Circuits Assembly - September 2008 - (Page 26)

On the Forefront Will Electronics Manufacturing Return to North America? Despite the signs, don’t hold your breath, our columnist warns. ith the weakening of the dollar, higher logistics costs, especially transporting goods from Asia to the US, rapid wage inflation in Asia, growing concerns about quality and intellectual property protection, many are asking if manufacturing will return to the US. Will it? It is unlikely. Why not? Manufacturing of many electronics products moved out of the US over the past several years largely because of lower costs elsewhere. Some manufacturing moved to Mexico, but most moved to Asia, specifically China. Even though the bloom is off that rose for a number of reasons, manufacturing is not likely to come back. What caused the migration? For many companies, it was not just high labor costs in the US, but also associated costs of health insurance for workers and other overhead expenses. More important, the major and growing markets for many electronic goods have moved to Asia, and manufacturers benefit by manufacturing where they sell. For that reason, some markets for goods produced in the US several years ago are now mostly targeted for sale in Asia. One reason Delphi sited a manufacturing operation in China, for example, was to provide “China-made content” for that market. Benchmark Electronics CEO Cary Fu crystallized the argument in July, responding to investors who asked whether programs would be migrating to Mexico from Asia: You have to look at the type of product in the market you serve. Yes, there is a higher cost related to labor as well as logistic costs in Asia. But at the same time, the demand for certain products is definitely shifting from the US to Asia; e.g., a lot more semiconductor test equipment businesses are moving to Asian sites. [There are] two different forces in the marketplace. One is the product we serve in the US or Europe. If they’re heavy, they’re very expensive to Circuits Assembly SEPTEMBER 2008 W move around. They tend to be moved back to either Asia or the US, as well as Europe. But for the product enjoying increased demand in Asia, we see those products staying in Asia because they have the benefit of lower logistics costs from just producing the product in Asia. Loss of Infrastructure Other factors that make it unlikely for manufacturing to move back to America include the loss of US infrastructure. The knowledge base of manufacturing engineers in the US is shrinking. In Asia, the engineer is on the manufacturing floor working on issues. With the exception of morning and end-of-day meetings, the typical engineer takes a hands-on role. In the US, the engineer is typically not involved in hands-on engineering and sits in front of a computer screen all day, with the exception of the time lost in endless meetings. Nights are filled with conference calls to the manufacturing sites in Asia. Many people with real manufacturing experience in the electronics industry either were laid off or retired. How many new college graduates look forward to an exciting experience in a manufacturing facility? Once the knowledge is lost, it is gone forever. Replacements in the ranks of younger workers are not even a sure bet. Even some of the top engineering schools such as MIT report an influx of students majoring in mathematics, rather than engineering, so they can get jobs doing quantitative calculations for Wall Street firms. Medical and military electronics are exceptions. For implantable medical devices, the quality factor makes the risk of manufacturing in a low-cost labor region too high. In the case of military electronics, national security is the issue. Closely related to military electronics is aerospace. It, too, has remained in the US. However, discussions with a major medical electronics manufacturer on the West Coast and a major military electronics company on the East Coast point out the same circuitsassembly.com "The typical US engineer is not involved in a handson role, and their knowledge base is shrinking." E. Jan Vardaman is president of TechSearch International (techsearchinc. com); jan@techsearchinc.com. Her column appears bimonthly. 26 http://www.techsearchinc.com http://www.techsearchinc.com http://circuitsassembly.com

Table of Contents Feed for the Digital Edition of Circuits Assembly - September 2008

Circuits Assembly - September 2008 Contents Caveat Lector Industry News Market Watch Talking Heads Focus on Business Global Sourcing On the Forefront Screen Printing Better Manufacturing Reflow Soldering with a SnCu Eutectic Pb-Free Alloy Improving OEE in High Mix Facilities Effectively Managing RF Design in Utility Metering Applications Solder Joint Reliability of Different BGAs Reworked Using Low Melting Point Pb-Free Alloys Tech Tips Wave Soldering Pb-Free Lessons Learned Materials World Process Doctor Equipment Advances Product Spotlight Ad Index Assembly Insider Technical Abstracts

Circuits Assembly - September 2008

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