Jabil on Tariffs

Jabil chief executive Mark Mondello said what we’ve all been thinking about the US-China trade tariffs.

On a conference call with analysts, Mondello called the issue “a big deal.” He underscored how Jabil could benefit if customers start to move manufacturing from China, as the EMS is well-positioned with factories all over Southeastern Asia, including Malaysia, Vietnam, Singapore and Taiwan — not to mention Mexico and Eastern Europe. And he broke down the potential impacts:

  1. “If the tariff and trade issues get resolved, that’s great.”
  2. “If the trade and tariff issues create some choppy seas and a storm here and there, that’s really good for (Jabil), because … there’s nobody that has our scale that can move product around with the agility and the flexibility that we can and, in fact, we do that all the time.”
  3. “If the trade tariff issues become some nasty hurricane, it’s going to be bad for all.”

Indeed.

Steve Jobs’ Biggest Legacy?

The decision of Foxconn to enter the semiconductor manufacturing market gives additional heft to the premise that the US created a monster determined to swallow everything in its path.

As reported by Nikkei Asian Business today, Foxconn is working on a potential joint venture with its Sharp subsidiary to “invest” as much as $9 billion in the new plant, which would be the company’s first foray into IC development. (We put “invest” in quotes, because 1. the gulf between Foxconn’s reported investments and its actual investments tends to be oceanic in size and 2. in this case, the investment is reportedly coming from the Chinese government.)

Foxconn already is likely the world’s largest consumer of chips, so getting into the OEM business would cause reverberations among its major suppliers. Moreover, it returns us to the sad refrain: What is Foxconn’s end-game? The company dominates the electronics supply chain from boards to assemblies to box build, makes other components (connectors, displays, motherboards, etc.),
operates retail stores, invests in 5G … you name it.

Personally, I blame Steve Jobs. The iPhone was a revelation, for which Jobs deserves every ounce of credit he has received. But in looking for assemblers, he could and should have looked further than Foxconn. There simply is no major company in the electronics industry today that is more aggressive and yet has a worse record of worker treatment than Foxconn. I’ve worked in the industry since 1991. Foxconn remains the only company that I’ve ever received direct complaints from its employees about their treatment. (And that came from US workers. I can only imagine what their Chinese counterparts might say.)

And yes, I realize it was Michael Dell, not Jobs, who gave Foxconn and Terry Gou its entry into the US computer industry. But it was Apple that gave Foxconn its biggest stage, boosting the Taiwanese company from a third-party motherboard maker to a partner in the most revolutionary electronics device the world had seen to that point.

When criticized for his reliance on Foxconn, Jobs would fire back that the US didn’t have the engineers to build what Foxconn could build. But I don’t think it was an issue of talent, or availability. I think it was an issue of greed. Jobs couldn’t acquire the volume of talent needed at the price he wanted. Foxconn could.

And so that’s Steve Jobs legacy. Foxconn is a $150 billion company and growing. Its revenues are larger than any of its customers. And, being traded on the Taiwan Exchange, it has access to financial markets without the transparency of public companies in the US or Europe. A monster is present among us, and will eventually devour us all.

Patty and the Professor Flashback: Uptime Part 4

Folks, the adventures of The Professor continue … 

So far the meeting with The Professor had proven very valuable, John thought. He was anxious to hear the other suggestions that The Professor had. The Professor began to speak. 

“Changeovers are what really hurts ACME’s uptime and, hence, productivity,” The Professor commented.

Pete was surprised. “Even you were impressed with our system of having a white board to document the logistics’ status for each future job,” said Pete.

“You are correct,” responded The Professor. “However, a changeover takes you about 2-3 hours and you have one or two changeovers per line per day,” The Professor added.

 “We have a high product mix business. It’s what we do,” said John.

“The good news is that you can cut your changeover time to 30 minutes,” shared The Professor.

“How?”  asked John increduously.

 “By using feeder racks,” explained The Professor. “These racks allow you to set up the component reels for the next job while the current job is running. Admittedly they cost about $30,000, but they will pay for themselves in weeks. Right now you lose more than two hours per changeover loading the feeders onto the component placement machines. With the feeder racks, you just roll them and lock them in place,” said The Professor.

Pete moaned, “We already have feeder racks. We only used them once, because they stick on the carpet when we move them.”

This comment caused The Professor to groan internally, but he hid it well. He had noticed the frayed carpet near the component placement machines.

John was beside himself. “It’s a good thing we are not The Professor’s students……I don’t think we would be heading for an A,” he thought. John responded to Pete’s comment, “Pete, let’s get facilities to remove that rug and start using  the feeder racks ASAP.”

Patty listened to all of this with comical fascination. She had harassed Pete about using the feeder racks several times. While the meeting was going on she drew a sketch of The Professor, who is notoriously camera shy. Oh, and she decided on the restaurant, Aujourd’hui in nearby Boston. Maybe they can pick up a Red Sox game while they’re there.

