Continuous Improvement and Understanding Lean's Role at Your Company

Editor's Note, update May 19, 2010:
Society of Manufacturing Engineers member and author, Mark Hamel, has been awarded The Shingo Prize Research & Professional Publications Award for the Kaizen Event Fieldbook. Given out in May 2010 in Utah at The Shingo Prize Annual Conference, the Shingo Research Award recognizes and promotes research and writing regarding new knowledge and understanding of lean and operational excellence.

SMT recently received a copy of Mark R. Hamel’s Kaizen Event Fieldbook for review. Hamel is a consultant to the manufacturing industry, facilitating the transition to Lean. Lean manufacturing has been a noteworthy electronics assembly strategy for many years, raised to a necessity level by the profit-margin, supply chain, and quality strains of the recession that began in 2008. While manufacturers must work to be lean, they also must make lean principles work for them. “Learn by doing” is the mantra of Hamel, encouraging readers to apply the lean principles that best improve their business. Hamel explains kaizen as “small, cumulative continuous improvements.” While some may be tempted to engage Lean as an abrupt overhaul of their business, these incremental changes will likely result in a more successful and sustainable manufacturing environment. Read a brief description of the book from its publishers here.

The workbook is divided into three sections, an education on the foundations of lean: kaizen, leadership, definitions, and ways to get started; four phases for developing, deploying, and maintaining kaizen events and strategy; and a final section on customizing these principles and actions for the specific business. Perhaps the most valuable resource of the Kaizen Event Fieldbook is appendix of worksheets: forms that can be used for audits, event planning, tracking initiatives, and more. The book is also closely synched with its Website, http://www.kaizenfieldbook.com/, where readers are welcome to ask the author questions, download the blank forms for their employees, and link to related resources suggested by Hamel.

For most electronics manufacturers, aspects of the Lean system are familiar, while others are not. The Fieldbook includes many clear definitions for the terms employed in the lean concept, while Hamel continuously points out that readers should come to the system with an idea of their own goals and interests. There is a difference between memorizing the system and terminology and learning it. Hamel encourages readers to learn the system and adapt it for their individual needs.

To quote Hamel, “the Fieldbook can be applied in several ways: at a corporate level as a framework for developing (improving, if the developing is done) and deploying standard work throughout the organization, and for the personal development of motivated kaizen practitioners. Kaizen’s role within a lean business structure is defined, and the point is frequently made that kaizen is a daily and weekly application of lean, not a single-event makeover. Detailed descriptions of how a kaizen event is planning, how it functions, and how best to maintain its effect are provided.

Contrary to the hype, lean systems can create plenty of waste, when communication lags, implementation is too ambitious, or when follow-up is lacking. Hamel points out that, while the main thrust of the kaizen event is kick-off, training, storyline, leaders’ progress meeting, work strategy, reporting, and recognition, this event is worthless without planning and follow-up. The Fieldbook’s suggestions for communicating include reporting methods as well as input methods to gain fresh ideas from employees. Suggestions even include visual communication, such as different colored shirts for people involved in different parts of a project.

Lean manufacturing demands continuous investment in making the production flow work; eliminating waste; and increasing your business’s performance through higher throughput, fewer errors, faster turn-around, or other metrics. With the Society of Manufacturing Engineers’ seal on this workbook, it looks to be a valuable addition to, or starting point for, a Lean initiative at the manufacturing facility.

For more information, read SME Releases the Kaizen Event Fieldbook

Meredith Courtemanche, managing editor

Technology for a New Year

Each year brings its own challenges and opportunities. During a recessionary period, people get creative. Though we have struggled for financial security, new ideas and applications in electronics will bring forth growth in the upcoming year.

For example, the new refrigerator in my kitchen has a bright Energy Star symbol on the front and a written estimation of operation cost for the year. The thermostat on the wall came with an Energy-Star-approved program recommended by the EPA for energy efficiency.

The grid system of energy usage in the U.S. is slowly evolving to smart electronics control as well, as we adapt to reduce power consumption. Lowering our carbon footprint will march right along in 2010.

RoHS Directive rules (2002.95/EC) are expected to apply to medical electronics in 2010, and many medical monitoring equipment makers are already converting to lead-free parts. This presents more challenges in a steady manufacturing sector that didn’t have the initial burden of RoHS that most board assemblers experienced. For more on REACH and RoHS, as well as new environmental legislation, read advisory board columnist Laura Turbini, Ph.D., RIM, in Our Relationship with the Environment.

One area that has been developing all along, and will see healthy support in 2010, is printed electronics. This should save on costs and fabrication steps as well. New circuit printing processes promise lower-cost ICs than conventional printed circuits.

Printed electronics on flexible substrates will affect many markets, adding RFID tags, OLEDs, and LEDs to traditionally non-electronic items. As I write this, I’m en route to California, where I’ll visit Kovio Inc. in Milpitas, CA. This company has been active in printed electronics since 2001. It manufactures RF barcodes from specialty inks using a printing process. Read a 2007 interview with the company from SST's WaferNews.

What will the new year mean for SMT? Market shipments are up and the North American PCB book-to-bill, published monthly by IPC, is strong. For some applications, PCBs will have printed RF on them for tracking; expect this higher level of traceability to become increasingly common.

Gail Flower, editor-at-large

Eastern European Near-sourcing on the Rise

Much has been made of the attendance numbers at productronica 2009 this year in Munich, Germany. As economic reports have trumpeted a better 2010, and electronics manufacturers have started to see a ramp in RFQs and orders, productronica’s attendance numbers jumped higher than anticipated. What kind of attendee visited the November electronics manufacturing show? From SMT’s informal poll of exhibitors, the attendance base was more European and, of those, more German than in prior years, with fewer attendees from Asia and the U.S. Many exhibitors pointed to Hungary and other Eastern European countries as sending motivated attendees — those sourcing equipment and materials to purchase.

Eastern Europe has a well-trained workforce for electronics manufacturing, according to many companies that sell equipment into the region. It is also linked via a strengthened infrastructure to the EU, with cultural similarities outpacing Euro-Asian business partnerships, and lower transportation costs than the Asia outsourcing model. The difference in labor costs between Eastern Europe and Asia can often be offset by transportation costs, time-to-market, and collaboration abilities. Several large EMS providers run facilities in Eastern Europe as well as Asia: Elcoteq operates in Hungary and Estonia, in addition to its China and India locations. The EMS provider states that it is interested in a broad range of customers, and this diversity of manufacturing bases can help achieve this. Flextronics recently made an acquisition in Slovakia to bolster its medical capabilities.

While none of this is new, productronica 2009 bore out the proof of Eastern European electronics manufacturing surviving the 2008–2009 recession, with companies selling equipment to Eastern European manufacturers, and many exhibitors saying that their most solid potential-customer interactions came from assemblers in this region. The proportion of foreign visitors to the show fell slightly to 42% (2007: 45%). However, there was a further increase in the expertise of visitors. The number of decision-makers rose from 88% in 2007 to 91% this year. The proportion of visitors from the top management level in their company increased from 15% in 2007 to 19% in 2009.

What drove the higher pan-European attendance at productronica 2009? Many possibilities exist, and it was likely a play of many factors coinciding. Travel budgets are limited for virtually every company, making international attendance more challenging. Asia has 4 major tradeshows coming up from end of 2009 through mid-2010, including Nepcon Japan, Nepcon China in Shanghai, Nepcon South China in Shenzhen, and Bohai Electronics Week in Tianjin. Asian manufacturers looking to add capacity or source new materials could likely wait for these regional shows to peruse the market, especially as investment budgets are still cautiously guarded. However, the increasing desire for smaller lot sizes, more reliability, and increased OEM/EMS interaction sets the stage for Eastern Europe to gain importance on the global manufacturing scene. With better trans-European infrastructure, cultural similarities, and a limited-cost workforce, near-sourcing to Eastern Europe is an attractive option for companies seeking those aforementioned qualities. For more on the shift away from Asia outsourcing, read Is the Migration of Electronics Manufacturing to Asia Slowing? from Charlie Barnhart Associates.

The next productronica will take place at the New Munich Trade Fair Center from November 15 to 18, 2011. Read the full report on productronica attendance on SMT’s Website, Demographics of productronica 2009

Meredith Courtemanche, executive editor

IPC Midwest: Friends, Fellowship, and Live SMT Assembly

It was a better-than-expected IPC Midwest tradeshow and conference in Schaumburg, IL this September. The A-Line live electronics assembly line attracted interest as each piece of automated equipment performed its task to build a mixed-assembly board with both through hole and SMT components. The process of assembly on a tradeshow floor never fails to draw a crowd, and this year the A-Line at Renaissance Schaumburg Hotel & Convention Center drew a line-up of visitors following the operation and waiting for a chance to snap up a finished board, still a bit warm from solder reflow.

As in last year’s A-Line, The Morey Corporation, long known for electronics manufacturing services (EMS), organized the set up. The Bare Board Group PCB distributor donated the boards. Microscreen stencils were used for paste deposition. The Capital Equipment Exchange Company set up a Speedline MPM AP Excel screen printer. Qualitek International donated the solder paste and flux, adding their support. PROMATION’s conveyors and handling equipment connected the equipment. Fuji America operated its XPF small-footprint pick-and-place system that can be flexible even at high speeds and with a wide range of components from 01005s to 68 mm². Ace Production Technologies donated their KISS-104 automated selective soldering machine to solder through-hole components. ASYS used their BLS 01 laser marking system to mark codes and images into solder resist. Aqueous Technologies operated the Trident III automatic defluxing and cleanliness testing equipment, using Kyzen’s Aquanox A4241 aqueous cleaning solution to clean the assemblies.

