A new report from the Information Technology and Innovation Foundation (ITIF) indicates that manufacturing job loss is not due to automation, but instead due to the activities of countries who incentivize transfer of manufacturing jobs through their policies. Those of us who work in manufacturing already know this. Yes, automation is a factor, but not everything can be automated cost effectively.
The good news is that folks who grew up in the service sector now have a little “data” to influence their opinions about the relevance of domestic manufacturing jobs. I’m not a proponent of protectionism. However, I do believe that countries with strong manufacturing sectors prosper. I also believe that manufacturing regionally (vs. perpetually chasing the lowest cost manufacturing market) is more cost effective for many products. Back when I was teaching leadership and marketing classes at a couple of local universities, I frequently brought up the example of Henry Ford because his choices apply to both curriculums. He was criticized by his peers for the above market wages he paid his employees. He pointed out that his production lines could build more cars than the rich could buy and that he needed a middle class capable of buying cars. We need transformative manufacturing jobs to sustain a middle class. By transformative, I mean jobs with a path to higher compensation as an employee’s skills increase. The service sector doesn’t have enough of those. A manufacturing resurgence floats all boats by increasing consumption, lowering governmental “welfare” costs associated with underemployment and creating a growth driver for the middle class that isn’t paid for by our taxes. To me, the middle class is the conscience of the country and also its biggest engine of consumption. When trade is balanced that is good thing globally and well as domestically.
As I’ve written before, a U.S. manufacturing resurgence is also good for EMS companies. Reports such as this signal changing attitudes. It is the right time to invest in marketing strategy. PMCI can help. Learn more here.
Some electronics manufacturing services (EMS) companies do a great job of differentiating themselves, but many don’t. If your company copied what your nearest competitors have on their websites, touts its equipment as its primary advantage, tells everyone it is the industry’s best kept secret or says it is customer-centric; it is really just screaming me too.
The reality is that within a specific size class most EMS companies have the same equipment and industry-standard processes. What makes a difference is the expertise of the team and the home-grown systems and processes that solve customer problems.
Yes, I used the word problems instead of the nicer euphemism, challenges. Companies rarely outsource manufacturing projects that have perfect design and quality metrics, well-understood demand trends and no surprises. When things run that well, they normally want to keep it in-house. Instead, they either outsource because they don’t want to be in the business of manufacturing or because that product doesn’t fit well into the mix of manufacturing they want to keep in-house. The end result is that EMS companies are in the business of managing controlled chaos. Outsourcing decision teams understand that and are looking for companies most likely to make them look good. When all competitors look the same, their safe choice is to make the decision on price. When one appears to have a better ability to address the issues that keep them up at night (and will get them fired if the contract manufacturer fails), that EMS company will likely get coached into meeting a reasonable target price.
So how do you package the secret sauce that makes your customers think your company is the best but isn’t obvious until they become your customers? There are two key steps. The first is understanding enough about your secret sauce to sell it (and yes, PMCI has tools for doing that), and the second is building a strong team sell. Prospects won’t understand that your team (engineering, production, program management, purchasing) has a superior solution, if they aren’t exposed to your team until after they are customers. Companies that successfully differentiate understand that and selectively engage team members with prospects throughout the sales cycle. Prospects aren’t sold on capabilities, they are exposed to the expertise of team members who discuss how the problems that keep them up at night are going to get solved if they select that EMS provider.
How do you turn your entire staff into that powerful a salesforce secret weapon? PMCI’s EMS Concentric Selling™ one-day onsite seminar can help. The course is designed for sales, program management and key staff members in engineering, manufacturing and purchasing. The goal is to provide a common framework of industry and selling process understanding to the members of your team who interact with customers and prospects. Case study breakout sessions are designed to help team members learn to develop specific account strategies and work together to close the sale. These sessions also help break down the disconnect that often occurs between sales and the technical staff in terms of what ideal projects look like. Request an informational brochure here.
My January 2016 article in Circuits Assembly looks at the Trump Effect and Manufacturing. The correct link is provided, but right now it appears to navigate to CA’s home page so look for the article on the left side of that page, if the link doesn’t take you to directly to the article. I look forward to a year of breaking paradigms and from what I’ve heard in conversations, a lot of EMS CEOs are hoping for the same thing. Read the full article: The Trump Effect and Manufacturing
My December 2016 article in Circuits Assembly looks at another management challenge: managing generationally, and asks the question: are generational differences impacting your program management team’s performance? Read the full article: Better with Age
My October 2016 article in SMT Magazine looked at the ways four different electronics manufacturing services (EMS) providers marketed and sold their services. The common thread in their strategies is listening to their customers and adapting their business model in ways that address those customer needs. However, the differences in their business models and the way they are sold demonstrates there is definitely more than one way to sell EMS. Read the full article: Choose Your Marketing Strategy.
One of the interesting dynamics I’ve observed during my career in electronics manufacturing services is the evolution of sourcing strategy. In the ’80s, outsourcing was a risky decision that involved the highest level of the OEM organization. Final decisions looked not only at the immediate need, but at the ability of an EMS provider to support the business needs longer term. Today, outsourcing is more of a commodity decision, and sourcing teams are often staffed by people with far less knowledge of the manufacturing process or the softer issues in the total cost equation. My April 2016 Circuits Assembly article focuses on way to achieve lowest total cost.
In my latest column in Circuits Assembly, I look at the challenges associated with establishing an operation in Mexico. The increased cost competitiveness of Mexico’s manufacturing, migration of automotive and aerospace clusters, and a lessening of the violence that has plagued the country for much of the last decade have incentivized a new wave of US-based regional manufacturers to look at the benefits of opening operations there as a the next step in their expansion plans.
That said, Mexico remains a country full of complexity when it comes to establishing a viable operation. There isn’t one right answer for best location or business structure. This month we look at some of the tradeoffs to consider when establishing a small operation in Mexico. Read more here.
I’ll be teaching part of the EMS Program Management Essentials course Feb. 23 and 25, and attending meetings in between, at IPC APEX Expo. Learn more about IPC’s EMS Program Management Certification Program here. It’s a great way to learn new things about the most difficult job in the EMS industry.
There is no question the electronics manufacturing services industry is evolving. One aspect of that evolution is actually hurting the industry, however. As outsourcing has become more commonplace, its salespeople have become less technically competent. At the same time, as outsourcing “experts” at OEMs have retired, they have been replaced by less-experienced personnel. The result is a commodity sale focused on price.
My February Circuits Assembly column looks at ways to change that dynamic.
Medical Product Outsourcing just published a good article on EMS trends in the medical sector. Yes, I’m quoted, but more importantly Managing Editor Michael Barbella did a great job of looking at some interesting product trends.