Archive for the ‘News’ Category:

Reshoring study echoes CBA data from 5 quarters ago.

It is good to see others catching up with what we have been saying for over a year, and for those companies involved in this trend the need for consistent, objective benchmark data to make the right decisions is critical. That’s what joining our Outsourcing Navigator Council is all about.

Five EMS Industry Trends You Can’t Afford to Misread

1. EMS/ODM prices are converging.

IMPLICATION: For the OEM, using an ODM model historically delivered a cost benefit over an EMS. This is no longer true because costs have been driven up by OEM demands. If you are depending on an ODM model you should be actively exploring other options.

2. Regionalization is gaining momentum.

IMPLICATION: More OEMs are designing a supply solution where they build in the region for the region. Are you?

3. Global capacity utilization is increasing

IMPLICATION: Our data shows dramatic reduction in the global supply of EMS capacity. What happens when demand exceeds supply?

4. Labor costs in China are rising far faster than anyone predicted 5 years ago.

IMPLICATION: Does that mean you should exit China immediately? Knee-jerk reactions rarely pay off.

5. Slower Rate of Growth of Electronics Outsourcing

IMPLICATION: Finally the industry is realizing that one size does not fit all; EMS and OEM companies must find new sources of value in the outsourcing relationship. Many OEMs are reconsidering their entire supply solution to mitigate risk and reduce cost.

Attend the EMS industry’s Most Important Event of 2012 to learn how to navigate these critical trends to optimize your outsourcing solution.

Our next Outsourcing Navigator Council members meeting will be a two-day event hosted by member company, Teradyne at their corporate facilities outside Boston.

The second day is open to Non-members. Its a chance to get to know our methodologies. And your Workshop fees will apply to membership should you decide to join this year.  (Check out our FAQs about the Council.)

What: ONC Member Meeting and Public Workshop

When: May 30-31, 2012

Where: Teradyne Corporation, North Redding MA

Cost: Both days are Free to Outsourcing Navigator Council members

Workshop (second day) Pricing:

ONC Members: FREE

Non-members**:  $650 if registered before May 1st,

$750 after May 1st

(**Workshop fee applies to 2012 ONC membership)

The first day will be a members-only day of presentations on the theme, Finding Advantage in the Product Lifecycle. Industry speakers from Celestica, Teradyne, and a roundtable moderated by Mike Buetow, editor in chief of Circuits Assembly magazine are among the planned presenters who join CBA Principals for a day of lively discussion and solution-oriented debate about the challenges and opportunities arising from global trends.

Non-members are invited to the second day CBA Workshop, Optimizing Your Outsourcing Initiative, a brand-new workshop designed to provide directly actionable, real-world techniques for both strategy planning and day-to-day management of an OEM’s outsourcing initiative. Topics include:

  • Estimating, understanding & managing internal spend
  • Mitigating geographic risk in the supply solution
  • Insider techniques for managing the EMS solution
  • Securing service and support at the lowest possible cost
  • Todays best in class alternatives across the demand spectrum

​This is a must-attend event, where OEMs will find essential tools and techniques for navigating the next evolution of outsourcing. Heres what ONC members say about the value of their relationship with Charlie Barnhart & Associates:

To register, contact: Jennifer@charliebarnhart.com or Eric@charliebarnhart.com.

This is a limited seat event, so do not wait! Sign up today.

CBA Client news: ATS Corporation wins Circuits Assembly Award. Again.

Applied Technical Services Corporation, a leading supplier of printed circuit board assembly, systems assembly and electronics contract manufacturing services, is pleased to announce today that it has received the highest overall award in the electronics manufacturing services (EMS) category in Circuits Assembly Magazine’s annual Service Excellence Award program for the 2nd consecutive year. Additionally, Applied Technical Services Corporation has now been recognized in the Service Excellence Awards (SEA)program for the 4th consecutive year.

This highest award from Circuits Assembly goes to companies who, like Applied Technical Services, received the highest ratings, as judged by their own customers, in each of the qualifying categories:
• Dependability/Timely Delivery
• Manufacturing Quality
• Technology
• Responsiveness
• Value For Price

Circuits Assembly Magazine acts as an independent third party to solicit feedback from each participating contract manufacturer’s customers to determine the competition results. Applied Technical Services won the top prize among EMS companies with annual revenues between $ 20 million and $ 100 million.

