A Tale of Two Shows; or, Where U.S. Electronics Assembly is REALLY Going

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I went out to Assembly Tech Expo and IPC Midwest to see what was going on in the industry. Everyone these days is looking for answers and that means looking beyond what's on display in the booths, or what's being hyped in what's left of the trade media. After all, I have somewhat of a vested interest in what's happening; after twenty years in this electronics manufacturing business, it's a lot like being on a sand-spit out in the bay with the tide rising. At first it seems like a big place, but after awhile the rising water cuts off the escape route and you find yourself pacing in ever-smaller circles on a shrinking piece of dry ground, wondering where the heck the big island went, and what, if anything, will be left once the tide reaches flood.

It takes desperation and no small amount of courage to get on a plane these days for a domestic flight here in the U.S. I actually looked at the option of driving from New England to Chicago, but then realized that if I flew, I could probably get there an hour or so sooner, delays calculated in, so what the heck, I stripped down, threw away my pride and my fluids, and stepped into the security screening queue.

Down to business. AT expo was a busy show, lots of traffic, but of course there were five separate, small, specialized shows all crammed into one, from plastics people to electric drill people. Most were not closely related other than being involved in manufacturing, and supported by Canon trade publications. There were still a few electronics manufacturing people there, complaining because they were largely ignored, and anyone wanting to find an electronics manufacturing products vendor had to push through a lot of other people in other industries to find them. Canon has no specific publication serving PCB assembly. That might have been a tip-off to these exhibitors, but it apparently wasn't. Remember this: if they don't have a book supporting your industry, then they're not supporting your industry. How are you going to advertise your offering at their show, and build booth traffic? Will you advertise in their assembly book with the electric screwdriver manufacturers? Or will you be in their plastics book with the injection molders? I did see some crossover; an old friend who makes illuminated magnifying lamps for inspection was there. His product is applicable to a wide variety of industries beyond electronics, and they had a busy booth. Right now, if you're only focused in PCB assembly, well, you're with me on that tidal island, and it looks like we're going swimming.

I had to get out of there on the second day. The Stephens Convention Center in Rosemont is a dump and there isn't much to eat - forget the cafeteria - and it took most people the better part of an hour to get out of the parking garage, which caused a good deal of grumbling.

By contrast, the Renaissance Schaumburg, home of IPC Midwest, is a swell venue. True, it's smaller, but it was big enough for this show. The hotel lobby is cheerfully retro in the spirit of the tie-dyed '70's and just sitting around there reminded me of my dissipated formative years.

The show was a little slow, as you would expect from the first year of a first show. Lots of folks from IPC and the supplier side whom I knew were there, which made it familiar and friendly. Talk was that the traffic was light, but the leads and inquiries were high quality. "I'd rather have five solid leads than a hundred literature collectors" one exhibitor told me, a common refrain that I've heard over the years.

Nowadays, wearing a visitor badge is a liability; and this was true at AT Expo as well as at IPC. In the old days, you'd look at the stuff in a booth and the guy standing there would try to make eye contact, and wouldn't initiate a conversation unless you raised an eyebrow or showed the first inkling of interest. Once or twice someone might jump out at you, but usually it was because they were bored and had been nipping at a little bottle of schnapps behind the literature table; the red, sweaty face was always a dead giveaway. Now, however, hawking seems to be the rule. Is it desperation? The colored stripe of the Visitor badge seems to say "pounce on me!" and they accost you in the aisle. My badge has my name on it and says in big letters "Public Relations and Marketing", but this guy still wants to sell me a tank of nitrogen. What am I going to do, inhale it?

The US electronics manufacturing market is not dead, but it is transitioning. EMS companies are proliferating - there are, by one local manufacturer's estimate, more than 100 in the Chicago area alone right now. One of the most successful and growing EMS companies in the Midwest is The Morey Corporation, in Woodridge, IL. This $100-million plus company specializes in hardened electronics - control systems for heavy equipment, telematics, military and avionics stuff. Read: stuff that, for quality, reliability, and security reasons, cannot be outsourced to Asia or to low-cost labor markets like India, or Vietnam. It's all high-mix, low volume. I spent an entire afternoon at Morey touring their new Innovation Center, a brand-new addition - dedicated only a couple of weeks ago - that will be a center of engineering and product and process development. This is the future of the US electronics manufacturing industry, right in front of our noses.

Of course, the Ericssons and Nokias and Samsungs will continue chasing low-cost labor markets around the globe for their high-volume, low-reliability stuff; the throw-away flash drives, cell phones, and iWhatevers. That stuff will never come home. But the big secret out there that no one wants to talk about is that the quality of electronics manufactured in China has been nose-diving. Why so? One editor I spoke to confided that he felt that the quality has always been poor, but it has been hyped; others generally disagree. This is the Problem that Dare Not Speak its Name; Outsourcing-to-China cheerleaders really do not want to hear this. One insightful analysis blames outsourcers themselves. Price pressure, in the face of rising costs and living standards over there, is forcing Chinese contract manufacturers to cut corners everywhere to maintain the pricing demands of their customers. They also see looming competition from India and other low-cost labor markets, and realize that it is only a matter of time before the chickens fly the coop. They want to slow that eventuality. In the process, quality suffers. Another theory is that they have overextended themselves, too much, too fast; perhaps. But the decline in quality is undeniable. A major pick and place manufacturer, according to scuttlebutt, has pulled their manufacturing of critical parts out of China and now will only do assembly of systems there, because of the unacceptable variability in quality. Horror stories emerge; a customer goes to China to solve a problem only to find out that the company supposedly manufacturing his product has sub-contracted the manufacturing out to another, which has done the same three or four times removed; or worse, the manufacturing company doesn't really exist, and the products are being assembled in a sub-standard (to put it nicely) location.

Fast-forward to the show floor: a supplier of benchtop selective soldering machines priced under $50K USD has sold more than 200 machines in the last couple of years. The booth was mobbed, and they're doing all three shows, AT, IPC, and SMTA. By contrast, many of the high-end automated flowline equipment manufacturers were less than busy. Who's buying?

A lot of assembly that simply makes no sense to outsource to Asia for cost and quality assurance reasons is coming home, or just not leaving. A proliferation of EMS companies in the US, driven by high-mix, low volume assembly, is occurring. These small mom and pops will grow larger and will drive the resurgence of US electronics manufacturing, also fueled by advancing packaging technologies, difficult to assemble parts, costly and compact stacked devices, etc.

Look also for the unexpected. A dozen years ago, it was all about "flowlines", turnkey facilities, lights-out manufacturing, getting the skilled operator out of the manufacturing process because it introduced variability. Now we will see a return of the skilled operator, not so much the white-haired little old grandmother in a cubicle with a soldering iron, but someone more sophisticated, operating automatic and semi-automatic equipment. There will be more skilled personnel on the floor. Lights-out flowlines are not coming back here.

The face of US electronics manufacturing is changing, and there will be winners and losers. It is a growing. Pie, and although it will not be like the world of the late 1990's, it will nonetheless be quite robust, echoes of the past, but a new world nonetheless.




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