The End of the World as We Know It Print E-mail
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Written by Jennifer Read   
Monday, 09 May 2011 16:16

An upcoming conference attempts to make sense of a fast-changing industry.

Yes, a provocative headline, intended to grab your attention. But we do have a serious point to make, so please stay with us.

When taking a long view, and considering momentous events such as war, famine, the rise and fall of empires, the invention of Facebook, and Simon leaving American Idol, the times we live in are perhaps no more or less significant than any other. Yet the impact of momentous events on the electronics industry is far more substantial and immediate than even a decade or so ago. Global events have a far deeper impact because so many of the world’s economies and business environments, currencies and marketplaces are inexorably linked. This is new. Off the top of our collective head, we can name five areas where unexpected and uncontrollable things happen to change the world as we know it almost on a daily basis:

  • Energy. Developing and developed countries without domestic sources of energy, and developed ones that choose to purchase from unstable regions rather than bear the potential negative environmental impact, create increased interdependence. When protests paralyze the Middle East, with astonishing speed, we feel it in fuel prices in every corner of the world. Instantly, an outsourced supply solution based in a region in another hemisphere becomes catastrophically expensive for lower volume products.
  • Components. Nearly the entire component base is now in China. The tragedy in Japan has generated a kneejerk response among participants engaged in panic buying and hoarding, driving the industry to a new low. This will create havoc for the next few quarters for a small number of SKUs. What happens when/if China experiences a meltdown of some sort? Do you have rational contingency plans in place?
  • Currencies. Since World War II, the US dollar has been the world’s reserve currency. This was intended to create stability. However, every sovereign nation will act in its own best interest, and the world is watching Washington with increasing alarm. Currency issues impact global economies, and tracking the implications is of vital importance for all businesses, not just the multinationals.
  • Financial markets. Automated trading designed by brainy financial wizards has taken over Wall Street and other global exchanges. What once was a way for businesses to access capital from (mostly private) investors for the purpose of growth has become a casino. By some estimates, high frequency or algorithmic trading is up to 80% of the daily volume. The flash crash, where the stock market lost over half its value in about three minutes, then recovered soon after (a wildly under-analyzed event), is the type of thing that happens when robots control the capital markets. When will the next flash crash occur, and how will your business be affected?
  • Mother Nature. You can’t predict disaster, but preparation and planning enables a humane and rational response when something bad happens, puts what’s really important into perspective, and helps us all remember that our industry is supposed to change the world for the better, not exploit events for personal greed.

What does this all mean? It means that beyond the normal competitive arena within market sectors and technologies, there is a level of global business intelligence that every professional must access to stay viable. In times past, when communications were not instantaneous, everyone was more or less in the dark about events, unless immediately affected. That was a level playing field, but it just isn’t the case today. If your competitor gains insights about something of vital importance to your business, and you don’t know about it, you are at a huge disadvantage.

Few persons have the luxury to stay on top of all these things. More often, industry executives are doing the work of six people.

That’s why CBA has fashioned a quarterly conference built around assessing and making sense of micro and macro trends and how they relate to electronics manufacturing businesses. We track dozens of key industry indicators, and we update our extensive database each quarter. We look at the implications of global events on the complex, risky, high-velocity, far-flung global supply chains that are too often the norm in nearly every industry sector, from midmarket to the top tiers. What happens in one section of this many-headed beast is felt throughout the organism, and we see the impact long before the news reaches the industry press.

On June 14-15 in the Chicago area, we will host an event where we discuss these sorts of issues with other experts and develop strategies to navigate these dangerous shoals. Yes, the world as you know it will end tomorrow. In its place will be a different world with countless new opportunities and challenges. Come to Chicago and let’s talk about how to succeed in this new world.

Ed.: CIRCUITS ASSEMBLY Editor in Chief Mike Buetow will moderate a panel on the future of EMS at the Outsourcing Navigator Council meeting in June. For information on the Outsourcing Navigator Council meeting, visit www.charliebarnhart.com.

Jennifer Read is cofounder and principal at Charlie Barnhart & Associates LLC  (charliebarnhart.com), a consulting company serving the electronics manufacturing industry; This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

Last Updated on Monday, 09 May 2011 18:20
 

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