Has the Economic Tide Turned?

2018 experienced a year of pump priming unlike any other during an economic growth period in our lifetimes. The US tax bill made significant revisions to the tax code, slashing taxes for (higher-income) individuals and corporations. The corporate rate alone was cut 14 percentage points, to 21%.

Moreover, taxes on profits held by US companies abroad were cut by 20 percentage points or more. That facilitated the repatriation of those cash reserves — estimated by Bank of America at $3.5 trillion, or more than 1/5th the size of the annual US GDP.

As those gains worked their way through the system, the effects included corporate buying sprees that topped anything we’d seen in at least a decade. Business capital investment budgets swelled, and suppliers’ bottom lines ballooned.

The bloom is off the rose, I’m afraid. While not a free fall, the economic reality today is that buyers are cooling off and budgets are returning to more conservative positions. Several EMS firms are guiding for slowing business conditions, and now fabricators are reporting the same. End-markets like automotive are leveling, which will have a ripple effect across the entire supply-chain.

No one likes a cynic, especially so close to the holiday season. But my advice is to go easy on the parties while aggressively going after market share. A large customer base is the best hedge against a slowing economy.

 

 

Guest Blog: The Future of Collaboration

Sawyer completes jobs quickly and accurately, works safely alongside co-workers and is an integral part of the workforce. However, Sawyer is not your average employee — he is a robot. Here, Jonathan Wilkins, marketing director at obsolete industrial parts supplier EU Automation, explains how advances in technology are changing the way that humans interact with robots.

Rethink Robotics’ robot Sawyer, is just one example of automated technology being introduced to factories. Increased automation in factories is optimizing productivity in manufacturing. While some people fear that the human workforce will ultimately be replaced by robots, manufacturers disagree as they are aware that both machine efficiency and human intuition are vital for optimum productivity.

So, how can manufacturers ensure that robots and humans can work efficiently and safely in the same workspace? Industrial robots are in the factory to complete either repetitive tasks or those that are too dangerous for human workers. Traditionally robots are heavy, simple and isolated to prevent humans getting too close.

There are now technologies that allow humans to work side by side in the factory with collaborative robots, otherwise known as cobots. But, what makes them collaborative?

Benefits

Collaborative robots are specifically designed to work in direct cooperation with a human, in a defined workspace. There are also collaborative workplaces that are safeguarded spaces where the robot and human can perform tasks simultaneously. There are multiple reasons why robots like Sawyer are becoming more popular in factories.

Cobots are affordable, highly adaptable and easy to install. Small and medium sized enterprises (SMEs) are eager to adopt the technology and the manufacturing sector expects to see huge growth of cobots over the next few years.

Cobots also support the human workers themselves. Robots can complete the heavy lifting and repetitive jobs that can cause human strain. This gives human workers more time to complete more creative and intricate work.

Safety

The key consideration for manufacturers that want to benefit from human and machine interaction is how to keep workers safe. Cobots have features that prevent them from injuring any humans when in operation, because humans will be working in close proximity with the machine.

All cobots have rounded and soft surfaces to reduce the risk of injury if a human gets too close to the machine. They are also fitted with sensors that detect anything entering their proximity and have force-limited joints that will instantly stop if a human gets too close.

These safety features are vital in preventing injury, but there are other factors that manufacturers must consider when investing in collaborative robots.

There are regulations, such as ISO 10218-2:2011, that control how facilities integrate robotics into the assembly line to ensure all workers are kept safe. As part of this regulation, all manufacturers that use cobots will be required to implement safety protocols on site. However, the application will ultimately determine the safety requirements, rather than the robot itself. For example, if the robot has sharp knives attached to it then manufacturers should avoid human-machine interaction.

The Future

In the future, advancements in machine learning and artificial intelligence could increase the capabilities of cobots. If cobots become more intelligent, they will be able to complete more difficult tasks and remember previous work to help them in the future. Machine learning may also mean that cobots will be able to diagnose themselves and fix any technical issues to complete work more efficiently.

Cobots have the potential to radically change the manufacturing sector. However, there are still some skills that a robot has not been able to perfect. A robot may be able to complete a repetitive task with complete accuracy, but it is not as agile as a human. Cobots lack dexterity and therefore cannot complete more intricate tasks that humans can.

Unlike older, industrial robots, cobots have design features needed to keep workers safe. Facilities managers must combine the machine strength and precision of robots like Sawyer, with human ability to see, think and adapt for the perfect factory. So, if you find out you’ll be working next to a robot like Sawyer, you can sleep well knowing that he will be a safe, supportive and efficient colleague.

