Change Coming to Jabil, But Where?

Jabil is cutting staff, but where?

The EMS company’s management this week acknowledged an ongoing restructuring — to the tune of $188 million in charges — but declined to address specific actions. “We intend to realign our manufacturing capacity and cost base to appropriately size our manufacturing footprint with current market conditions and our customers’ geographic needs. We have begun consultation with employees during the third fiscal quarter and out of respect for those employees, we shall not be providing details as to specific sites or locations under consideration at this time.”

Under repeated questioning from analysts on a conference call, CFO Forbes Alexandar did suggest that the restructuring would include plant closures. Discussing when the charges would hit, he said, “[I]t’s really to do with the timing of when we can, essentially, start closing sites or releasing employees and transferring business.”

Obviously, this information will come out, likely sooner rather than later. But it can’t help that while Jabil is trimming, Flextronics’ shuttering of several sites this year has been effectively drowned out by the announcement of a massive new operation outside of Dallas, where it will build the new Moto X smartphone. Jabil also does business with Google (which owns the former Motorola handset business), but my understanding is these tend to be prototypes, while Google performs the volume and final assembly in Fremont, CA.

 

 

 

For $12B, Google Buys Motorola’s Insured Supply Chain

The Google-Motorola deal announced last week is about hardware manufacturing capability.  In other words, Google just paid $12.5 billion for a gadget supply chain with over 20,000 patents as the cherry on top.

As Chris Nowak put it in a recent article in Environmental Leader about quality management in a modern supply chain, “Today’s business problems include how to compete with a supply chain like Apple’s – a bristling hot pot of electronics suppliers and logistical hubs that delivers a customized, monogrammed electronic gadget in 3 days or a book you order today that’s delivered tomorrow, or the sneakers that you design to wear next week.

“Like it or not,” writes Nowak, “this is today’s competitive field.  All this speed still has to be cost-effective, innovative, compliant and risk-analyzed for whatever market it’s being made in and sold into.  Today’s global supply chain has blink-fast distribution demands.”

It couldn’t be more true.  What Motorola has is a hardware supply chain for gadgets comparable to Apple’s; now Google has one too.  That’s a large chunk of the $12 billion, and that chunk that was worth it.

The environmental compliance piece. What’s notable from our point of view is that Motorola has in recent years made significant efforts in its supply chain environmental compliance.  Their supply chain risk in terms of compliance vulnerabilities is low, low, low.

Motorola has for years been actively collecting supplier chemical information, fortifying compliance efforts with REACH, RoHS and other environmental regulations — imposed by both government and industry alike.

Did Google see that as part of the value?

Did Google acquisition executives see this material disclosure data as significant portfolio gold that may continue to return value?

As regulations tighten worldwide and the pressure mounts to know what’s happening at the chemical level in an electronics (or in any discrete manufacturing) supply chain, Google will know.  Their competitors?  Not so much..

Microsoft, Apple and Oracle have a new and sudden weak spot. While the term material disclosure has more than one meaning, some call it “supply chain insurance.”  Here’s how Motorola — in just a few years — has insured its supply chain.

“We require our suppliers to disclose an extensive list of Motorola Solutions’ banned, controlled and reportable substances as well as request recycled material content for each part supplied to Motorola Solutions,” says the company.  “We do this to fully understand and track the material content of our products, to comply with regulations, prepare for future regulations and control and improve the environmental profile of our products.”

This is not a partial approach.  It’s bold and thorough.

If you think about all the law suits that fire back and forth between the tech giants like Google, Apple, Microsoft and Oracle — the giants without material disclosure insurance seem suddenly keenly vulnerable in the environmental, sourcing, and quality assurance heel.

Motorola’s material disclosure advantage. Motorola Solutions — in its corporate documentation — discusses how its taken a proactive approach and compiled a list of 63 substances (or substance groups) targeted for exclusion, reduction or reporting during the design and manufacture of products. The list is divided into three sections:

  1. Banned substances which are not allowed for use in any Motorola Solutions product at any level
  2. Controlled substances which are limited for use in manufacturing processes or certain product applications (use limitations are typically defined by national or international environmental regulations)
  3. Reportable substances which are are not currently banned or controlled for use, but are likely to be in the future or the company has identified the need to understand their use as part of a environmentally conscious design process and/or for end-of-life management

Motorola has for years now required its suppliers to fully disclose information on the materials composition of parts and components, including information on substances of concern and recycled material content.  The company collects, stores and published information about internal efforts in researching alternative materials and stewardship regarding batteries and other end-of-life concerns.

Regulatory specifics. Motorola has been a leader in recognizing that many countries around the world have implemented regulatory restrictions on hazardous substances.

  1. European Union’s directive on the restriction of hazardous substances (RoHS):  Motorola Solutions complies with the European Union’s directive on the restriction of hazardous substances (RoHS) for electronic products sold in the EU. The company voluntarily extended compliance with the European Union’s restriction of the hazardous substances (RoHS) directive to cover all newly designed professional and public safety two-way radio products as well as mobile and wireless products for the enterprise, regardless of where they are sold worldwide.
  2. China Management Methods:  China’s Management Methods for Controlling Pollution from Electronic Information Products requires manufacturers to report and label usage of the same six hazardous substances listed in the EU RoHS Directive affective as of March 1, 2007. All Motorola, Inc. and Solutions products manufactured after March 1, 2007 and shipped into China comply with the labeling requirements of China Management Methods.  Motorola posts a direct phone line where you can call to get more information.
  3. REACH:  REACH, the European Union substances regulation that entered into the force of law on June 1, 2007, has notable phased deadlines to 2018. The broad regulation requires communication throughout the supply chain, and Motorola Solutions has been “actively sharing information to meet our obligations and help our customers meet theirs.”