Epilogue: Six months later ACME’s uptime was a respectable 30.4%. John never had to buy another line. The improved productivity enabled ACME to increase their market share.  Patty’s dinner and ball game were a complete success. She handled her victory modestly and she and Pete became best friends. Pete also joined the ranks of The Professor’s many admirers.

Dr. Ron’s note: I know that a story like this must seems too comical to be true. Every point and the associated uptime numbers, lost time etc, are all based on a real situation with no exaggeration. The Epilogue, however, is ficticious, as is the Patty/Pete friendly (?) conflict. The names have been changed to protect the innocent (guilty?).

What is your uptime??

Cheers,

Dr. Ron

Going Mobile

As those who view our websites on their phones know, we have rolled out new mobile versions of circuitsassembly.com and pcdandf.com.

The new versions are optimized for smartphones and tablets, and are designed to present news, press releases and, of course, our technical content in a much more user-friendly way. As always, we’d love your feedback.

Meng’s Rollup

The arrest and possible extradition of a high-rankling Huawei official should be of concern to anyone doing business abroad. It is bound to have a domino effect as other nations line up to wreak havoc on strategic competitors to their respective domestically based corporations.

Or will it? This has been standard operating procedure for China for years. Whereas Moscow specializes in kidnappings for ransom, that’s Finance 101 compared with the Bear’s doctoral dissertation. China’s motive is longer in range — and the detainment longer in duration. What prevents many countries from acting in such rash fashion is the inevitable broadside to their reputation. China doesn’t mind the public relations hit, provided its broader objectives are met. And that objective is complete control over its economy and security. To the Chinese government, gulags are a feature, not a bug.

Canada rolled up Meng Wanzhou at the request of the US government, which cited an unsealed indictment against the Huawei CFO. It is widely believed Huawei is a front for the Chinese government, in part because its founder (Meng’s father) is a former Chinese intelligence office. Huawei denies the charges, but the US knows of what it accuses: In 1999, no less an entity than the Taliban had approved a plan for Afghan Wireless Communications — essentially a front for the American government — to build out the phone and Internet system in Afghanistan. If not for infighting in the US government, America could have had the entire country tapped.

When contemplating these latest events, consider these issues:

  1. The US has not yet indicated why it wants Meng. (The early buzz is the company is shipping illicit gear to Iran, in violation of international sanctions.) What happens the next time an adversary decides to nab an American? Who has the moral high ground? Do we trust the government — any government — enough to take it at its word? Or is Meng a pawn in a bigger, as-yet to be disclosed play?
  2. What will be the cost to US businesses that do (or want to do) business in China?
  3. How far is the US willing to go in terms of disclosing what it knows about Huawei’s operations? Sometimes it’s more useful to allow the behavior to continue in order to monitor it surreptitiously. Also, alerting others could give them a leg up on determining where their vulnerabilities lie, and lead them to close those gaps.
  4. There’s a trade war ongoing between the US and China (really), causing several major electronics ODMs to consider relocating factories from both nations, not to mention higher costs to consumers. Some, like Foxconn chairman Terry Gou, think the effects will last for years. Will Meng’s arrest lead to further economic isolation and barriers among the world’s two largest economies?

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.

 

Do Bolts Go On Your PCB Bill of Materials?

The short answer: Yes. If you want prototype assemblers like Screaming Circuits to install it, it must go in the bill of materials.

For the most part, we solder through-hole and surface mount components on PCBs. As most everyone knows, all those parts need to be put in the bill of materials (BoM). The BoM is a list of all of the components to be placed on the PCB. The file typically includes an index number, the number of times a specific component will be used on the board, the reference designator from the schematic, the component manufacturer, and the manufacturer’s part number.

If a specific component is used more than once — a common bypass capacitor, for example — it will take only one line in the BoM. One field in the BoM will list the number of times the component is used, and another field will list all of  the reference designators for that part number.

You may also want to include alternate parts for components likely to go out of stock. Passives, like capacitors and resistors, are notorious for going out of stock without notice. Invariably, though, there will be a half-dozen nearly identical parts that will fit the bill just as well. Create an alternates list so your purchasing folks or manufacturer won’t get stuck not knowing if a substitute is valid or not.

But what about things that aren’t soldered, like nuts and bolts, double-stick tape, or display panels and such? Where do they go? The quick answer is they go in the BoM like all the other parts. Manufacturers build from the BoM. That means that if it’s not in the BoM, they won’t know to install it.

Some of these parts are nonstandard and can’t easily be quoted online, but they still need to be in the BoM. If you have such things, give your manufacturer a call to see how much it will cost and they can assemble it. Then either put the reference designator in the silkscreen or offer an assembly drawing with a reference designator for whatever it is.

That means a set of bolts might be BT1, BT2, BT3 …. Washers could be W1, and nuts N1. A glue dot could be G1. It doesn’t matter that much. Just make sure the reference designator in the BoM matches that on the silkscreen or in an assembly drawing.

If it requires hand operations like double-stick tape under a display, again check with your customer service rep first, but then put the display and tape in the BoM and provide any non-obvious information in an assembly drawing or special instructions.

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: