As a member of Medical Product Outsourcing’s Editorial Board, I share my views on 2018 and the year ahead in this article.
PMCI’s December 2018 article in Circuits Assembly looks at regionalization strategy:
As I write this, a trade deal with China that will eliminate the tariffs appears to be in development, but China is continuing to talk tough. The tariffs are causing significant pain to manufacturers in both the US and China, so I suspect some type of deal will happen eventually. In the meantime, the tariffs motivated many companies to look hard at the geographies involved in their outsourcing strategy. Some OEMs have moved or are in the process of moving some of their business, and a much larger number are thinking about it. I think it is important to carefully weigh the pros and cons. Read the full article here.
Your customer wants to grow. Are you ready for the transition?
One of the difficult challenges small electronics manufacturing services (EMS) companies face is the transition from a transaction-based job shop to a relationship-based, full-service EMS provider. There are a number of issues to consider prior to taking that journey. My June column in Circuits Assembly, looks at some of the issues a job shop should analyze in determining whether to make this evolutionary change. Read the full article here.
In EMS, program management is the “face of the company” to many customers. When those customers work with more than one facility, the challenge becomes ensuring that customers see consistency in the way their business is managed. This isn’t an issue for Tier One EMS providers, but can be for companies that have grown by acquisition or smaller EMS firms that are just starting to add facilities. My November 2017 article in Circuits Assembly looks at ways to address this. Read the full article here.
Does your company have issues in this area? PMCI performs customer surveys and program management assessments that can help identify specific areas requiring improvement. PMCI can also create program management handbooks and offer training designed to standardize the program management approach among all facilities.
Back in February I wrote an article for Circuits Assembly, titled “The Trump Effect, One Year Later,” where I highlighted some of the positive effects those policies have had. While the stock market has gone back to being more of roller coaster, I still feel we are looking at more positives than negatives. Tax policy really has improved for both individuals and small business. Jobs numbers look good. The economy has taken a slight dip because of the demand bubble created by last year’s hurricanes and floods, but most companies in the EMS sector are still reporting strong sales. Trade talk is still tough, but I suspect that will work itself out favorably. We’ve got ground to regain from past concessions.
The one car wreck I see still on the road is health insurance. My health insurance company conveniently informed me after open enrollment closed (and they raised premiums an astronomical amount) that they would cancel my policy at the end of the year. So, I’ll be shopping in the desert wasteland of HSA-compatible junk insurance policies at the end of the year unless Congress decides to actually do some work on healthcare before the mid-terms. While I carry individual insurance I know many smaller EMS companies struggle with this issue as well. Letting the market meltdown before initiating a fix is a slap in the face to small employers and responsible individuals who have been shaken down by insurers for decades throughout the U.S. Hopefully, that will change.
All that said (or vented), I still think the business community is in a better place right now. What do you think? Feel free to comment.
Susan Mucha will be giving a presentation at this year’s PCB West as part of their newly introduced EMS Management Conference Track. There is still time to register.
Five-and-a-Half Technical Services Marketing Myths
Wednesday, Sept. 13, 1-2 p.m.
My August column in Circuits Assembly focuses on getting to win-win in OEM-EMS negotiations.
One of the recurring themes I hear in electronics manufacturing services (EMS) is how challenging it is for many program managers and salespeople to negotiate with customers. I’m often told the industry has changed, but when I ask hard questions I tend to find that the biggest change is that the people doing the negotiation seem to know a lot a less about the business of building electronic products than their predecessors. And this isn’t just on the EMS side. Years ago, OEMs put highly technical senior people on the team that managed outsourcing efforts. While those people were tough negotiators, they negotiated based on strong knowledge of the processes and challenges inherent in electronics manufacturing. Similarly, EMS program managers (PMs) were often pulled from operations. If expenses were increasing, they had the knowledge to explain the reason a price increase was necessary. Read more here.
Most manufacturing firms I know (both EMS and precision engineering) are hiring right now. In many labor markets, that can be difficult. I continue to wonder how much of this is that the right applicants aren’t available versus that the right applicants don’t know manufacturing is a career option. Like many of you, I’ve sometimes beaten my head against the wall trying to explain to young people why factory work is great career option both in hiring back in my corporate days, and to friends and relatives entering the job market. My favorite example was when I was interviewing marketing manager candidates in Florida and one applicant looked around my rather spartan, windowless office and told me he really wanted a job that had a nicer office. Fortunately, the next applicant went out on the manufacturing floor and was amazed by the prospect of being able to work in a place that built electronics. SMT placement machines fascinated her. It was the same type of excitement that brought me to EMS in 1981–it is pretty cool to work in a place where you see new products ahead of the rest of the world.
