To Outsource or Not to Outsource PCB Rework

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When a task is outside a company's core competency, it's time to outsource in order to save time and money while reducing the risk. This core competency is a deep proficiency that enables a company to deliver unique value to customers. According to business texts, such a core competency creates sustainable competitive advantage for a company and helps it branch into a wide variety of related markets.

Typically, the litmus test for a core competency is that it's hard for competitors to copy or procure. Wait… isn't this the value proposition of EMS companies when selling the advantages of outsourcing to the OEM? Isn't the OEM better off designing, testing and supporting their customer base rather than being process geeks and "making" their widgets? Well, there is a case to be made that outsourcing certain rework projects makes a lot of sense.

Costs to Consider for a Rework Technician

Several factors need to be considered as part of PCB rework and repair costs when looking at the "total costs." These costs include the labor rate of the rework technician performing the rework and repair operations, their training program costs as well as costs associated with supervising the individual.

Hourly labor costs for soldering technicians performing rework operations drives a significant portion of the marginal cost of rework. The mean salary for associates skilled in the art of rework is $14.23 in the United States. The national average for the overhead burden which needs to be added this hourly rate is 42% for manufacturers with less than 500 employees. This consists of both voluntary (medical, dental and life insurance, etc.) and involuntary (i.e., social security, unemployment insurance, etc.). This puts the loaded cost at $20-$21 per hour.

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Editor's Note: This article originally appeared in the April 2016 issue of SMT Magazine.