The Wily Larry Page. Acquiring Motorola Mobility’s environmental compliance and collection of material disclosure information from suppliers may not be the final straw that flips the other turtles onto their backs.  But it may.  In the meantime, the value of the logistical aspects of Motorola Mobility’s logsitical supply chain is not to be overlooked.

Not everything Larry Page, Inc., also known as Google, has done in 2011 has been amazing, but this deal is a smart, wily, forward-thinking acquisition for a number of reasons — from risk management right down to the chemical level.

All Wet

Folks,

I have often pointed out that SAC solder’s poor wetting is both a curse and Godsend.  It is a curse when trying to fill a through-hole in wave soldering, and a Godsend when assembling close lead spacings as shown in the image (below).Tin Lead vs Lead Free Spreading Indium Corporation colleague and friend, Mike Fenner (image below), pointed out that, when I say “SAC solder doesn’t wet well,” I should be saying “it doesn’t spread well.” His explanation follows:

Mike Fenner“SAC is different from SN63, and I think it is helpful to explain the difference by making a subtle differentiation between wetting and spreading.

“The way that solders spread and wet to a surface is a balance of competing forces. We have surface tension acting to make the molten solder shrink into a ball, and wetting forces trying to make it spread across the surface. Wetting is also the action of the solder dissolving into the surface to form an intermetallic. This intermetallic is essence of the solder joint. The balance changes with different alloys, surfaces, and processes.

“Most people are very familiar with the way that tin lead solders behave — and that governs their expectations. The different balance in SAC means the solder tends to spread less for the same wetting and, therefore, can give the impression of a lower quality joint. This lack of spread is usually expressed as ‘poor wetting.’

“I would explain this by saying the active ingredient’ in both solder families is tin. SAC alloys have a ~50% higher concentration of tin than the Sn63 solder alloy. This gives them a higher surface tension which increases the balling (coalescing) force. At the same time, the less dilute tin, in SAC solders, dissolves into a surface faster. So the final SAC joint can have a well formed intermetallic, but not high spread. These relationships will vary with surface finish and, of course, flux chemistry and process conditions come into play, but that’s for another day. Meanwhile I hope this simplified explanation helps.”

Thanks Mike!

Cheers,

Dr Ron

P.S. The solder image is courtesy of Vahid Goudarzi of Motorola.

Pb-Free Sky is Not Falling

Folks,

Although a few have suggested that lead-free reliability is an oxymoron, currently most people that have studied the reliability of SAC3XX and SAC105 Pb-free solders would conclude something akin to what Denny Fritz wrote in response to one of my posts:

No one I know will dispute your ranking of SAC better than SnPb solder using the commercial temperature cycle [Dr. Greg] Henshall uses – 0C to 100C. But, harsh environment electronics have to perform to either -40C or -55C, and most use a top end cycling temperature of 125C. IT IS IN THAT WIDE THERMAL CYCLE TESTING THAT SnPb outperforms SAC solders.

It is interesting to consider however, that almost all discussions on lead-free solder reliability are based on lab-based thermal cycling and drop shock testing. What about field results? It occurred to me that I knew someone who might have an answer.

Vahid Goudarzi is a Director of NPI Advanced Manufacturing Technology at Motorola and owns a Six Sigma Black Belt. He was the technical leader in Motorola’s efforts for lead-free and RoHS compliant assembly in its mobile phone products. There are few people I know that are more knowledgeable in electronics assembly than Vahid. Motorola was a very early adopter of lead-free, seeking the advantage of tighter lead spacings that lead-free allows. So, Vahid has been working on lead-free processes since the late 1990s. Motorola has been shipping lead-free mobile phones since 2001. With over 100 million mobile phones in the field since then, Motorola has quite a bit of lead-free field data. I asked Vahid if he could comment on these data. Here is his response:

In general, the reliability of lead-free solder is equal or better than leaded solder except for BGA/CSP/WLCSPs. The high silver content in SAC387 resulted in poor drop performance of these packages as the joints are very brittle. This issue can be addressed by reducing the Ag content of the solder balls.

Being an early adopter, Motorola qualified the near-eutectic SAC387 solder. So, with SAC387 and SAC105 solder balls, Motorola’s field data (for about ten years and over 100 million mobile phones) shows equal or better reliability than leaded solder. While these data do not necessarily support other applications, they are encouraging.

Another encouraging thought is that, since its debut (with RoHS now about to celebrate its fifth anniversary),  about $4 trillion worth of lead-free electronics have been manufactured with no shocking reliability problems.

Although admittedly anecdotal, the IT folks at Dartmouth’s Thayer School of Engineering have purchased over a million dollars in lead-free electronics since RoHS. They have noticed no difference in reliability. This is enough gear, and time, to have the beginnings of statistical confidence. Compare this to the advent of Microsoft’s Vista, it was viewed by these folks as a step backward and they immediately took action to prevent Dartmouth from adopting it. Yet, lead-free adoption went by unnoticed. The biggest reliability problem with PCs is still hard drive failure.

So concerning lead-free field reliability: The sky is not falling!

Best Wishes,

Dr. Ron