That said, the message in my latest Circuits Assembly article is that the best “target” applicants may be mid-career folks looking for a change. The service sector (particularly hospitality) typically hires people with required skills rather than trains and promotes from within for supervisory and management positions. It can be physically demanding work. The end result is a pool of workers with little advancement potential looking for better options. The challenge is that those workers may not be looking at manufacturing jobs. Their vision of a factory may be a dark, dingy, noisy workplace. They may have heard that manufacturing jobs will all be replaced by robots (although in many cases they are more at risk of being replaced by kiosks in their current jobs–thanks to the fight for $15). They may simply assume that they don’t have the skillset to work in a factory. Or, they may not have a clue that these jobs exist.
The benefit of looking at this segment of workers is that they are experienced enough to appreciate concepts that younger workers may not. Where a younger worker overestimates their value; an older worker appreciates seeing a framework for advancement. Where a younger worker is looking for a cool workplace; an older worker appreciates benefits like health insurance, paid vacation and predictable hours. In short, workers who have enough work experience to understand the realities of their current career choice have the understanding to appreciate much of what a career in electronics manufacturing has to offer. Read the full article here.
I wrote an article that focused on TeligentEMS’ teaming efforts with Tallahassee Community College (TCC) to develop an educational program for SMT operators in SMT Magazine in May. I really enjoyed writing this article for two reasons. First, as much as the Gator alum in me hates praising anything in Tallahassee, TCC really has its act together. It is helping to change lives as well as provide an education to folks who either don’t have the time or the money to spend on a four-year degree. Second, I was able to interview a production worker who had changed her life by taking advantage of SMT training at TCC and then going to work at TeligentEMS. Much of that interview is in her own words and I think in many ways she reflects the sentiments of many 30-something workers who are trapped in service sector jobs and looking for a path to a job with advancement potential that doesn’t involve a long period of unemployment and retraining in order to make the switch. For EMS companies facing challenges in recruiting production employees, this article highlights a formula that seems to be working.
One of the ways companies mistakenly think they are saving money is to allocate marketing budget to one or two activities with the idea that if sales increase they will up their marketing budget. This is false economy for two reasons. First, it often results in money spent on activities that never reach their full potential. Second, it often results in money spent inefficiently.
For the first example, let’s look at a trade show. I’ve lost count of the number of companies that tell me trade shows don’t work. The truth is that some shows don’t work for some companies. Years ago, McGraw-Hill ran an ad that had a mean-looking decision maker sitting in a chair saying: I don’t know you. I don’t know your company. I don’t know your product. Why should I talk to you? Trade shows are networking activity. If you do one or two shows a year and just show up with a pop-up booth and no other prep, a trade show is unlikely to achieve your lead generation goals. Worse, if you a pick a show because someone called and had a last minute corner booth, you may be at the wrong show.
In the second example, let’s look at marketing materials. When marketing materials are done as one-off projects all of the creative activities typically must be repeated for each project. That means a photographer may be brought in for several project-specific shoots instead of one slightly longer shoot designed to provide needed imagery for the next 12 months. Graphic design may not reflect a common theme (particularly if different firms are handling different projects). And, pricing discounts achieved by coordinating all printed collateral at one time may be missed.
An integrated marketing plan is a roadmap that ties everything together. Core messaging strategy is evaluated and the best mix of no/low cost activities is paired with higher cost activities to ensure an effective promotional strategy that aligns with budget. Activities are done on a schedule which helps ensure that periods of high sales activity don’t automatically mean lack of marketing activity. And because a plan normally looks at a 12-18 month schedule, outside service utilization can be planned more efficiently. However, the best part of this marketing approach is that it helps ensure that full value is achieved from higher cost activities.
Let’s get back to the question of why trade shows don’t work. The main reason is because even when the right show is chosen attendees are often focused on the companies who did the best job of telling them who they are and why it is worth an attendee’s time to learn more before the show. This is where an integrated marketing plan really shines. A person needs to see a message 3-7 times before he/she remembers seeing it. One pre-show mailing may not be enough. An integrated marketing plan that times social media outreach, industry articles, pre-show mailings, conference presentations and/or advertising to align with key shows delivers the message consistency needed to attract qualified attendees. And, most of that promotion effort is low or no cost. It also provides for mindshare maintenance of prospects who come in as leads, but aren’t in a ready-to-buy mode yet. These prospects often get thrown away when marketing is done in an less organized fashion.
This year, in particular, is an important year to look at utilizing an integrated marketing plan because there is uncertainty in U.S. policies toward manufacturing and a lot of decision teams are looking at new options. Electronics industry trade shows traditionally have greater attendance when there is uncertainty in the market. Having consistent and timely messaging being distributed on regular basis is the best way to get more value for the marketing dollars spent in this year’s trade show activity.
Not sure how to implement a good integrated marketing plan? Powell-Mucha Consulting, Inc. can help. Visit us at www.powell-muchaconsulting.com.