Category Archives: Hot Wires

Mike Buetow’s thoughts on the industry

Boston Bulls

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To the list of those bullish on the prospects for US manufacturing, add the Boston Consulting Group.

The consultancy group has issued a report that, in essence, gives China about five years before the gap between the two nations is closed.

The report contains few surprises. BCG points to steady increases in China’s wage rates and logistical costs, coupled with higher productivity in the US, as reasons for its optimism. Automation in China will have a deleterious affect on manufacturing there, as it will further reduce any labor rate advantage.

Moreover, any shift to other lower-cost nations such as Vietnam or Brmitl will be mitigated in part by those nations’ weaker infrastructures.

Pointing to past successes in fending off Taiwan and Japan, BCG says that US manufacturing sector in well into a period of adjustment and retrenchment, and “conditions are coalescing” for another American factory resurgence.

Worth a read.

Pay to Work

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Here’s fodder for those who believe government should stay out of the “job creation” business. In the past few years one Florida county gave tens of millions in direct funding and tax breaks to a series of companies that are now accused of not having delivered on their employment promises. It’s not clear from the news item, but it appears one of the companies — Jabil — never lived up to its job guarantees and the state is now trying to renegotiate the contract.

 

Microsoft to Harden Sustainability Line

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Microsoft says it will start requiring some suppliers to provide annual sustainability disclosures starting in 2013.

About a dozen of its key vendors will be notified about the new reporting process in the coming months, Microsoft said.

Microsoft, of course, sells relatively little hardware, most famously its Xbox video game system. (It pulled the plug on the Zune media players earlier this year.) Celestica, Flextronics and Wistron have been some of the xBox manufacturers, and Flextronics also built the Peabody mobile phone platform, and Flex and Hitachi have worked on Kinect. So we have a pretty good idea of who will be on the receiving end of those first phone calls.

Researchers’ Take on Trade Wars Hard to Swallow

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A group of researchers are asserting that onshoring low-cost manufactured goods back from China would not solve the US’s current economic woes.

The cost of an Apple iPad, they point out, includes about $10 for the workers who assemble it (and that may actually be high, from what I’ve heard). Meanwhile, each device sold helps maintain thousands of higher-paying design, software, management and marketing jobs.

OK, that’s all believable. But it’s the next part is harder to stomach. “Without China, Apple couldn’t be so successful and Apple products wouldn’t be so affordable,” said Yao Shujie, professor of economics at the University of Nottingham in England.

Not so fast. Apple’s margins are by far the highest in the industry. With lower margins, Apple might not be so profitable, but the affordability (an Apple comes at a premium for no other reason than consumers are willing to pay it) is a whole different bag of potatoes. Apple could pay a significantly higher price for onshore EMS work, yet given the fairly low labor content of an electronics assembly, could do so with no effect to the end-product price.

And it says here, those design, software, management and marketing jobs would exist regardless of where the product is manufactured.

Furthermore, the researchers extrapolate from this the idea that the effects a big change in the price of the yuan would have on US manufacturing would be fairly limited in scope. “Multinational firms that think currency appreciation is going to have a big effect on their export capacity from China to the United States are going to shift to other countries, not to the United States,” one researcher said.

Good point. But I would counter that the monies pouring from US consumers into Chinese hands serve to boost the latter’s national coffers, from which its military is deriving great benefit. Cuts in purchases of Chinese-made goods would help reduce China’s ability to assert itself militarily around the world. That would be a positive, too.

Should the US wean itself from its Chinese teat, the benefits would be seen in multiple, if somewhat less obvious, ways.

Making the Rounds

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We will be at several events over the next six weeks.

On Thursday, senior editor Chelsey Drysdale will attend IMAPS’ annual symposium in Long Beach, CA. There’s a number of EMS companies focused on medical electronics exhibiting and it will be interesting to hear what the latest trends are.

The following week, I will be at SMTA International, covering it for the magazine and cochairing (with CIRCUITS ASSEMBLY columnist Sue Mucha) the session “Global Strategies for Lowering EMS Costs” on Oct. 18 from 10:30-1 pm. CIRCUITS ASSEMBLY also is taking part as an exhibitor (booth 528).

On Nov. 8, I am honored to be speaking at Zuken’s US ZDAC users group meeting. We also will be out in force in mid November at Productronica, the biennial trade show to end all trade shows.

Looking forward to seeing you … somewhere.

Data Transfer in the News

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A couple new articles are out on the IPC-2581 and ODB++ data transfer formats.

On Oct. 2, longtime EDA journalist Richard Goering provided a well-written writeup on the “lively panel discussion” (“Data Transfer in the 21st Century”) we held during PCB West on Sept. 29. Richard does a nice job capturing the frustration of the designers present and historical give-and-take that has led us to the current situation.

And yesterday, EDN weighed in with interviews of participants from the data transfer panel held at PCB West and other key spokespersons.

Given the new support for IPC-2581 by Cadence and Zuken, among others, this issue isn’t going away.

Stopping the Fakes

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The US on Saturday (hey, good to know I’m not the only one working weekends) signed a seven-nation agreement to implement an infrastructure for preventing counterfeits. Other assignees include Australia, Canada, Japan, Korea, Morocco, New Zealand and Singapore, while the EU, Mexico and Switzerland appear to be about ready to come on board as well.

I’m not entirely optimistic this will staunch the flood of fakes pouring into the US — without China’s active involvement, that just cannot happen — but it’s good to be on the same page with the majority of our other trading partners. Perhaps together we can accomplish that which we cannot do alone.

 

 

All’s Well at West

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We really had an outstanding week at PCB West. Preshow registration rose to nearly 2,000 (!) and actual attendance was up more than 30% over last year.

Congratulations to Judy Warner and Michael Ingham, whose talk on RF/microwave design and fabrication drew more than 100 attendees, the most in the conference. Newcomer Jamin Taylor’s presentation on flex construction also drew more than 80 folks. Well done!

I also want to congratulate the winners of the PCD&F NPI Award for best new software tools of 2011. They include:

  • Design Verification Tools: DfR Solutions (Sherlock Automated Design Analysis)
  • Computer-aided Design (CAM) Tools: Downstream Technologies (CAM350)
  • Documentation Tools: Polar Instruments (Professional HDI Stackup Design & Documentation)
  • PCB Design Tools: Altium (Altium Designer 10)
  • System Modeling and Simulation Tools: Sigrity (SystemSI – Parallel Bus Analysis)

We have posted the full announcements on PCD&F’s site. Thanks to all who attended!