Tag Archives: EMS

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.

Plexus Delivers, Again

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Plexus this week reported December quarter revenues were flat with last year’s, which for this market counts as a huge win, as most top tier EMS firms saw revenues drop 3% or more. The world’s 10th largest EMS company also turned a net profit, making it a rarity among its large publicly traded competitors.

It’s a testament to the company’s wisdom years ago when it decided to forego chasing revenues in favor of concentrating on the higher margin medical, military and aerospace markets. That foresight, coupled with solid execution, has put Plexus at the forefront of its peer group.

All of which justifies Circuits Assembly’s selection of Plexus as its 2008 EMS Company of the Year.

As markets turn down, EMS companies historically reach for any piece of business they can get to keep factories full. This means new competition. This week, for example, Flextronics chief executive Mike McNamara said the company is “very bullish” on the medical end-market, adding “more and more outsourcing opportunities are coming out of this environment. And it is an industry that is very reasonably new in terms of outsourcing. We think that is a big upside.”

Things aren’t going to get easier in Neenah. But we think the company remains the best-positioned to survive this cold winter.