Zentech: Expanding EMS Solutions and Supporting Innovation

Estimated reading time: 21 minutes

Zentech CEO and President Matt Turpin sat down with me recently for a wide-ranging discussion of the state of both domestic and global manufacturing. We also touched on a recent acquisition that will significantly expand their capabilities. Other topics covered were supply chain issues, automation, regulations, and the importance of STEM education in the U.S.

Barry Matties: Matt, thanks for joining me today. You've been the CEO and president of Zentech since 2006. What were you doing prior?

Matt Turpin: Prior to Zentech, I was with a large OEM, Spirent Communications, which acquired a company that I was with for a long time, Hekimian Laboratories. We made test equipment for the telecom, service assurance hardware, and software industries. I managed product development, marketing and the operations group with them. All told, I’ve been in manufacturing for more than 30 years.

Matties: I see that you are pretty active in your local government and are now on the IPC Government Relations steering committee for the national level, plus you are focused on some of the reshoring issues as well.

Turpin: I try to stay current. That's a really good way to be current and be around other like-minded people. Assuring peace is fascinating at the local and national level. Things have really changed during the last 10 years. It's interesting to watch how reshoring is evolving, both on the electronics side and outside of electronics, too. The economics have really changed over the years.

Matties: The interesting thing to me is the way that you are approaching manufacturing and the re-shoring effort. It looks like you are building the American workforce by region, beginning with your local neighborhood, where you are supporting local suppliers for sheet metal and all the other supply chain items that you need. This looks like an interesting model that could really bring infrastructure back into America, one neighborhood at time.

Turpin: I would agree, and add that this is particularly true with regard to how transportation costs play into it, both in terms of wallet costs and lead-time costs. Even though there is still a ton of manufacturing that moves offshore and is completed offshore, most of the innovation and product development activities are still taking place in the U.S. Unfortunately, a lot of those have migrated closer to the manufacturing in Asia, both for regional reasons and cost reasons, but the majority of it is still being done in the U.S.

Having a regional model with the ability to help these innovation centers execute on the design and assembly side of the printed circuit boards, plus a regional model where we can leverage quick tooling to the plastics, sheet metal design, cabling, and ancillary requirements, makes the whole development process faster and more efficient.

Matties: It also gives you a competitive advantage.

Turpin: Certainly it helps with what I refer to as the innovation center and the people doing the innovation. Most times it's the company, but sometimes the company is outsourcing the innovation effort to a larger design house, too. We come in by being close to that and helping them to succeed, both on cost and time-to-market. But you're right; if done correctly it does create a sticky relationship that is harder for them to go outside of, because they won't get the price and the lead-time support that they've come to enjoy.

Matties: I understand that you have recently made an acquisition. Are you ready to make some announcements about that or name names at this point?

Turpin: Yes, we are very excited to announce our acquisition of Colonial Assembly & Design (CA&D). They are well-embedded with the DOD, particularly the Navy, and also have an excellent portfolio of customers in the commercial aviation sector. Their DOD role is interesting (contrasted with Zentech’s traditional contract manufacturing role) as CA&D has traditionally functioned as a prime contractor for electronics system design and manufacturing. We also pick up a very experienced, dedicated and talented workforce. From a capabilities standpoint, it significantly broadens our solutions offering by adding circuit design, mechanical engineering, cable and wire harness expertise, machining and a whole systems level approach to customer engagement. Zentech was recently recognized as the premiere contract manufacturing organization in Maryland, but our larger goal is to be the dominant player in our space in the entire mid-Atlantic region. So the acquisition of CA&D, located in Fredericksburg, Virginia is also strategic from a larger footprint and regional build-out perspective.

Matties: It looks like Zentech is doing about 45% in aerospace and defense and the rest is medical, communication, and so on. What sort of capacity or market are you targeting with this acquisition?

Turpin: The rationale for the acquisition has more to do with expanding our capabilities than it does with expanding into a specific industry segment. Currently, I think we're over 50% defense and aerospace. This particular acquisition is also heavy on the big defense and aerospace side and, like us, has a thriving commercial piece. When you have a blended model like that, it helps keep the overhead costs down on the defense side, making you more cost competitive on a lot of the defense programs because you are not just a pure defense play. You've got to keep your costs in check to compete on the commercial side as well. It's kind of a self-regulating model.

The main reason for this current acquisition is to expand our capabilities. Getting back to the previous conversation about helping these innovation centers succeed and get to market faster, we've done a really good job of supporting customers on the design side as well as on the manufacturing side. Where we want to expand our capabilities is being able to be faster on prototypes. We do prototyping now, but as you get more and more of your work on the prototype side, you really want to make sure you can stay ahead of the curve from a capacity standpoint. The best way to say it is that we want to be able to add quick-turn capacity, and we want it to be a more efficient delivery model.Page 1 of 4

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