costs continue to go up, you’ll probably see more things get pushed back in the USA,” McNamara said.
Even Foxconn is showing some appeal (for a change) for its push toward automating its factories. Maybe Jim Raby’s vision for true lights-out manufacturing will finally be realized?
A decade ago, at Wall Street’s urging, companies followed the herd to China. Not enough thought was given to the ramifications of chasing lower labor costs, and my guess is that we will be feeling the pain of these short-sighted decisions for some time to come.
But given the prospects for higher levels of automation and a more balanced approach to regionalization, it’s been years since the industry was so exciting.
Hi all,
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As CEO Tim Cook shakes up the Apple management team and struggles to keep Apple at the top of the hyper-competitive electronics heap, I am reminded of the last time Apple saw such a fundamental challenge to its mojo.
It was the John Sculley era, when the former Pepsi exec was tapped to add some juice to the lagging MacIntosh maker. Sales rose tenfold during his five-year reign, but the tension rose between the Apple board, Sculley and ex CEO Steve Jobs, and both ultimately were given their walking papers.
That was some 20 years ago, and while the PC wars on the Left Coast were taking their toll on Apple, a similar story was emerging in upstate New York. There, IBM, long the king of the DOS-based computer equipment world, was being overrun by competitors like HP, Compaq, Dell and Digital Equipment and had seen its stock slide more than $100 to the low $40s. Some were going so far as to predict the end was near.
About that time, the editor of the magazine I worked for visited IBM and came back with this warning: “IBM remains a manufacturer of the top rank,” a firm response to those who believed that Big Blue was about to fade to black. And sure enough, IBM overcame its own product hurdles and regained its crown.
Not that many notice. While others make news for either their stunning profits (Apple, Samsung) or stunning slides (Dell, HP), IBM has gone about its business in the professional, button-down way that its founder Thomas Watson would both recognize and approve of. While others may grab the headlines, IBM is still the bluest of the blue chips, a company that others should spend more time understanding and emulating. Through management changes and computer fads (mainframe to PC to the cloud), IBM has shown an unprecedented ability to adjust and stay relevant.
I’m not sure whether Apple under Tim Cook can duplicate the success of Steve Jobs. That’s like following Babe Ruth, the quintessential game changer, and no person should have to do that. But I do know that no matter where Apple is in 20 years, IBM will still be at the top of the computing pile.
UP Media will be closed the next couple of days in honor of the Thanksgiving holiday While you will still see a few updates to the Circuits Assembly and PCD&F websites during that time, we will not publish the PCB UPdate newsletter on Friday.
We’d like to take this moment to thank all our loyal readers and (for those to whom this applies) wish you a happy — and safe — Thanksgiving.
Checking our pool of 30 or so publicly traded EMS companies that have thus far reported third-quarter earnings, we see an industry that is decidedly mixed.
Exactly half of those in our pool reported net income rose over last year. And 16 said sales are higher.
Of the Tier 1s, Foxconn and Jabil said sales were up, and Foxconn and Flextronics saw higher profits. Celestica and Sanmina-SCI saw revenues fall while Plexus’ and Benchmark’s rose. However, all but Sanmina took profit hits.
Confused yet?
The mid tier EMS groups were no easier to divine. On the larger side, Nam Tai and IMI had great quarters all around, Kimball saw operating profits and sales climb, and Venture’s sales ticked up too (it hasn’t reported profits yet), but Fabrinet (whose recovery continues) saw both figures slip. Key Tronic was up, CTS was down. Scanfil was up, Note was down. Neways was up, PartnerTech was down.
You get the idea.
The good news is, most companies, especially the larger ones, saw higher revenues in the third quarter than they did in the first. This could be another sign that the traditional seasonality has returned, which would be welcome at least because it makes things a little more predictable.
In listening to the various analyst calls and poring over the quarterly reports, it seems many companies reaped the benefit of existing programs in the September period, while those who didn’t were plagued mostly by new product starts, which are a drag on earnings. The former could hide some deeper some concerns, because all programs eventually come to an end, and if overall launches are on the decline, it could spell trouble down the road. This could be why several EMS companies, which collectively tend to be a bit gunshy bunch anyway, warned that the December quarter might be slower than the last.
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I’ve noted before my admiration for the late President Dwight Eisenhower and his moderate, fiscally attentive approach to government. And, as so many others have before me, I also appreciate Ike’s willingness to stand up to the military contractors who wanted nothing more than a steady, ample payday.