In 2007, ATS embarked on a “Drive for Five Program” which placed our customers as the number #1 priority in terms of providing both outstanding customer service and superior operational performance. Every year, ATS customers participate in an in-depth third party interview focused on five (5) key areas: (1) On Time Delivery, (2) Quality, (3) Price-For-Value, (4) Technology and (5) Responsiveness. The overall feedback gathered is used to develop a strategy for the following year. In 2010, ATS introduced quarterly online surveys to get more timely feedback, which complemented our periodic customer business review meetings.
“Now that we have established a new ATS standard for customer service, our goal for 2013 and beyond is to remain Number #1 in customer service across our industry. I’m confident that the ATS TEAM will continue to meet the increasing expectations from our customers relative to service quality across the demanding EMS industry. On behalf of our valued customers, I would once again like to thank our employees for their hard work and unwavering focus on the customer,” said George Hamilton, CEO of Applied Technical Services.

About Applied Technical Services, Inc
Applied Technical Services is a leading provider of contract manufacturing services including a wide variety of circuit designs, printed circuit board assemblies and integrated final assemblies. ATS provides manufacturing solutions for original equipment manufacturers throughout the US and Canada who are in the medical, industrial control, military, aerospace and energy markets. Headquartered in Everett, WA, the company also operates facilities in Hermosillo, Mexico and has business development offices in Seattle and Chicago. For further information, visit www.atscorp.net.

APEX Interviews from EMSNow TV: Sparton, Promex, Hunter Technology, ATS Corporation, MC Assembly,Vario Systems

Phil Stoten interviews Charlie Barnhart at APEX 2012 in San Diego:

Charlie interviews Sparton CEO, Cary Wood

Eric Miscoll interviews Vario Systems’ Alicia Hamby at APEX 2012 in San Diego:

Charlie interviews Promex President Richard Otte

Charlie interviews Hunter Technology’s Joe O’Neill

Eric interviews MC Assembly’s Michael Cox

Eric interviews ATS Corporation’s Steve Canzano

CBA Client News: Not every Chinese factory exploits workers

Ryder Industries Initiatives Focus on Corporate Social Responsibility in China

Initiatives meet and exceed Chinese association guidelines

for labor relations and community action

Hong Kong, March 7, 2012. Ryder Industries, LLC, a Swiss-owned developer and manufacturer of electronic products headquartered in Hong Kong, announces initiatives aimed at fostering and promoting respect, egalitarianism, harmony and initiative in its corporate culture and in that of the greater community in which it operates. At the core, these initiatives reflect the strongly held  principles of management, ‘The employees are the company’s most important asset; the company grows only when its employees grow.’

To promote these objectives, Ryder staff members have undertaken a variety of people-oriented initiatives. For example, employees have established an outreach program to support a primary school in Juang Xi province, close to the location of its manufacturing plant. After visiting the school in December 2011 to discuss needs with students and teachers, the following commitments were made to provide a better learning environment:

  • Equip a state-of-the art technology lab and library with computers, books and resources in literature, arts and science.
  • Establish scholarships for outstanding student achievement in both academic studies and team work.
  • Provide psychological counseling courses for staff.
  • Establish volunteer English teacher program.
  • Organize after-school activities for students.
  • Provide financial assistance and/or psychological support to students with special needs.
  • Organize volunteer activities for students to help each other.
  • Train school staff to organize student competitions and activities.
  • Provide team-building training to enhance cohesiveness of school staff.
  • Initiate an idea exchange  to stimulate English learning teaching and activities, such as ‘English corner’ and English speech competitions.

Ryder’s continued focus on the welfare of its employees has resulted in the 2011 Shenzhen Harmonious Labor Relations Award, bestowed by the China Association of Enterprises with Foreign Investment (CAEFI) and the Shenzhen Association of Enterprises with Foreign Investment (SZAEFI).

This award requires adherence to a rigorous set of requirements, which are strictly monitored by those external associations. Award winners must meet these requirements:

  • All employees must work under negotiated labor contract.
  • Employees are always paid on-time, full amount.
  • Zero tolerance for child labor.
  • Special protection measures for female staff strictly implemented at all times.
  • All technicians are well-trained and certified.
  • Social insurance paid for all staff.
  • No level 4 industrial injuries for one year.
  • No strikes or shutdowns due to labor conflicts for one year.
  • Labor unions established by law.