 

Don’t Sweat, Taiwan: Apple is Still Yours

Forbes today offers an interesting take on Apple, specifically, that Taiwan would feel the crunch of a major shift in the supply chain back to the US.

If Apple scales back contracts in Asia, at least a half-dozen core suppliers and assemblers in tech hardware hub Taiwan would face a loss in orders, analysts forecast. But those corporate heavyweights might be able to retain Apple’s business by moving their China-based production back home to Taiwan, if not to the U.S., and using automation for lower costs.

Let’s consider the various angles to this.

First, Forbes is right: A shift by Apple to somewhere outside China (it doesn’t have to be the US) would absolutely affect Taiwan’s major electronics ODMs. That precise outcome occurred when Cisco, AT&T, Motorola, Alcatel, Tellabs, Lucent and many, many others moved their manufacturing to suppliers outside North America. How much laminate is now manufacturing in the US? How much solder mask? Process equipment? Components? How many merchant fabricators and assemblers still do volume production in North America?

But let’s be straight here: Just who will be affected? Key Apple ODMs such as Pegatron, Compal, Wistron, Zhen Ding, and of course Foxconn would be directly impacted. They would have to spend tens of millions to rebuild elsewhere. But … they can afford it. Can anyone else?

Keep in mind, Taiwan doesn’t operate factories in China as a favor to the Chinese. It does so because it has to. Taiwan is a small nation with a population of less than that of New York City and roughly 16 to 17 million people of working age. The unemployment rate is 3.7%. It has no available domestic workers to hire into engineering and manufacturing. China has ample population resources, not to mention the stark differential in labor rates. (Taiwan’s national minimum wage is more than twice that of Shanghai’s, which is the highest in mainland China, and could be five times higher than that of China’s less developed areas. The fully burdened rates are equally disparate.) Taiwan has every incentive, financial or otherwise, to introduce more automation. If it could, it would. If Apple were to bail, China stands to lose much more than Taiwan.

Second, if not Taiwan, where would Apple go? The US doesn’t have the spare workers either. The unemployment rate is 3.9% and has been under the benchmark 6% rate for more than four years. Immigration is at a post-WW II low, further straining the labor pool. Wages are rising as businesses compete for a smaller available workforce.

Third, how long would it take? Building a supply chain in a new region takes time. Granted, the US has the processes in place to bring industrial parks online, but space in key areas is at a premium and local, state and federal regulations often impede quick progress. Many other nations have various issues (graft, corruption, lack of educated or trained workforce, lack of infrastructure, little or no IP controls, etc.) that also prevent a mass exodus. Businesses, especially public ones, cannot afford disruptions in getting products to market. They tend to be risk-averse, for good-reason.

Fourth, not all manufacturing plants are the same, a fact Forbes downplays.

Some Taiwan tech firms, most notably Foxconn, already operate factories in the US and could feasibly move final assembly of Apple’s gear to the US after some initial work at their cheaper China bases, says Tracy Tsai, research vice president with tech market analysis firm Gartner in Taipei.

If only it were that easy. An LCD panel plant is not the same as an SMT placement plant. It would be nearly as expensive to convert a plant as to greenfield one. And final assembly tends to be more labor intensive that upstream processes, which means higher costs. Putting that work in the higher (highest?) labor rate nation —  the average manufacturing labor rate in the US is now close to $39/hr. — makes little sense.

All in all, Forbes is waxing hypothetical, but it’s not a realistic notion.

Now Hear This: Micro Headset Technology

One of the perks of this job is the occasional invitation to take a close look at a range of products. Usually the device is something I would never consider using, rendering the review moot. So it was a pleasant surprise this week when a pair of wireless earphones arrived at the door.

The K True Wireless Headphones (Kfit) are designed by KuaiFit, which insofar as I can tell is a web-based sports training outfit that offers personal training and related apps and devices to get you moving. It’s the first venture into wireless by KuaiFit, although they do offer wired micro-headphones and other sensor-based products related to personal fitness.

 

 

 

 

 

 

At first blush, there are small but sturdy. I don’t think dropping them repeatedly will have any effect on reliability. KuaiFit tells me they weigh only 4.1 grams and have 3-6 hours of play time. Charging is done via a standard USB (included).

