At AltiumLive, Lots of Sun (and One Big Cloud)

by Brooke Anglin

One of the first things I heard when I arrive at AltiumLive last week was was how much they loved the recap of the event my colleague Chelsey Drysdale wrote last year. They added that Chelsey truly captured what AltiumLive is about. Talk about pressure!

Let’s start at the beginning.

The Piano Arc contains a total of 12 PCBs.

Drinks are on Them. The week (well, three days, but they really pack a lot in!) kicked off with a great reception on an outside terrace at the Loews Coronado Bay Resort.  Dave Starkey, the engineer who designed and built the Piano Arc — the circular piano used by Lady Gaga’s pianist, among others — was there. So was the pianist. They displayed the unit, a 360-degree custom keyboard, with one of the panels removed, exposing the PCBs.  Altium director of community engagement Judy Warner met Dave at a user group meeting in San Diego, heard his story and recruited him for the event.  In case anyone wants to know the piano has 288 keys, a total of 12 circuit boards and only cost $57,000.

I saw our customary PCB West speakers Suzy Webb, Rick Hartley, Gary Ferrari and Eric Bogatin and met a lot of engineers.

Getting Younger. One of the things you note about AltiumLive is the demographics. It’s a younger crowd than you typically see at industry events. Eric Bogatin noted this in the first keynote (AltiumLive had not one, not two but three keynotes). He brought some of his students, had them stand up for recognition and encouraged hiring companies to talk to them.  That drew a good laugh from the crowd.  In his talk, he pointed out that while many designers will be retiring in the next 10 years, AltiumLive gives us reason to think a new generation is coming on strong.

Keynote #2 featured a celebrity from outside our industry. Jor Grand of Grand Idea Studio has a short-lived TV show called Prototype This! on the Discovery channel. The concept, which was similar to Mythbusters, was about the viability of gadgets and technology and how engineers feel a since of winning when a product doesn’t work the first time, but they don’t give up until their creation finally works successfully.  While the show lasted only one season, Grand shared several clips and generated lots of laughs.

Finally, the main event: Altium rolled out its much-anticipated Altium Designer 20 ECAD. VP of marketing Lawrence Romine detailed the new “push and shove” capabilities that enable routing of complex HDI boards and ramp up design times over 20%. (For more on the tool, click here.)

Cloud in their Eyes. This was the third year of AltiumLive, and the multi-city event (another is being held in Frankfurt this week) draws 500 designers. The company grow is equally impressive. Last year 2018 Altium saw over 8,000 new users for its Designer PCB CAD tool, and on average Altium users do over 10 designs a year.

Looking ahead, Altium wants to move toward the cloud, something the industry has been avoiding for years. Its has added real-time collaboration, and hopes to bridge the gap between manufacturers and designers.

Not surprisingly then, AltiumLive focused as much on tomorrow as on today. The highlight of the event was the Robot Build and Battle. Attendees split into teams of six or more. Ours had nine; eight engineers, from all of the country, and me. I was cheerleader, motivator and general handyperson. (They said I sounded like each of their bosses … I beg to differ!) Team Sierra beat last year’s record, but we weren’t far behind.  Amit Bahl of Sierra Circuits told me he didn’t realize just how geeky our industry was until the robot build. Such a fun and educational event!

Brooke Anglin is senior sales associate with PCD&F/CIRCUITS ASSEMBLY.

The Disruptors

In his most recent monthly column my friend Gene Weiner pointed out the irony of calling a printed circuit board a commodity. “When did printed circuits become mass-produced unspecialized products?” he asks.

As I told Gene, it’s true PCBs are custom, but in some (many?) instances they are highly mass-produced. Think residential LED lighting, or game consoles or the most popular phones, etc. My sense is that calling them “commodity” or “custom” is a bit of a red herring. Large OEMs call PCBs commodities even though they know each is specific to a particular program. I think to most its a catchall word for “volume procurement.” 

There is real tension on costs between customers and suppliers, and without artificial price bottoms I can see no reason that won’t continue. I think it’s highly unlikely sellers will be able to change the pricing model as long as the process technology remains essentially the same. It’s too entrenched, and often the buyers (which more and more often are EMS companies) have lower margins than the fabricators, so there’s no incentive for them to switch to a pricing model that will cost them more. A move to a different process technology (3-D/additive manufacturing) might well change the pricing curve.  

It’s not that simple, of course. As double-Ph.D. and former CTO of Multek Craig Davidson once said, “Never underestimate the tenacity of incumbent technology.” It’s perhaps the best quote on technology adoption I’ve ever heard.

