Tag Archives: electronics manufacturing services

What a Waste

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All sorts of nonsense is erupting in our industry’s corner of the environmental arena this past week. Let’s go to the tape:

  • On May 14, Rep. Michael Burgess (R-TX) introduced a bill that essentially codifies the EU RoHS Directive for the US as well. The bill proposes to prohibit the manufacture after July 1, 2010 of “electroindustry products” that contain lead, mercury, cadmium, hexavalent chromium, PBBs, and PBDEs above the maximum concentration levels specified in the European Union’s RoHS Directive.
  • Today, the Electronics TakeBack Coalition issued a statement opposing a toxic e-waste bill scheduled to be introduced in the House later this week. The bill, sponsored by Rep. Gene Green (D-TX) (how’s that for irony?), Rep. Mary Bono-Mack (R-CA) and Rep. Mike Thompson (D-CA), permits e-waste exports under a loophole under which any type of entity can export toxic e-waste to developing nations for reuse and refurbishment, the Coalition asserts.

    “By passing a law that only appears to restrict exports to developing countries without actually doing so, the bill would undermine those recycling companies which are in fact managing their e-waste responsibly, and providing jobs here at home. This bill fails in serious and even critical ways.”

  • And in between, IPC issued a press release boasting how 22 of its 2700-odd members managed to trek to Washington in support of a permanent R&D tax credit, something that just about every technology company operating in the US already supports anyway — and many of which are priming the lobbying pump to ensure it goes through.

    So in summary, we have a Republican from Texas trying to overlay (absurd) European laws onto US manufacturers, an industry environmental advocacy group trying to shoot down new proposed environmental regs, and the major US PCB trade association completely in the dark about all of it.

    Not too good.

    • Too Many Shows? Nah!

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    With the Apex attendance numbers painting an ugly picture – trade show floor walkers dropped nearly 35% from last year and are down more than 50% from just a few years ago – expect the typical hue and cry over whether there are too many shows.

    Ignore it.

    Market forces will decide whether there are too many shows, and which ones will live and which will die.

    Rarely does a healthy show fail on its own. The exception: Surface Mount International, which its peak in the mid 1990s drew 5,000 attendees to the San Jose Convention Center each year. The assembly event was produced by a number of concerns, including Miller-Freeman, SMTA, IPC and EIA. Problem was, the latter three didn’t like the financial arrangement, under which Miller-Freeman kept the bulk of the proceeds from the lucrative exhibition, while all the partners split the conference revenue. So the partners forced Miller-Freeman out, and the show collapsed within two years. Which is what at least one the partners wanted all along, as getting SMI out of the way set the stage for the then-biggest prize of all: Nepcon West.

    But the sabotage that undermined SMI is the exception, not the rule. Nepcon East, Wescon, Electro and plenty of other once-vibrant events went away or were merged because the market stopped supporting them.

    So don’t get caught up in the “should they or shouldn’t they” talk about Apex. The market will work its magic on its own.

    ‘Hot’ Blog!

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    Today we added a link to ProfilingGuru.com, a new blog launched by the good folks at KIC Thermal. As the name suggests, the blog — and it’s really more informative than that — covers tips on profiling.

    You may recognize the names behind it: Mike Limberg, who has been kicking around our industry for some 20 years between Intel, Seika USA and KIC. He estimates he has worked on on hundreds, if not thousands, of production lines.

    His partner in crime is the funny and energetic Brian O’Leary, Americas Sales Manager at KIC. Brian has worked for KIC and Sono-Tek, and the pair teamed up on the recently published 2009 Profiling Guide, an entertaining and informative guide for the reflow process.

    Check it out.

    Blue Sun

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    IBM’s potential merger with Sun is hardly a done deal, and reporters at The Wall Street Journal and elsewhere now think the deal may be off. (For the record, neither OEM has yet commented on the deal.)

