Bring Our Industry Back? Shift Your Attitude

Estimated reading time: 15 minutes

Beaulieu: We focus on new product introduction, technology, products of the future. I did a book review of The Future Is Faster Than You Think. The first 50 pages are loaded with today’s innovations. All those things that must be done in privacy, and are proprietary at the beginning, will be going to trusted PCB shops who have the capability of an R&D facility, for example. Customers who value that are willing to pay for it. As you said, we’ve been so lean on margins that we haven’t had the oxygen to do R&D. Some of that must be paid for and it’s starting to be paid for well.

Matties: Part of the problem, though, is shop capabilities. I have heard stories where the buyers have been to shops and the yields were just not where they needed to be. They are cycling through the short list of the 300 or so shops in the U.S. There’s not a lot of depth to finding a capable supplier.

Beaulieu: No. You’re going to have customers subsidizing early on. They must make cost-plus programs and have patience. It might be contracts like, “How much do you need to make? Give us your costs. Give us a percentage of what it is. We need you.”

Matties: We both see it; we know a few captive facilities coming into the marketplace. Captive may be the answer with technology being what it is. If you’re going to invest in some shop in North America, why not just set up your own facility where you can have zero waste, an automated state of the art facility that you have total control of? We interviewed the Schweitzer SEL on their new captive facility, and they’re excited to have their own facility to control quality and reduce cycle-time. As a bonus, they feel it fosters creativity and new product designs from their design team because it’s right there. They’re connected.

Beaulieu: I don’t think that precludes what I’m talking about. There are going to be merchant shops that must keep up. I completely agree with that. My theory is that in the 1970s and ‘80s, the captive shops went from being the PCB department to a P&L center. And when that happened, they were gone. Rockwell, where I spent several years, is a good example. They never talked about money. If their Minuteman boards were late, or the shuttle boards were late, they talked about that a lot. We didn’t even know if we were profitable.

Matties: Outsourcing was becoming quite popular. This is the birth of the EMS, if you will.

Beaulieu: It was, and that’s another factor. I don’t work with the giant EMS companies, but I work with people who did. And only the big ones had some sort of respect for the PCB. The smaller ones are just learning about the PCB. I like to joke that you have a shop in the Everglades, you keep boards on a shelf for three months, and don’t realize you’ve got to bake them before you assemble them. It’s things like that. They’re opening to the knowledge of the PCB.

I don’t think we’ve done ourselves any favors. Anytime we talk about our image, and I’ve been guilty of this, we point the finger at the IPC. Well, this piece is a little different. It’s pointing the finger at us. It’s saying, “Yeah, you could blame the IPC. That was your organization. You could have fixed it. Now, put that aside. Let’s talk about what you’re doing for your image. Then I’m back to why you won’t even spend a day thinking about your company strategy. That’s where this company is going? What’s my ideal customer?”

Once, when I worked for a company that was owned by Cadence, I was exposed to strategy. These guys who sell software, who make millions of dollars a year, you can bet they’re talking about account plans and strategies all the time. They did that with us, saying, “Okay, we’re going to go after coefficient of thermal expansion products.” It was a successful strategy for a while; it really worked. You must have a strategy. What’s your niche? What are you going after?

Johnson: Dan, I’m getting the idea there is business currently overseas that would be an ideal fit for North American manufacturing. There is some business that’s mismatched, over in China mostly, because their volumes are being done there. So, they’re doing everything there. Do you agree with that?

Beaulieu: Maybe. I don’t know about the very beginning of a part number, let’s talk about that. That needs to be done in a neighborhood. I don’t really know. Barry, do you know of somebody out of Silicon Valley going directly to Asia for their PCB development? I’m not sure of that.

Matties: I think that was a market the Asians were going after, but I think the geography lends more to doing it in your backyard, in your neighborhood.

Johnson: I’m going to argue, though, that the strategy overseas was, “If we can get the prototype, we’ve got them locked in. They’ll stay with us for volume.”

Beaulieu: They will. That’s true strategically. But realistically, like Barry says, traditionally most shops in Silicon Valley do well. And one of the reasons is because you can walk across the street. You can go over there and hang out. Like what was happening in the ‘80s and ‘90s. That’s a big deal. We don’t hang out enough. Also, I think the political factor of the last 18 months has put a damper on sending our IP before it’s fully developed to anywhere, maybe even Europe. It’s like, “We need to keep it here for a while.” I think they were headed that way. And maybe, someday, it will be what you’re saying, Nolan. But right now, I think we’re going to play it closer to home. That’s my opinion, and what I see.

Matties: Strategy is one thing, about knowing your direction. But strategy is also about your internal processes, connecting one process to the next. That’s an important part of strategy. How do we make sure we’re connecting correctly? How do we make sure that it’s efficient? How do we get rid of the waste in those processes?

Doing that gives you a competitive advantage. Then, you take that strategy and share it with your market. Have your experts in the forefront help educate the marketplace. When you’re searching for a partner supplier, who will you go to? Somebody not in the forefront, or somebody who is being recognized as the expert? That’s an important part of this strategy so many people are leaving behind.

Beaulieu: Some don’t want to do that. They are fearful that competitors will steal their people. My advice is always, “Take care of your people.”

Matties: It sounds like you’re saying part of a company’s strategy should be, “How do I make sure the culture in my organization is so strong that people want to stay here, and not just for the money?”

Beaulieu: That’s exactly right. I’ve had calls from people who want to move, and it’s usually not about the money.

Johnson: Where are we headed, Dan? Working in a more technical, more challenging, more NPI-oriented environment where that’s our strong suit as an industry also means relationships, not transactions.

Beaulieu: Right. It is relationships. When you start being transactional, then China takes over.

Johnson: And that’s when you lose markets.

Beaulieu: Well, yes. I think, when I talk about “coming back,” what I really mean is our attitude needs to come back. First, stop complaining. Get off your mental death row. There are certain things that don’t make any sense anymore. Protectionism doesn’t make any sense. China will do what it does. Let’s find what we do and do it well. You won’t be building 10 million garage door openers here. Never. It’s a waste of time—unless we have a machine that makes garage door openers, then we might. But with people involved, people are too valuable.

Let’s do what we can and do it well. I believe that is at the front end of the market. With that, there’s coordination, by the way. You’re seeing a trend with your EMS and your design partners. People increasingly in the NPI space want one purchase order and do it all. They want cooperation.

Also, stop being so scared of the competition knowing who your customers are. So what? People have phone books. They can find your customers. Unless it’s more the idea, “Oh, I know Motorola is over there. I’m going to steal them from you.” Good luck. If we’re doing a good job, you’re not going to steal them from us. That’s part of it.

We talk about putting pride in the industry. Some of that is cooperation and working together. We’re starting to realize there’s nothing to hide here. What do we have that’s so proprietary that they’re going to steal? First, we’ve lived for years with a “not invented here” philosophy, that if you’re doing it, I’ll prove that you’re wrong. It’s that kind of thing.

Matties: Thank you for taking time to expand your thoughts on this topic.

Beaulieu: My pleasure.

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