While much has been made of Ike’s “military-industrial influence” warning, few are aware that those comments came at the end of his presidency; in fact, during his denouement as president, just a few days before leaving office.
In fact, as is so well-documented in Evan Thomas’ book, Ike’s Bluff, Eisenhower spent most of his political career warding off defense contractors, military chiefs and even his own Cabinet members, all of whom were intent on inflating the budget with expensive war toys. Ever the military genius, Eisenhower realized that “small wars lead to big wars,” and that the federal budget could be busted by runaway defense spending.
As he said in his penultimate address, “We annually spend on military security more than the net income of all United States corporations. … Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together.”
I am reminded of these wise words today, the morning after the re-election of a US president. For no matter who had won, the president must rein in spending, and that includes the staggering US defense budget, which for fiscal 2013 is more than $600 billion.
Yes, health care, Social Security and other programs need to be pared and reconsidered. And yes, defense is tremendous source of jobs — including the ever-important manufacturing ones — for US citizens. But the current budget is not sustainable, and given that we spend more than the next 14 countries combined, it’s impossible to argue that a reduction would somehow make us less safe and secure.
A moderate like Ike might not be electable in today’s political arena, but we should still heed his words. We need his wisdom now more than ever.
Is it the water?
Just days after Cookson announced it would split in two and spin out its Alpha Metals solder unit, Dover says it too will divest its electronics assembly and test businesses.
Just like that, we are primed to lose two of the longstanding electronics supply chain brand owners. The difference here is, Alpha’s management and ownership will remain, for now, the same, as the stock will be split among Cookson’s former shareholders.
The future of the Dover businesses, on the other hand, is much less clear. Dover hasn’t said whether it will sell the businesses piecemeal, as it did with Universal Instruments and Vitronics-Soltec in 2006. The brands on the block — DEK, OK International and Everett Charles Technologies among them — probably brought in at least $1 billion in annual revenue prior to 2012’s dropoff, and have traditionally been higher margin performers as well. Not many equipment companies have pockets deep enough to absorb the price Dover will ask. Yet that’s what employees of those businesses must be hoping for right now, as the slash and burn methods of the private equity companies have been excruciating for everyone involved.
We don’t think this was a quick decision brought about by this year’s slump. Sources tell us Dover has been discussing the possible divestiture of these businesses for nearly a year. The guess here is that Dover’s management tired of the endless boom-bust cycles of the electronics industry. It’s hard for an equipment company to meet Dover’s goal of 10% revenue growth and 15% operating margins year in, year out.
We also believe Dover has a buyer on the hook, as some might recall that when Dover announced the impending divestiture of Universal, the deal went through a month later. Who that buyer is (ITW? Nordson?), and at what price, are now the questions.
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If you read this announcement about Cookson splitting in two the first question must be, what will this mean for the organization?
My take is, not much. Here’s why:
1. The company will remain public, and the shareholders are the same. (Under the proposal, Cookson shareholders get one share in each of the two new companies.) Had this been an MBO or private equity group, I would expect slash and burn. But the transition as planned should bring much-desired stability to the new organization.
2. The upper management isn’t changing. Had Cookson Performance Materials group CEO Steve Corbett left, I might think differently. But Corbett, who joined Cookson in 1990 and has run Enthone since 2002 and both companies since 2004, is highly responsible for the existing management and operational structure. He knows what he is doing, knows the markets and understands the brands.
3. The debt is manageable. Alent (the new name of the former Cookson Performance Materials) will “get” about one-third of Cookson’s £451 million ($727 million) worth of debt. Given the new company’s sales of £418 million ($675 million) and profitability, it should be able to swallow that meatball.
4. The brands are intact. The Alpha Metals and Enthone brands are well-recognized and respected worldwide. Indeed, after spending some time trying to beef up the somewhat unwieldy Cookson Performance Materials name, the company reversed gears and has been working over the past year to rebuild those individual brand names. Perhaps this was in anticipation of the demerger, but either way, the strategy was well-timed.
In fact, the only casualty I see in all this is the Cookson name, which is, believe it or not, more than 300 years old. One wonders whether the Cookson name was seen as a negative by either of the spinoff companies.
And so goes Cookson. From its founding by Isaac Cookson in 1704 as a collection of metal and glass businesses to its aggregation of a herd of electronics assembly equipment and materials companies in the 1980s and 1990s to the respective divestitures of Speedline, then Polyclad and its Precious Metals business, Cookson has always been in a transition of some sort. It’s hard to believe, though, that this is its final move.