    Which, for EMS companies, is probably just as well. Deutsche Bank estimates a merged IBM-Sun would be able to cut as much as $1 billion in costs from the bottom line. Some of that, no doubt, would come from deleting redundant product lines and even greater buying leverage with the companies’ respective suppliers.

    Sales to Big Blue make up about 10% of the revenues at Celestica, Benchmark and Sanmina-SCI, five to 10% of Jabil’s revenue, and two to five percent of Flextronics’ sales. Several of those companies supply significant volumes to Sun as well.

    Faced with the pullbacks of Nokia and Alcatel-Lucent, which took some $6 billion combined out of the EMS industry’s collective pockets, word that a deal is off should touch off industry rejoicing, even if just for a day.

    If anyone has reason to be sad about the reported deal’s collapse, it would be Sun, which was already on shaky ground. Instead of Big Blue, Sun might turn out to be just blue.

    Apex or Bust!

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    Tuesday marks the opening of Apex, the largest electronics assembly trade show in North America. With it, the industry suppliers hope buyers will turn out in force for the Las Vegas event. The early returns don’t look promising, with suggestions that preregistration attendance numbers are down some 15% or more from last year, coupled with travel bans by several major OEMs. Here’s hoping this week marks not another nail in the coffin but the beginning of the turnaround.

    Tonight, CIRCUITS ASSEMBLY will announce winners of its NPI and Service Excellence Awards. Check back for frequent updates.

    A bit of early gossip: IPC will induct Dan Feinberg to its Hall of Fame on Tuesday. Years ago, Feinberg was president of the dry film and soldermask division of Morton (now owned by Rohm & Haas) and was a major driver behind the IPC Printed Circuits Expo trade show.

    The Rush to Russia

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    Timing is everything, isn’t it?

    On the same day IPC named an official representative for Russia, calling it “a market with enormous growth potential,” a leading research firm basically threw in the towel on Putinland.

    “Russia now is facing a cessation of new investment, along with shutdowns in existing facilities and delays in new ones,” iSuppli said in a press release today. The firm pointed to aborted attempts by Foxconn, Flextronics and others in trying to get operations there up and running, and noted that while Elcoteq has been building in the country for years, its investment there has been so unprofitable, the telecom EMS tried in vain to find someone to dump it on and finally decided to shut it down.

    In its announcement of Yury Kovalevsky as its official representative to Russia and Russian-speaking countries, IPC said the appointment is part of a “long-term plan to expand services and standards globally.” Kovalevsky, IPC said, will make IPC services “widely available to companies in Russia, a market with enormous growth potential for both electronics manufacturing services and printed board production.”

    That comes as news to iSuppli.

    I’m not saying one side is right and the other is wrong. By outsourcing translations and distribution of its standards, IPC can position itself to make money even if the market doesn’t materialize any time soon.

    But it’s hard to escape iSuppli prinicipal analyst Adam Pick’s damning statement: “With the ongoing recession and financial crisis, however, it appears that most of the interest in penetrating the Russian market has disappeared. Furthermore, the historical record for electronics manufacturers operating in Russia has been plagued by multiple problems.”

    Pick ticks off a series of reasons: the Russian economy; social and political issues; tariffs and value-added taxes; shifting policies and laws; slow material supply chains and a lack of electronics supply chain infrastructure; inefficient distribution; Russian mobs; counterfeiting rates so high it would make the Chinese blush.

    On the other hand, in market terms, IPC is probably buying low. Like I said, timing is everything, right?

    The Obvious and Not So Obvious About Yields

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    It was Charles Talbert’s first major assignment after graduating from Tech top in his Industrial Engineering class. He was excited and didn’t want to blow it, but how hard could it be? All he had to do was select the contract manufacturer with the best yields. His company, Excalibur, has rapidly become a leader in designing premier laptops and mobile phones. Excalibur’s exciting and highly functional designs have made it the envy of the industry and a great place to work. So Charles wanted to add value by helping Excalibur find the best EMS firm. To make his job even easier, senior management performed preliminary screening, limiting the candidates to two: ACME and AJAX. Charles visited both and found they both had excellent quality systems in place including an effective continuous improvement program founded on statistical process control. It looks like it would come down to the yield numbers.

