All Screwed Up

If you work for Foxconn, don’t cheat on your wife.

That’s the message the world’s largest EMS company explicitly sent yesterday, according to several published reports.

Apparently, working for Foxconn means no cheating on spouses, gambling, prostitution, drugs or bribery (not to mention telling the company where you are during certain holidays or overseas trips).

Not that I’m condoning any of that behavior, but I can’t help but note the irony of the rules.

So it’s OK for the company to screw the employees, but not OK for employees to screw each other. Got it.

Trade Show Regionalization

On the eve of Productronica, I am certain of one thing and becoming more sure of another.

First, I believe that this year’s show will be Dominated — capital D — by Europe. I believe that there will be few Americans and fewer (read: next to zero) Asians.

That leads me to No. 2: That the reason for the regionalization of trade show attendance has less to do with the economy and more to do with the fact that for the very most part, existing production technology can build even the latest and greatest products. No matter that new generations of end-products come out every six months (or less), processes are driven by component packaging, and while leading-edge package types have shrunk from 0402 to 0201 to 01005 during the past five years, most conventional equipment is so darn good that it can print, place, solder, inspect and test the latest package styles. Assemblers simply no longer need to chase the latest and greatest equipment around the globe in order to win or build the latest designs. And that obviates the need to run from show to show in search of the “next big thing.”


Where in the world in Chongqing? If you don’t yet know, you’d better grab an atlas as the ultra-dense (population: 31.4 million) central China municipality is fast becoming the next major hub for electronics manufacturing.

A reported $43 billion worth of foreign investment is pouring into western China, with more than 550 companies taking flyers on the region. Foxconn is on board (to the tune of $1 billion), and Quanta is reportedly considering a similar deal to open a PC assembly plant.

Be forewarned: the Three Gorges Dam, which in many experts’ opinions is a disaster waiting to happen, is nearby. And the crime so rampant in Shenzhen is making its way to Chongqing as well. But there’s no stopping the pursuit of cheap labor — even if it costs billions to save pennies.

‘The Goal’ of Line Balancing

The day of the line balancing telecom with AJAX had arrived and Patty was nervous. She had a feeling that the meeting might be contentious.

She felt some relief that The Professor would be teleconing in. The Professor had asked Patty to request a brief tour to measure the chipshooter and flexible placer placement times on one of the lines.

Patty arrived at AJAX an hour before the telecon. Rob took her for the tour. After the tour Patty and Rob went to the meeting room. While they were setting the computer projector and telecom equipment up, the attendees started to arrive. Patty had agreed to give a short presentation on the importance of line balancing, to kick things off. Rob had already told her that Charlie, the lead senior engineer, would be a hard sell.

After everyone had arrived and Patty had called The Professor, she began her brief presentation on line balancing. AJAX has three similar assembly lines each with a $2 million Pinnacle ultra high speed chipshooter and one of Pinnacle’s top of the line flexible placers.

On her tour, Patty measured the placement time for the chipshooter at 81 seconds and the flexible placer at 18 seconds. Patty mentioned in her presentation that for maximum productivity the chipshooter and flexible placer should each take the same amount of time. Upon hearing this comment, Charlie hit the roof.

“Let me tell you something about running a manufacturing facility, little girl,” Charlie fumed at Patty. “When I bought them three $2 million chipshooters, I promised Tom Stevens that I would work them puppies to death. Everyone knows that to minimize costs you must use your expensive equipment the most, so I make sure every feeder is full on all them there chip shooters.”

Patty couldn’t tell whether she was more intimidated or annoyed, but was ready to speak when The Professor intervened.

“Charlie, have you read The Goal?” asked the Professor.

“The only ‘Goal’ I have is to down a few cold ones after I finish wit youse guys.” Charlie shot back.

Patty looked a Charlie’s ponderous beer gut and thought to herself, Now that is something I believe!

Was Charlie right? How does The Goal fit in? Will the meeting take a more productive turn? Who is Tom Stevens?

Stay tuned for the latest.


Dr. Ron

Santa Anna, Redux

That was quick. Electronic News today raised the same point as my post from last week.

To quote: Opinion: In comparison to China, Mexico has emerged as a “best cost country” for products destined for the United States and global markets. Daniel J Hill, CEO of Silicon Border, argues that the reasons for this trend are relatively straight-forward.

You can read the article here.

Santa Anna’s Revenge

We continue to see greater emphasis on Mexico as a preferred sourcing spot by North American OEMs, and thus a preferred locale for volume production by major EMS companies.

The latest proof: According to a recent article, Jabil expects to boost employment at its factory in Zapopan to more than 9,000, up 136% from October 2008.  According to an industry source, Jabil has moved all but six SMT lines from its St. Petersburg, FL, headquarters to Mexico as it ramps its capacity south of the border.