I used to think that with the many brilliant minds in our industry, we would successfully disrupt ourselves — in other words, the ideas that obsolete our current ways of doing things would be conceived and implemented by one of our own — maybe some genius in the basement of Apple or Intel or IBM. I’m less confident of that now.

I now lean toward the notion that the true disruptive change will come from someone outside our industry who has knowledge of both hardware and software and who uses a truly novel process to develop a widget that the public embraces. The mass appeal of the product (not the process, to which the general public is ambivalent) will be the proof of concept. And the investment money will follow.

Not with a Bang …

Cemtrex’s run in EMS ended today with a decided whimper. The New York-based company sold its remaining contract assembly assets to a German private equity group for about $7 million.

It brings to a close one of the stranger stories in recent EMS memory. Cemtrex grew through acquisition, buying up a German EMS company, and later another, and green-fielded plants in Romania and India.

Focus was not its strong suit. Along the way, it became involved in virtual reality software and proprietary IoT device design and manfuacturing. It set a goal of $500 million in revenue, but its most recent quarterly results, released this week, put it on a run rate of about $90 million annually, which is behind its pace of just a year ago.

Then there was bewildering and lame hostile takeover attempt of Key Tronic, at the time a Top 50 EMS in terms of revenue. In offering a 1:1 stock swap, Cemtrex called out the larger EMS for its seemingly underwhelming profitability. Key Tronic’s response — at once clinical and dismissive — was one for the ages: “Our initial research shows [Cemtrex] reports approximately $45 million of EMS revenue. In our opinion, this does not qualify [Cemtrex] to make any statements as to how it might operate an EMS business like KeyTronic which is over 10 times [its] current size in terms of revenue.” 

Cemtrex never filed the paperwork for a potential acquisition and the proposal quietly vaporized. And today, so did its aspirations of EMS supremacy.

Silicon Valley Not Paved with Gold

Is the bloom off the rose in the Silicon Valley?

For years, manufacturers have insisted on putting factories in the greater San Jose area. The CIRCUITS ASSEMBLY Directory of EMS Companies lists hundreds of entries with Silicon Valley zip codes. Damn the costs — siting near customers — actual or desired — takes precedence!

In the first quarter, the most up-to-date data available, industrial space vacancy rates were 2.7%, near an 18-year low. That’s despite more than 200,000 sq. ft. of new industrial space coming online in the period, on top of about 3 million sq. ft. of new industrial space that came online last year.

Ironically, industrial space rents, while climbing, are a relative bargain. The average rent was $1.27 per sq. ft. in the March period, more than twice that in 2010 ($0.60 per sq. ft.), but well below the national average. That comes to more than $381,000 in rent a year for a modest 25,000 sq. ft. factory. But tack on energy, and labor costs — unemployment rates are not only lower than the national average, but workers earn a small fortune — and it all adds up to a very expensive enterprise.

Today the pendulum is shifting, if only bit by bit. We are seeing furloughs, layoffs and even some big names starting to blink. Jabil, Creation Technologies,
and this week, Benchmark are among those closing factories in Silicon Valley.

Will more follow? In an industry where margin and cash flow often make all the difference, it won’t be a surprise if more players head for lower-cost pastures.

Trade Wars Battlefield Goes Beyond US-China

The US-China trade war shows no sign of abating. And as predicted, it is wreaking havoc on the electronics supply chain. While OEMs like Huawei get most of the headlines, suppliers of semiconductors are feeling the pain.

Even assemblers are getting caught in the crossfire: When the US government initiated a ban on doing business with Huawei, one of its EMS firms, Flex, withheld a reported $100 million in materials and shipments. According to some Chinese blogs, the OEM now plans to sever its business ties with Flex.

Less publicized, but perhaps just as crucial, is the ongoing spat between Japan and South Korea. The Asian nations are locked in a dispute over a group of uninhabited islands located in the straits between the two countries. Relationships are further frayed over issues of war reparations dating to World War II. Japan has struck first, taking steps to put controls on exports of key semiconductor fabrication materials to South Korea for fear they could be used in military applications. South Korea has not publicly countered, but the nation is home to two of the three largest memory device makers.

The tension between Japan and South Korea further complicates an already cloudy memory market picture. DRAM prices are already threatened by a global inventory glut, leading Gartner to forecast a 4% price drop this year. By choking materials supplies, Japan could inadvertently help lower inventories and boost margins. But there’s a point where parts availability could tip the wrong way, ratcheting up lead times and leaving buyers scrambling for sources.

