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U.S., Europe team up to compete with China's mfg dominance

Posted: 29 Jun 2012 ?? ?Print Version ?Bookmark and Share

Keywords:electronics manufacturing? EMS? contract manufacturing?

Last March, Switzerland-based electronics manufacturing services (EMS) provider Escatec Sdn. Bhd. partnered with Surface Mount Technology Corp., (SMT) an up-and-coming contract manufacturer based in the United States. The partnership was one of many collaborations announced every month in the electronics industry.

If you look at the Escatec-SMT deal, it underscores that global nature of electronics production at a time when competitiveness along with high-tech manufacturing jobs have become key issues in reviving the tightly linked U.S. and European economies.

The deal made sense since Escatec was looking for a North American manufacturing partner to gain a foothold in the region while gaining another "gateway" to its high-volume manufacturing operations in Penang, Malaysia. Martin Kingdon, Escatec's director of business development, added that it also allowed the Swiss EMS to move up the value chain by providing R&D and design services closer to its North American customers.

SMT, which specializes in low- to medium-volume contract manufacturing for underserved smaller companies, expanded its customer base through the deal and gained the ability to offer higher-volume contract manufacturing through Escatec's Malaysia operation.

SMT's shop floor

What is significant in this picture of SMT's shop floor is the fact that the back wall is temporary, allowing for quick expansion when more work comes in.

We visited this upper Midwestern manufacturing hub (in the 1960s, the "Fox River Valley" was home to nearly a dozen paper mills) to get a closer look at the forces shaping the electronics supply chain. We also wanted to find out whether anecdotal reports about electronics manufacturing returning to the U.S. are true. To a limited extent, we found, electronic components like LED modules are now being redesigned and manufactured again at places like Surface Mount Technology.

The other piece of good news is that SMT has laid out its design, prototyping and manufacturing facility that currently employs 140 workers with a temporary wall to allow for quick expansion. The employee parking lot was full on the day we visited, and company executives said they are currently running three shifts six days a week to keep up with orders from its current roster of 85 customers.

Leaving China?
SMT's strategy revolves around early-stage product design aimed at reducing manufacturing costs and boosting product quality, said Paul Vander Maazen, SMT's sales and marketing vice president. Company engineers are "designing the labor out" of what are currently labor-intensive manufacturing processes, he explained.


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