I tested out the earphones on a range of songs, from rock to country to classical. (Jazz lovers, find another reviewer!) I streamed the following tracks using Amazon Music:

  • Mozart, “Serenade in G K.525”
  • Beethoven, “Piano Sonata 14 in C Sharp Minor”
  • Travis Denning (“David Ashley Parker from Powder Springs”)
  • Eric Church, “Desperate Man”
  • Zebra, “Whose Behind the Door”
  • Rush, “The Spirit of Radio”
  • Pete Yorn, “Strange Condition”

With any micro headset, audio quality is going to be compromised somewhat. I would characterize the sound as clear albeit a bit tinny, with some loss on the low-end. No real surprise there. Streaming wasn’t perfect; there were occasional dropouts. Not so much to be a deal-breaker, but enough that I must disclose them here. The music softens when a text alert is incoming; a plus.

Because these are intended as sport headphones, I took a short run with them in. (Imagine the annoyance if one fell out on a run, especially in dim light.) They are really comfortable and — just as important — do stay in place. They also passed the comfort test of my 12-year old son, who was notably impressed. They come with various eartip sizes, which are simple to switch out.

 

Since KuaiFit specializes in sports fitness, there are also downloadable apps which can be tied to KFit for custom training plans (running, cycling, gym, triathalons, etc.) I haven’t explored those yet.

All in all, Kfit is a cool innovation. They are funding the new device through Kickstarter. See below for details:

Profits or Politics: Where’s Your Company’s Focus?

On paper, Bryce was a rock star.

In person, Bryce was a costly mistake.

When Bryce strolled through his company’s headquarters sipping his gourmet triple latte and waving to the little people (as he dubbed them), every front line employee noticed. They snickered at his confident strut leftover from his days fronting a band. They recognized his disdain for real work. And they were appalled by his self-serving power plays. Sure, Bryce flashed plenty of smiles. He slapped high fives and offered up empty promises like a candidate running for mayor. But poor follow-through was Bryce’s legacy. He seldom kept his word. In short, Bryce was a leadership disaster!

How does one spot an emerging “Bryce” before his decisions crater your company?

Here are five ways to detect a political player like Bryce in the making.

1. Political players fixate on the wrong numbers.

Take our buddy Bryce for instance. Bryce kept “real-time stats” on the total number of employees who reported into his organization. Bryce frequently boasted that a significant portion of the operation reported to him or one of his people. That’s how Bryce boosted his shaky self-esteem. He added people while he talked a great game and tried hard not to mess up in front of his boss. Bryce figured as long as he had an adequate number of people to throw under the bus at the opportune moment, he would be too big to fail. Bryce fixated on employee count, not profitability.

2. Political players recruit, hire and promote people like themselves.

It’s true. Birds of a feather flock together. Self-absorbed power junkies are obsessed with protecting their titles at all costs. Consequently they try to hire people who are singularly loyal to them. Often they find themselves at odds with an underling more loyal to the company. When they do, they will quickly take any measure imaginable to rid their team of those who are looking out for the good of the whole.

Fortunately, oil and water don’t mix. Employees and leaders who are truly concerned about the welfare of the whole are turned off by those who seek to play the system. Case in point. Bryce’s demise began when his peers became as disillusioned with him as his front line employees were. Bryce’s hiring and promoting of other politically minded employees initially went unchecked because his colleagues were immersed in their own immediate concerns.

3. Political players manage up and cover up.

After all, the Bryces of the world tend to perform for an audience of one. Their boss! Political players will often freely (and unnecessarily) sacrifice their team’s welfare for the sake of keeping the boss happy or shielded from the truth. This is not always a reflection on their boss. He or she may have been misled about the details two or three levels down. The political player likes vagueness and fuzzy business practice. Transparency is not typically part of their game plan. They operate in the shadows where almost no one has insight to their treatment of the people.

4. Political players encourage a zero sum mentality.

Some got to win, some got to lose. That’s the chorus to every song for a corporate politician. In their world, there is no such thing as a win-win outcome. And their department heads also propagate this win-lose mindset. The political player seldom takes the time to seriously evaluate a balanced option. They want to win at all cost.  And their politically-motivated direct reports know instinctively not to cross the boss. It wouldn’t be prudent. Political players win by short-changing the organization.

5. Political players come with plenty of hidden costs.

As I later met with the CEO’s management team, we inventoried the true cost of having Bryce in power. It became apparent that he had made dozens of unnecessarily costly decisions. Bryce built a division that could never reach profitability. He pushed technology that he preferred versus exploring for new IT solutions that would best serve the company. Bryce delegated all authority to managers who were either asleep at the switch or pandered for his favor. As a result, the company was paying extraordinary sums for expensive logistics initiatives that delivered a poor customer experience. Bryce’s salary and benefits were only a tiny fraction of his real cost to the company.