By sales, Samsung and SK Hynix manufacture about 23% of the world’s memory chips. Their combined sales last year topped $110 billion. But there’s no simple answer. Japan is in many cases a sole source of many of these critical materials. How long will South Korea be willing to suffer? And what lengths will it go to to protect its semiconductor dominance?

What’s the Difference?

Here’s the headline:

F-35 Jets: Chinese-Owned Company Making Parts for Top-Secret UK-US Fighters”

Sounds dramatic.

As it turns out, Exception PCB, a UK-based fabricator, is building circuit boards for the next-gen airfighter. And Exception is owned by Shezhen Fastprint, the Chinese fabricator.

All angst aside, however, how is this different than TTM being the largest board supplier to the US Department of Defense?

Laminate Consolidations Continue to Stack Up

AGC continued its consolidation of the laminates market this week, reeling in Taconic for an undisclosed amount. The Japanese company also acquired Nelco last winter, giving it two of the remaining US-based PCB materials manufacturers.

That leaves Isola and Rogers as the last two major players of a once formidable domestic laminate industry to call the US home. And neither company produces the majority of its product in onshore. (Sound familiar?)

With Rogers’ capacity consumed by the 5G rollout, some OEMs and fabricators have been turning more to Taconic as a source for high-rel end-products that required a Made in USA stamp.

The largest vendors — KingBoard, Shengyi, Nanya, ITEQ, and so on — are all based in Southeast Asia. The volume and variety of materials that can be sourced in the US continues to erode, and its hard to see that reversing course. To wit, in its announcement, AGC allowed that “Over time, materials made in Taconic’s Petersburgh, NY, location will be moved to another facility.”

Isola makes FR-4 in Ridgeway, SC, and AGC Nelco makes the same in Tempe, AZ. They join Rogers, Taconic and Arlon as manufacturers of electronics materials in the US.

Will trade tensions peaking, and 5G creating supply issues around the globe, is that enough?

Designing User Experience for the Factories of Tomorrow

by Olga Zinoveva, Senior Software Engineer, Bright Machines

The User Experience (UX) discipline in the technology sector has evolved rapidly over the last two decades and we’ve all witnessed the changes.  For example, the transition from button-based phones and keyboard-only interfaces to increasingly powerful yet easy-to-use, touch-based smartphones and tablets. A parallel change has been happening in factories, with industrial Human-Machine Interfaces (HMIs) evolving from physical push buttons, lights and switches in the 1980s, to the multi-touch screens of today. And we are not done evolving yet!

I have worked on various consumer applications in the past, including games and websites, and was directly responsible for building the UX on a couple of those projects. My experience in consumer UX gives me some insight into the many exciting opportunities that lie ahead for industrial UX. Here are a few I’ve been thinking of.

Defining UX in the factory context

In a setting where a vast array of hardware devices are connected to each other in complex ways, and users range from operators on the factory floor to project managers in remote offices, UX goes far beyond a single screen. Instead, it encompasses the full experience of using the system, from any interface or device that connects to it. Industrial UX is a mix of software (dedicated touchscreen panels or apps) and hardware (buttons, feeders) interfaces controlling the machines on the floor, monitors giving real-time status updates about the production line, and services generating reports based on data collected in the cloud over many weeks. Almost every component we build becomes a part of the user experience, so we must approach design holistically. Every software and hardware engineer, product manager, and data scientist must think like a UX designer.

Increased software capabilities mean increased complexity

The role and responsibility of software in manufacturing is growing rapidly. But with more software capabilities comes more UX complexity. As more tasks move from hardware to software – whether running on the device itself, in a local server, or in the cloud – the number of ways that users can interact with the system and their complexity increase. Yet the UX we build cannot simply hide this complexity from the users. A core concept of UX design is that people always form mental models of how a system operates, whether we want them to or not, and if their model sufficiently differs from reality, it will lead to frustration and mistakes.  Therefore, the next-generation factory UX will need to be intuitive and straightforward, but never oversimplified. The goal is to design a UX that helps users build the right conceptual models from the start to maximize productivity and minimize training time and mistakes.