In addition to meeting the associations’ standards of conduct, Ryder Industries established a higher set of requirements for itself:

  • Designed unique cross-level internal communication system, (”1+3 Communication and Negotiation System”), which has now been adopted by Shenzhen government entities and become the model for similar programs at other companies.
  • Established comprehensive staff training programs for job-specific and company-specific education.
  • Established and continue to maintain full-functioning labor conflict resolution committee.
  • Established employee union committee to protect staff interests.
  • Promoted corporate team building through staff social activities.

These people-oriented initiatives have made Ryder Industries one of China’s best employers, resulting in higher employee retention rates, and leading to increased customer satisfaction.

ABOUT RYDER INDUSTRIES: Ryder Industries is a privately held company headquartered in Hong Kong, with business offices in Germany and California as well as three manufacturing facilities in mainland China.  Known as Saitek until 2007, the company has for much of its history been a designer of branded products from intelligent games to computer game controls and is behind well-loved brands including Kasparov, Cyborg and Eclipse.  Ryder developed out of the expansion of Saitek’s manufacturing facilities, divesting itself of the branded products division and further developing its factories to provide EMS services to a more diversified customer base, including professional audio, smart home audio and appliances, industrial and consumer controllers and automotive electronics.

The company was started by Hong Kong Swiss entrepreneur Eric Winkler, who remains non-executive chairman.  His vision has always been to focus on technology and quality, which in his view requires a stable and well-trained workforce.  When opportunities in the PRC began to open up in the 1980s, the decision was made to set up a wholly-owned facility where employee relations would be a high priority.  This approach has paid off for the company; Ryder has received a series of awards from the Chinese authorities in recognition of its ethics, citizenship and high industrial standards, but perhaps most importantly it enjoys a strong team dynamic and high levels of employee loyalty.

For more information about Ryder Industries, go to www.ryderems.com.

Executive Summary: China vs. Mexico research

Download a free Executive Summary of Eric’s ONC Special Report Mexico vs. China: An Objective Comparison for North American OEMs. The summary includes the study’s rationale, Table of Contents outlining survey findings related to OEM perceptions of the strengths and weaknesses of the two regions, and a discussion of EMS trends, including regionalization and total cost of ownership analysis.

Download Executive Summary here>>

Contact Eric@CharlieBarnhart.com to find out how to get a copy of complete report.


Outsourcing Lessons from an Industry Case Study

There’s nothing better than a good story to help illustrate a concept, and that’s what CBA’s case study approach to data analysis accomplishes. Outsourcing is a highly complex activity, usually involving multiple geographies and corporate entities, and there are an almost infinite number of permutations among type of end product, market, suppliers and technologies. Gaining insights from actual industry case studies is one of the best ways to assess and plan your own outsourcing solutions.

For example, the case study of the quarter for CBA’s Outsourcing Navigator Council in Q1 2011 was about a commercial transportation/light rail system, a medium volume/high mix product containing PCBAs, a cable harness and several electromechanical assemblies that collectively formed a high level assembly (HLA) that was fulfilled to a rail solutions customer with off-the-shelf accessories and options. Some of the details of this story have been changed to protect the innocent, but this is based on a real scenario.

One of CBA’s Outsourcing Navigator Series methodologies, the OEM Internal Spend Module (OIS) requires OEMs to match their own situation against our tables based on three dimensions: scale, approach, and complexity, and that’s a key aspect of the framework that the case studies take in outlining what happened. In the rail transportation case, this OEM had historically used a blended in-house/outsourced approach on previous products, but had decided in this case to outsource everything to a combination of suppliers, including:

  • China EMS for the PCBA
  • China harness manufacturer
  • Mexico electro-mechanical assembler
  • Domestic US 3PL that integrated the HLA and performed the order fulfillment.

Read more>>>

Made in the USA?

Eric blogs on the EBN online website about what it would take to revive US electronics manufacturing.

Gina Roos on Next Horizon Report

Don’t base your global manufacturing strategy solely on labor rates. New coverage of CBA’s report on Electronics Advocate Global:

EBN’s Barbara Jorgensen reports on Next Horizon

Here’s a link to a blog post about our report’s Country Profile on India:

To get a copy of a sample of the report, register here, or  join the Outsourcing Navigator Council to get the entire report!