-
- News
- Books
Featured Books
- smt007 Magazine
Latest Issues
Current IssueComing to Terms With AI
In this issue, we examine the profound effect artificial intelligence and machine learning are having on manufacturing and business processes. We follow technology, innovation, and money as automation becomes the new key indicator of growth in our industry.
Box Build
One trend is to add box build and final assembly to your product offering. In this issue, we explore the opportunities and risks of adding system assembly to your service portfolio.
IPC APEX EXPO 2024 Pre-show
This month’s issue devotes its pages to a comprehensive preview of the IPC APEX EXPO 2024 event. Whether your role is technical or business, if you're new-to-the-industry or seasoned veteran, you'll find value throughout this program.
- Articles
- Columns
Search Console
- Links
- Events
||| MENU - smt007 Magazine
Going Global: Bridging Today's Labor Gap
March 18, 2022 | I-Connect007 Editorial TeamEstimated reading time: 3 minutes
No doubt you will relate to Foad Ghalili when he expresses his concerns about rising input costs to doing business, from getting the right components, to delivery times, and price increases. But what’s unique for the president of Epoch International is the way his company has leveraged its U.S. and China operations to make the most of the other thing on everyone’s mind—the labor shortage. If you’re not already implementing his ideas, you will walk away from this interview with some sure-fire tips.
Barry Matties: There’s a lot of reporting on inflation and the supply chain, but what about the input cost impacts for the EMS providers, strategies you’re utilizing to mitigate those costs to help your customers and navigate for the future. What are the trends and pressures you see right now?
Foad Ghalili: When you break down the input costs into direct material, direct labor, and include facility and transportation cost, they are all under pressure right now. We are seeing a rise in every aspect, especially with semiconductors, at around 20%—that is, if you can get them. We are struggling to get components and spot buy has become a daily activity as we constantly look for different sources. We’ve seen semiconductors at prices two to three times than what we were paying about a year ago.
Labor is also on the rise, both in China and in the United States, though not as bad in China. In the U.S., besides the cost, we are also dealing with a constant transition of staff in a tight market, where everyone is looking for that higher salary.
We also see infrastructure costs on the rise. In China, we see a 2–3% rise in power consumption. The other is transportation where not only costs are increasing but also delivery time. Before, we could count on delivery times of three to four days between China and the United States through FedEx. Now, if we can get things in a week, we are lucky. Generally, you are seeing a major shift in every area. Demand is still strong, and the market is expanding, but to keep up with the demand is a major challenge.
Matties: How are the customers handling the price increases?
Ghalili: Some customers understand, everybody knows the price of components, as they are readily available. An intelligent customer understands what is happening in the market and they’re willing to work with you.
Matties: In the U.S., we’re having a hard time finding people to take the jobs. Is there a trend in China, like the U.S., where people aren’t wanting necessarily to work, or is it more job-hopping?
Ghalili: In China, we don’t have much problem with finding or maintaining the labor. It’s nothing like our facility in Fremont [California], where finding and keeping employees has become a challenge. In China, we are finding and maintaining our workforce, but salaries are on the rise, and we expect it to continue.
Matties: Where do you see this headed? Do you see a plateau in the wage increases or do you see a sustained rate of increase?
Ghalili: I think it will plateau in China. In the past 15 years, we were seeing 15–20% pay increases. It’s starting to plateau around 4–6%. In our industry, we’ve been a bit on the upper end, running around 6% and anticipating the same next year.
The U.S. is a completely different market where the difficulty is just in finding the labor force. Engineers are hard to find, and the demand for the engineering and technical field is very high.
Labor cost increase is a constant struggle we are having in both the U.S. and China. We are trying to see how much we can leverage each facility, for example, the engineers here (in China) supporting the engineers in the United States. We want to build synergy between the two companies in supporting each other.
To read this conversation, which appeared in the February 2022 issue of SMT007 Magazine, click here.
Suggested Items
Magnachip Celebrates the Grand Opening of Magnachip Technology Company in China
05/16/2024 | MagnachipMagnachip Semiconductor Corporation celebrated the opening ceremony of Magnachip Technology Company, Ltd. (MTC) yesterday at its headquarters located in Hefei, China. MTC is a subsidiary of Magnachip, established on December 20, 2023, to expand the Company’s display driver IC and power IC businesses in China.
Real Time with… IPC APEX EXPO 2024: Saki America's Inspection Solutions and Market Expansion
05/15/2024 | Real Time with...IPC APEX EXPOCraig Brown, GM of Saki America, speaks with Editor Marcy LaRont about Saki's comprehensive inspection solutions, metrology, quality control, and software integration. He also touches on the company's recent X-ray machine award, the 3Di-LS3 machine, and their growing presence in the US and Mexico markets.
Real Time with... IPC APEX EXPO 2024: Electra's Passion for Inkjet Solder Mask Technology
05/15/2024 | Real Time with...IPC APEX EXPODon Monn, national sales manager for Electra Polymers, discusses his transition to Electra and the benefits of inkjet solder mask technology. He emphasizes the significance of product passion and understanding customer issues. Don also outlines Electra's mission and expansion plans, and addresses the current state of the PCB market and the importance of education.
SiPearl: Partnership with Samsung Electronics for built-in HBM in Rhea
05/14/2024 | BUSINESS WIRESiPearl, the company building the high-performance low-power European microprocessor for HPC and AI inference, has signed a partnership with Samsung Electronics Co. Ltd., a world leader in advanced memory technology, to equip its Rhea series with Samsung’s advanced memory solution ideal for HPC and AI applications.
LPKF is Ready for Increasing Demand for Glass Substrates in the Semiconductor Industry
05/13/2024 | LPKFThe semiconductor industry is shifting towards glass to package the most advanced semiconductor chips. LPKF’s mature LIDE technology is enabling that transition into this new era from ramp-up to high volume manufacturing.