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Marcy's Musings: Engineering Economics

The real cost to manufacture a PCB, sometimes referred to as the "loaded cost," encompasses everything that goes into making the product: the materials and other value-added supplies, machine and personnel costs, and most importantly, your quality. Happy Holden calls it "Engineering Economics," and dedicated a chapter in his book, 24 Essential Skills for Engineers, to the subject.

So, how do you understand the real cost? Obviously, yields are everything in this business, but so is building more accuracy into our boards and finding defects. This is critical to a PCB fabricator’s success. As Happy writes, “Yields are the dividing phenomena that often decide whether we make a profit.” This is where pricing can be a dicey proposition. Not pricing your product properly can be disastrous to your bottom line which is one very important reason to understand the true cost to manufacture.

In the November 2024 issue of PCB007 Magazine, we examine the real cost of manufacturing through several different lenses. We start with an article by Richard Koensgren of ICAPE, who provides an overview of the things in a PCB design that can significantly affect cost. Matt Stevenson of ASC Sunstone adds to this discussion by providing a customer case example. Hitting the manufacturing floor, Dr. Pat Valentine of Uyemura discusses the value of process yield statistics as powerful tools that help an organization see how defects impact their scrap, rework, and ultimately customer satisfaction, and cites that “companies operating at a three-sigma quality level can spend about 25% of their annual sales remediating poor quality costs.” Happy Holden also takes us through first-pass yields.

Of course, there is more to one’s total product cost and total cost to operate than just what is encompassed on the manufacturing shop floor. Dan Beaulieu drills down on the intangible costs in your business that can make or break you. This month our book excerpt is from Happy’s, 24 Essential Skills for Engineers, where he dives into knowing your break-even costs. Finally, Doug Palladino, also of ASC Sunstone, takes us through the basics of depreciation, or as I like to call it, “depreciation for dummies” (or non-accounting people).

The alternate metallization conversation continues in my interview with Mike Carano and Happy Holden, discussing whether the time for tin-nickel as a surface finish has finally come. Lastly,  Manfred Huschka talks about China Plus One in the first of a two-part series, entertaining the question, “Does China Plus One Really Work?”

Now fully immersed in the fall season and end-of-the-year holidays, we’re already looking ahead to a brand new year. A hard look at real costs seems wholly appropriate. So, let’s dig in.

This column originally appeared in the November 2024 issue of PCB007 Magazine.