    ACME argued that it was clearly the best choice as it had superior yield in both laptop and mobile phone manufacturing. AJAX argued that, while that was true, AJAX’s overall yield beat ACME’s 96.6 to 95.4% (table). How is this possible? And which vendor would you choose?

    Laptops
    No. Built Yield (%)
    ACME 90,000 95
    AJAX 10,000 93

    Mobile Phones

    No. Built Yield (%)
    ACME 10,000 99
    AJAX 90,000 97

    Overall Yield (%)
    ACME 95.4
    AJAX96.6

    Relisted

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    Research firm iSuppli’s Top 10 Global EMS firms list, which came out today, differs in several respects from Circuits Assembly’s findings.

    Why? It may be that the iSuppli data for Foxconn take into account non-EMS related sales (the company also produces bare boards and connectors, among other things). Even so, Foxconn itself last week reported 2008 revenues of $42.3 billion.

    iSuppli also excludes Cal-Comp Electronics/Kinpo Electronics from its list, despite that company’s contract manufacturing revenues of $3.2 billion last year, which would place it seventh overall.

    Finally, iSuppli includes Universal Scientific in its ranking, although the Taiwanese company reports EMS sales of just $490 million in 2008.

    Just Say No, IBM!

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    Over the years, OEM after OEM has fallen prey to Foxconn, lured by the temptation of higher margins by outsourcing product to the Taiwanese ODM. H-P, Motorola, Dell, Sony and Apple are among the many, many companies that outsource billions of dollars worth of product build each year.

    Sadly, IBM, one of the few remaining major holdouts, appears on the brink of ending its streak. Big Blue is set to announce a deal to to codevelop something called “environment-friendly” products.

    Pending release of financial terms, it’s unclear what IBM stands to gain from the program.

    IBM has ventured down the environmentally friendly path before. In 2007, it committed $1 billion to fund Project Big Green, an effort toward environment-friendly, energy-efficient products and services. This is its first known deal with Foxconn, however.

    It shouldn’t happen.

    As The Economist pointed out earlier this month, China’s reputation for workmanship remains a negative in consumers’ eyes. “The poor external reputation of China’s products hurts not only Chinese companies but also Western firms known to be selling Chinese-made goods.” Citing last year’s scandals over various Chinese-produced toys, the US and India have passed new laws governing imports from the World’s Workshop.

    And myriad stories have cited Foxconn’s dismal and imperialist working conditions.

    IBM is America’s crown jewel, the greatest electronics company the world has ever known. Getting in bed with scofflaws like Hon Hai cheapens its luster and diminishes its reputation. IBM should walk away.

    UPDATE: Whew! That wasn’t so bad. The Wall Street Journal is reporting Foxconn is licensing IBM’s GreenCert technology for estimating the amount of greenhouse gas emissions pumped from factories. It could have been much worse.

    Just 3 Minutes

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    Three minutes is not much time. It’s about the amount of time to get a coffee from the vending machine or maybe not quite enough time to visit the restroom. Three minutes doesn’t seem important.

    You have probably spent multiples of three minutes looking for a stencil that was misplaced. The job couldn’t get started until that stencil was found. Three minutes, 10 minutes; what’s the big deal?
    Let’s say your company has a two-shift, five-days per week operation, and on each shift three minutes is lost each day. Assuming 250 days per year, this is 1500 minutes or 25 hours of lost production time in a year.

    How much is this costing your company? Using ProfitPro cost-estimating software that I developed and information in annual reports, I analyzed the typical subcontract assembler’s profitability. It nets out that each hour lost on a typical assembly line is worth about $3500 of production. So 25 hours per year is almost $90,000 of lost production – all because of just three minutes.

    And I’ll bet some of us are losing 30 minutes a day.