Focus on Business

Susan MuchaBusinesses are happy, but more work remains to be done.

In February 2017, I published a column called “The Trump Effect and Manufacturing.” I thought it would be timely to revisit it since, with the passing of the tax plan, manufacturing companies face both opportunities and challenges in the coming year.

So, what will the Trump effect bring in 2018? Business is already seeing positive benefits:

  • Resurgence of the manufacturing sector. According to the US Jobs Report, the manufacturing sector added 196,000 jobs in 2017, compared with a loss of 16,000 in 2016. Peel back the numbers and 88,000 of the jobs were added in the last four months of 2017, showing momentum. While some of this growth in demand for labor likely relates to replacement product production driven by hurricanes and flooding earlier in the year, the passage of the tax reform bill is providing an incentive for US manufacturing growth as well. Reduction in regulations is also a contributing factor.
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Sue MuchaWays to resolve management variances across multisite operations.

One of the trends I’m continuing to see grow across the electronics manufacturing services industry is greater OEM focus on strategic use of multisite EMS facilities to maintain proximity with their facility structure or end-markets. Higher volume industries such as automotive and appliance have long dictated where their products would be built and sought EMS providers with facilities in the locations near their operations or distribution points. However, companies with much smaller volumes are also now looking at EMS facility site proximity to their operations. This can create an interesting challenge with smaller EMS providers.

Tier 1 EMS providers have done an excellent job of integrating their operations globally from a systems and process perspective. However, that is not necessarily true of multinational EMS providers in the lower tiers. Many in that category have grown by acquisition and have not standardized equipment and processes among facilities. Program management structures and processes may also differ.

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Susan MuchaAnd more important, who will it affect, and how?

It’s difficult to turn on a TV or read a major newspaper without seeing mention of Foxconn and the $10 billion flat-panel manufacturing facility targeted for southeastern Wisconsin. On one hand, it’s great to hear manufacturing jobs may be created on the scale being bandied about: 3,000 near-term, according to Foxconn’s quotes in several publications, and 13,000 (with an average pay of $53,000 plus benefits), according to Wisconsin Gov. Scott Walker. And while I don’t relish the idea of Foxconn becoming the poster child for the electronics manufacturing services (EMS) industry, after decades of working in and consulting to participants that are rarely known outside of electronics, it is nice to see the industry get this type of national recognition.

But will it happen? Foxconn’s track record isn’t stellar. A highly touted deal in Pennsylvania that involved a $30 million investment and 500 workers didn’t happen. Previously announced investments in Indonesia, India, Vietnam and Brazil have either yet to occur or were far below original projections.

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Gene Weiner

Auditors can help improve processes, but certifying quality is another story.

Writing in the August issue of PCD&F, Peter Bigelow says quality programs should ensure quality, not hamstring ingenuity. “Micromanaging a supplier by approving or certifying processes the customer is not familiar with will ultimately hamstring their supply base and add unnecessary cost and time, thus defeating the purpose of the approval or certification,” he concludes.

I believe outside auditors or consultants can help improve yields, lower costs, shorten cycle times, and so on.

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Susan MuchaIn the OEM-EMS relationship, getting to win-win requires a clearly stated business case.

One of the recurring themes I hear in electronics manufacturing services (EMS) is how challenging it is for many program managers and salespeople to negotiate with customers. I’m often told the industry has changed, but when I ask hard questions I tend to find that the biggest change is that the people doing the negotiation seem to know a lot a less about the business of building electronic products than their predecessors. And this isn’t just on the EMS side. Years ago, OEMs put highly technical senior people on the team that managed outsourcing efforts. While those people were tough negotiators, they negotiated based on strong knowledge of the processes and challenges inherent in electronics manufacturing. Similarly, EMS program managers (PMs) were often pulled from operations. If expenses were increasing, they had the knowledge to explain the reason a price increase was necessary.

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Sue MuchaService sector businesses have plenty of functional parallels to SMT.

As CIRCUITS ASSEMBLY Editor-in-Chief Mike Buetow pointed out in his April editorial, hundreds of thousands of manufacturing jobs are going unfilled. However, the notion that the smallest demographic of employees is in the 30 to 50 age range surprised me. My hypothesis for this is slightly different from Mike’s.

Back in the late ’90s/early 2000s, we were publicly touting the evolution of our economy into a service economy. I think folks entering the job market during that period simply focused on the concept of 21st century jobs. In the STEM events I’ve attended, many of the students I’ve talked with have no concept of factories (outside of thinking about putting a 3D printer in their garage). To them, a high-tech career involves a glass office in Silicon Valley.

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