Jeff Waters: Isola Updates

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Johnson: You must have some customer demand in the forecast, with short lead times some cases. How are you planning to transition from one factory to another?

Waters: That has been at the top of our minds ever since we embarked on this path. Going back four to six months ago, we knew this was going to be the big task at hand. We shut down a factory in Elk Grove, outside of Sacramento, three years ago right before I joined. The company handled that transition very poorly. It caused a lot of pain for customers and internally. I came in soon after the shutdown, and it was one of the bigger headaches that I’ve had. We learned a lot from that experience—what not to do. A big piece of it is ensuring that we set up with the right inventories and material amounts that we know customers will need, and then supplementing that with a lot more air freighting from our factories in South Carolina and Taiwan until we get the new factory up and running.

The other key piece to it is to try and minimize the time gap between when we're out of the current factory and into the new factory. We're getting the gap down to months, and we're trying to make it as few months as possible. We have some great minds involved, and we've also engaged some customers to provide wisdom to help us make sure we don't miss any details. We're confident that we will be able to do it. We’ve budgeted for holding more inventory and all the negatives that come along with that from a cash and scrap perspective. Everything we’re doing should make this a painless transition.

Johnson: A lot of our readers are consumers of Isola's materials. What advice would you give them for working with you successfully through this transition?

Waters: Not everybody needs to qualify or requalify new material coming from a different plant source; a minority do. But when you do, our salespeople are already engaged, pushing hard to finish qualifications quickly. If we did need to iterate that, we should still have time to make sure we got that done.

Johnson: It sounds like you're already being proactive in identifying requalifications and making that process smoother.

Waters: Yes, we're receiving those orders as we speak on the requalification, so that's one piece. The other piece is where customers have unforecasted or one-off orders. As always, even with the situation we currently have, you still need more time with those kinds of orders, so we're asking them to highlight them. Make sure that you stay in close communication with our people. Our people are working hard. Many times, busy customers don’t spend enough time talking with our sales and tech support personnel as they need. Keep that boulevard of communication going.

The last time we spoke, I discussed the transformation that we were undergoing. As I described then, the company had been through a pretty rough decade.  The new product development engine at Isola was in bad shape and only got worse. When I joined, that was top priority: What do we need to do to get the new product development engine back up and firing.  The challenge was that we had a set of new products that were already out in the market, tough for us to manufacture, that didn't perform as well as they should have. We spent the better part of a year to a year and a half doing two things. The first was putting a better development process in place—a more traditional cross-functional product development phase gate process where you go through four or five different steps. At every step, you have a representative from manufacturing, quality, R&D, sales, and marketing making sure the product is ready to graduate. We have a sound process in place now, and we're already starting to see fruit from that.

The second big effort was fixing some of the challenges that we had with those products that had been released, and I'm very proud to say that as of March of this year, we fixed the last remaining challenges. For example, our Tachyon 100G product is now passing the most stronghent CAF requirements—which is one of the main reliability requirements that our communications customers and automotive customers have—with results that are putting it best in class. There's maybe one other supplier that has achieved the same level of performance with CAF performance as we have, which is a massive achievement for us as a company—especially since we weren’t able to even marginally pass in the past.

We wanted to go through the pains of getting those products ready first, so we had something to sell. There is still a growing market for our Tachyon 100G product. I wanted to be sure that we understood the sins and ills of the past so that when we're approving new products on the roadmap, starting development, and investing the millions of dollars that it takes, I could be confident we knew what we were doing.

March gave the blessing that we knew what we were doing, and since then, the roadmap has started to kick into gear. We have new products in development on the next generation of extremely low-loss products beyond Tachyon. We also have products in research for the RF space. Further, we have a compelling product in development in the high-Tg, thermally robust product space that will be great for electric vehicles.

There are a lot of exciting things going on, and we’re on the cusp of being able to talk about some of those products in a more deliberate and public way. We have great ideas and products, and OEMs are still very engaged with us. We now have an engine that can create those products and get them to market on time in a schedule. We’re bullish on our future.

Matties: How did you bring your team around? Did you bring in new people or reorganize with who you had?

Waters: In product development we essentially did a replacement from top to bottom; that's what it took. We now have our product development group broken into two pieces. First, we have a front-end group, which is our CTO organization where they work with customers on defining products and the roadmap and front-end formulations. They have chemists and scientists that come up with the formulations that will help create the resins that will go in the laminates and drive next-generation products.

The lead for the chemistry team is a relatively new hire, somebody who is well-experienced in the industry but came from outside of Isola. He was the guy who came in and quickly helped us fix our CAF issue with Tachyon 100G. The man who runs that organization, Ed Kelley, was with the company before in another function, but Ed came from Polyclad. From my perspective, a lot of the successes that we've had as a company came from the Polyclad acquisition. Putting him in more of a leadership position has been great.

Second, we have another organization run by Bill Mazotti who comes from the semiconductor industry and is well-schooled in the process of bringing products from ideas and first-pass samples, to how to make something that can scale into mass production. He's bringing processes and tools that we used in semiconductors going back to the ‘80s, but with a lot more rigor and a greater time reduction around how to get products to market as quickly as possible. He's also new to the company. It's been a pretty whole-scale change out for us.


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