And Sanmina-SCI projects 10 to 20% growth in sales over last year, prompting plans to invest $7 million to  $10 million in new machinery.

Call it Santa Anna’s revenge.

Word Play

Here’ s a little trivia for your Thursday morning. Do you know what Nintendo means? Or how Nokia got its name?

Of course you do. (Not.)

As the Wall Street Journal today explains, “Nintendo” in English translates as “leave luck to heaven,” while Nokia is named for the nearby Nokianvirta River, which in turn is an ancient Finnish word for sable.

It’s part of a fun and anecdotal look at how those and some 14 other electronics companies — including Motorola, Coleco, Magnavox, Samsung and a host of others — came to be known as they are today.

I won’t rob the Journal of its work by listing them all here. Click on the link, though: it’s worth the two minutes.

Service Excellence: Coming Soon, to a Company Near You

In just over a month, Circuits Assembly opens the doors for our annual Service Excellence Awards for EMS providers and electronics assembly equipment, material and software suppliers.

Now in its 18th year, the SEAs honor companies in electronics manufacturing for excelling in the critical area of customer service, permitting participants to benchmark customer service against their peers.

Customers are surveyed to determine a participating company’s level of customer satisfaction in various categories, including dependability/timely delivery; ease of use; manufacturing quality; responsiveness to requests and changes; technology, and value for the price. All customer responses and ratings are tabulated by a third party and provided in a confidential report to the participating company.

The SEAs recognize four categories of EMS providers based on revenues (under $20 million; $20 million to $100 million; $101 million to $500 million, and over $500 million), and the following categories of suppliers: automation and handling equipment; cleaning processing or materials; device programming equipment; dispensing; pick-and-place; repair and rework; screen printing; test and inspection; materials (solder paste); soldering equipment, and manufacturing or supply chain management software.

Circuits Assembly will honor winners during the Apex trade show on April 6, 2010. Proceeds from the program help fund the SMTA’s Charles Hutchins Educational Grant.

For more information, click here. The deadline to enter is Nov. 24.SEA 2010 logo

Focus? Who Needs It?

From Jim Collins to Michael Porter, the latest generation of management gurus argued companies must focus on core competencies and shed all other activities.

Just what makes a “core competency,” however, is always in flux. And as electronics companies see sales plunging like cliff divers, they are quickly redefining the terms.

With today’s launch of Nokia Booklet 3G,Nokia, long synonymous with mobile phones, has now officially entered the netbook market.

But Nokia is just the latest in a string of high-profile OEMs that are seemingly trying to jump-start their revenues by going after what are increasingly commodity markets.

Dell, in conjunction with China Mobile, is said to be looking at jumping in the mobile phone wars. In doing so, the world’s No. 2 computer maker would join Hewlett-Packard, Acer and Asustek as PC OEMs that either have launched or are planning to debut smartphones.

Meanwhile, China Mobile, AT&T and Far EasTone Telecommunications are among the mobile providers now pitching netbooks.

In today’s Wall Street Journal, Roger Yuen, Acer’s vice president of Asia-Pacific smart handheld business group, is quoted as saying “it is relatively easy for PC makers to make smartphones because the two devices share similar components and software.”

Which makes sense to analysts, I suppose, but is something of an insider’s joke in electronics manufacturing. After all, what doesn’t have Intel Inside?

The moves are highly questionable. As this article today in the Wall Street Journal notes, “Analysts say PC makers are unlikely to reap significant benefits in the near term as they need to develop better relationships with mobile operators to sell their products. It will also take time to develop differentiated products and market their own brands in a segment where consumers already have many choices.”

The WSJ hedges, adding, “[M]any agree that longer-term, PC makers have a chance to gain share which would generate a new source of revenue growth and improve overall profitability.”

I don’t see it. These are extraordinarily competitive markets, flush with big-name brands with deep pockets. IBM. Nokia. Samsung. Dell. H-P. The list goes on. None is going to give in without a (very expensive) fight.

Meanwhile, the broader markets are showing some signs of leveling: Worldwide mobile phone sales fell 6.1% year-over-year to 286.1 million units during the second quarter. And the battle for the niche markets – like smartphones – may already be over. Nokia holds a 47% share of that market, and RIM has been entrenched in second place.

New players have found the going bumpy. Take for example, Apple’s much-ballyhooed entry, the iPhone. Measured in terms of style and pizzazz, it has performed exceedingly well. In terms of units sold, it’s another story. Apple shipped 5.4 million units in the second quarter, Gartner says, good for 2.4% market share. Very likely, Apple makes the equipment as a medium to sell its highly profitable catalog of digital music.

Given that, and given that few companies boast Apple’s marketing and design savvy, it’s hard to fathom why a company would risk dominance in one market to attempt to conquer such foreboding – and possibly worthless – terrain.

It brings to mind one more business truism: That the grass – and the profits – is always greener on the other side of the fence.