The high bar set by consumer devices

Almost every worker in a modern factory has used a smartphone or tablet – this year, global smartphone usage is expected to hit 2.5 billion (and it’s growing)! As a result, today’s factory workers have a high level of technical literacy and familiarity with certain interaction standards. This represents an incredible opportunity for industrial UX because it can reduce training time for any UX that follows these standards. At the same time, the ubiquity of thoughtfully designed consumer devices has raised the bar for the quality of user interactions, responsiveness, and UX clarity in the factory context. Workers now expect industrial interfaces to work as well as their personal smartphones.

Building UX for the factory of tomorrow is no small feat, but it represents a massive opportunity and an exciting time for UX professionals as they help inform the next wave of industrial innovation.

An edited version of this article also appeared in Design World on June 3, 2019.

Leadership Failure! What Will It Cost You?

by Keith Martino

Mediocre Mike was a card shark.

He LIVED for the weekends. Saturdays and Sundays were the only mornings I ever knew Mike to leap out of bed. It was in his blood. Mike couldn’t wait to hit the casinos. Every weekend and holiday sunrise, he was among the first to start tossing out his homespun version of “fish bait.” Mediocre Mike loved to brag.

Slowly but surely, each Sabbath unsuspecting, wannabe gamblers migrated into the club where Mike hung out. It seldom failed. A few of the less fortunate souls would land at Mike’s table. No worries. Mike and his cronies were poised for the pleasure. With friendly smiles and sinister hearts, they shook down every novice card player who came their way. What could be more entertaining?

In his mind, Mikey worked hard Monday through Friday sharpening his craft. He stayed up late into the evening hours swigging bourbon, practicing his moves, and watching YouTube videos. When it came to hustling newbies, Mike was good. He was always prepared. He took pride in his winnings. It gave meaning to his life and made his son proud.

Of course, someone had to pay the price. In Mike’s case it was his corporate employer. As they say, one man’s loss is another man’s gain.

Mike got lucky and his bankrupt band of gypsies was bought out by a high-quality Fortune 100 company. Mike couldn’t believe his good fortune when his new ship came in. The sharp household logo added to his prestigious cover at the casino. Mike was on a roll.

So what does any of this have to do with leadership failure? Plenty!

In the first year with his new employer, Mike maintained a low profile. He hid out and let a hundred or so direct and indirect reports do whatever they liked. After all, who was Mike to blow the whistle on anyone else? He figured as long as his fingerprints weren’t on any egregious errors, his gig could go on forever.

And for a while, it did.

Mike sharpened his corporate gaming skills as he flipped the switch on his region to autopilot.

Like any looming bar bill, someone ultimately has to pay the price. Yep. Mike’s employer took it on the chin. Just one floor below him, one of Mike’s managers, Rambling Roger, started running a different racket. Roger began practicing a few new moves on his administrative assistant. Who knew? Everyone. Except Mike, of course.

Mike’s elevator never stopped on the second floor. It was essential to his third-floor strategy.

Yet, Roger’s seedy habits came to light anyway. His once loyal admin turned the tables on him and sued the corporation for sexual harassment, mental duress, and psychological cruelty. Mike wasn’t worried. This manager wasn’t one of Mike’s political buddies. Mike simply ushered in HR and pretended to be appalled by the findings. Meanwhile, he brushed up on his shuffling skills. And Mike shook off the losses as a necessary cost of doing business. At the company’s expense, of course!

Over time, Mike’s regional salespeople were found to be cheating on their commission plans. His operational leaders turned blind eyes to cost overruns. His staff took plenty of time running personal errands and convening for smoke breaks. The billion-dollar brand faltered.

You wouldn’t need to be a member of Mensa to calculate the cost to his company of Mediocre Mike’s leadership failure. It was high into the six-figure range. Likely higher.

What can you do if you have an employee or leader who has poisoned the well?

  1. Do nothing and hope s/he doesn’t mess up too badly? Don’t chuckle. It happens daily.
  2. Fire the person and replace him/her with someone from outside the company? That’s often an illusion destined to fail.
  3. Replace the person internally? Perhaps, but it will be most effective if you do the following:
  4. Reset the culture of the company, division, or team by replacing the leader internally and bringing in an outside leadership consultant to re-instill the values of the company.

Mediocre Mike was a card shark.

He LIVED for the weekends. Saturdays and Sundays were the only mornings I ever knew Mike to leap out of bed like a man on a mission. It was in his blood. Mike couldn’t wait to hit the casinos.

Don’t gamble on your losses with a leadership failure like Mediocre Mike. The bar tab will leave you with a hangover that may cost you your company’s reputation.

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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 Finance, Hotwires, Circuits Assembly, and Printed Circuit Design & Fab. For more information visit: www.KeithMartino.com