Sooner or later the results speak for themselves. The results of Bryce’s self aggrandizing moves were draining the company’s balance sheet and delaying success. Once realized, Bryce was given a fair severance package and hustled out the door.

Avoid the heartache, headache and howling that political players bring to their companies. Ask yourself these five questions about each member of your management team:

  1. Does _____ fixate on the wrong numbers?
  2. Does _____ overlook or ignore loyal company employees who do good work?
  3. Does _____ recruit, hire and promote individuals who pander to them?
  4. Does _____ quickly adopt the easy solution that best serves their self-interest?
  5. Does _____ make costly decisions because s/he is self-absorbed?

If any of your leaders (or employees for that matter) cause you to answer “yes” to three or more statements, you have an opportunity to lower your operating cost substantially. Consider replacing that person with a competent leader who really cares about your company. If you must, look outside your company. Remember… hire for character and train for skills.

Ironically, Bryce’s follow-up gig gave him the spotlight to swagger like an actual rock star. You can catch Bryce and his new band playing weekends on the Jersey Shore. At least now the only cost for watching Bryce perform is the cover charge.

Don’t let a political player on your payroll. Today is the day to shine the spotlight on each of your leaders and objectively evaluate their performance.

Keith Martino has a passion for helping engineering executives achieve stellar results. Martino authored the book Expect Leadership in Engineering. In addition, the team at Keith Martino has designed and launched Leadership Institutes at multiple engineering firms across the US. Martino is quoted in Young Upstarts, Entrepreneur Magazine, NewsMax Financial, the FedEx Worldwide Manager’s Pak, and several metropolitan business and industry trade journals. For more information visit keithmartino.com.

New Podcast with Marc Benowitz of iNEMI

Our latest podcast features Marc Benowitz, the new CEO of iNEMI. Before joininh the electronics consortium, he spent nearly 40 years at AT&T, Lucent, Alcatel-Lucent and Nokia Bell Labs, where he began as a member of the technical staff in the interconnect technology lab, and ultimately worked his way up to senior director of the reliability, hardware test and eco-environmental engineering organization.

He speaks with me about the transition from the private sector to fulltime consortia work, and his goals and priorities for iNEMI at pcbchat.com.

Shocker at Sanmina

Jure Sola spent 26 years atop Sanmina as chairman, president and eventually CEO. His replacement lasted less than 12 months.

In a stunning announcement, Sanmina today announced the resignation of Bob Eulau as chief executive. The move is effective immediately.

Eulau was handpicked to replace Sola as chief executive of Sanmina, a move that took effect last October. At the time, Sola gushed over his successor’s abilities, stating “Bob has a deep understanding of Sanmina’s strategy, customer focus, technology offerings and day-to-day execution. I am confident we’ve selected a strong leader. Bob’s wealth of experience and strong leadership are invaluable to the strategic direction of Sanmina and are precisely what Sanmina needs for a successful future.”

What changed in a year? Often, quick changes like this are tied to financial issues or disagreements with the board over direction. Sanmina was quick to reaffirm financial guidance for its current quarter, and is on pace to surpass last fiscal year’s revenue total. At the low end of guidance, the EMS firm will top $7.1 billion, about 3% more than the prior fiscal year. In its most recent earnings call, Eulau forecast increasing margins and yield improvements.

Michael Clarke, another Sanmina alum and a current board member, will take over come Oct. 1.

PCB Chat: California Prop 65, RoHS, and REACH with Brenda Baney

Brenda Baney has been addressing product environmental regulations for over 20 years.  She began with General Motors as a materials engineer, where she was at the forefront of the automotive industries material compliance reporting.  Brenda has led internal company projects on elimination of CFCs, lead solder, hexavalent chromium, and a myriad of other substances of concern. She has been a leader within both automotive and electronics industry groups covering topics like ionic cleanliness of printed circuit boards, lead-free solder, End-of-Life Vehicle, RoHS and REACH compliance, and is considered a supply chain expert for material content reporting.

Baney was the Product Stewardship Manager for Delphi, where she led the reporting of complex material compliance data on hundreds of thousands of parts successfully. She also created an internal Conflict Minerals cross-functional team leading Delphi to be named as the Number One automotive component supplier in the 2015 Assent Conflict Minerals rating.

In March 2016, Baney founded B Cubed Consulting, where she works with automotive & other durable goods suppliers to keep strategies on course and stay up-to-date on the latest negotiations between industry and global government enforcement bodies.

She speaks about the new latest amendment to California Prop 65, plus REACH, RoHS and other related regulation issues with Mike Buetow on our latest edition of PCB Chat.