It’s always amazing that a full assembly line works together so cooperatively and efficiently, even in the fast and temporary set up of a tradeshow floor.

There were plenty of new products and news at the tradeshow as well. Asymtek had the DispenseJet DJ-100 high-speed equipment for jet dispensing. CyberOptics showed the SE500, a fast, accurate solder paste inspection (SPI) system. Fuji America had its large-board all-in-one placement system XPF-W at the show. Juki demonstrated the FlexSolder W510 selective solder machine, said to handle dual mini waves for simultaneous use. MYDATA showed its MY100SX pick-and-place. Panasonic had a NPM (Next Production Modular) line. Zestron America highlighted its VIGNON N 501 pH-neutral defluxing agent.

IPC Midwest wasn’t the huge show of yesteryear, but it was quite productive, exciting and enjoyable. Hey, a great event in the Midwest just shouldn’t be missed.

Gail Flower, editor-at-large

25 Years of SMT, and 25 More

At the SMTA’s 25th anniversary dinner, held during SMTA International in San Diego, Ken Gilleo, Ph.D., ET-Trends LLC, demonstrated the reliability of a decades-old flex circuit by throwing the assembly against a wall. He turned it on, and it worked. This symbolized much of the resiliency of our industry, where, as Gilleo put it, technologies and processes have been evolving since IBM made the first SMD in 1963.

Much of what we have achieved was derived from mistakes, such as dropping assemblies, ruining prototypes in countless ways, reflowing a moisture-absorptive material without drying, etc. As Gilleo put it, the industry has seen “a lot of embarrassment along the way.” Of course, we’ve gained knowledge at every step, and the SMTA gathered at SMTAI to celebrate this acquisition and dissemination of knowledge that has propelled the SMT industry to where it is today.

Although lead-free, laser soldering, nanosilver, flip chips, and other aspects of “modern” SMT have been used and refined over tens of years, technology is not the sole focus of the SMTA. As SMT Editorial Advisory Board member Jennie Hwang pointed out, the SMTA realized early that China would become the world-leading region for electronics assembly, and pushed to establish an SMTA program abroad. SMTA’s work continues to focus on developing chapters in other countries, with the most recent being Penang, Malaysia. The SMTA’s range of knowledge to propagate is a confluence of technological advancement and the business of manufacturing.

What is the result of this technological and international endeavor? Ron C. Lasky, Ph.D. PE, senior technologist, Indium Corporation, in his presentation, “SMT: The Next 25 Years,” provided a glimpse into the electronics products enabled by our work. In the 1950’s, televisions and radios were the personal electronics known to many Americans. In the 1980’s, personal music players, laptops, mobile phones, digital cameras, and other familiar devices were in their infancy. Lasky pointed out that many of these products, in today’s form, are reaching their size limits for human use. Could we make a computer small enough for a wolf spider to use? Probably. But do we really want those guys using the Internet? Lasky dangled the possibilities of virtual electronics, wherein the computer is miniscule, but the screen and keyboard are virtual reality projections for ease of use. The portability and features limits in electronics are yet to be reached.

Lasky also pointed out the synthesis of electronics manufacturing and biology, with bioelectronics meeting defined needs (vision, prosthetics, advanced surgical processes) for betterment of human conditions. No matter how much we adapt our lives to the ubiquitous electronics in them, Lasky notes that humans are unique, and will continue to be so for the next 25, and more, years.

Meredith Courtemanche, executive editor

Want more news from SMTAI? Follow SMT’s Twitter feed, updated live from the show, at Twittter.com/surfacemount.

SMT Assembly Shows Steady Growth in Medical and Military Markets

In the beginning, when SMT assembly first began penetrating the board assembly market, it was thought that surface mount would work for office computer production, but never in critical areas such as military and medical applications. Today, it seems that these are two of the rock-steady areas to be in if you’re an EMS provider.

Much progress has occurred along the way to increase SMT assembly. In 1999, the FCC opened up bandwidth frequencies, spurring development of new markets for miniature low-power RF devices and specialized communication protocols for monitoring medical conditions and delivering medication to patients. Implanted medical devices, such as heart monitors, could communicate with external devices, uploading data to doctors for review without physically transporting patients to the hospital. In drug delivery, new electronics-controlled equipment allows patients to deliver their own medicine but with the added safety of dose and frequency control.

As assemblies shrink, board real estate becomes an issue. Especially with mixed-technology (through hole and SMT) boards, tight spacing makes soldering through-hole and SMT assemblies difficult for small medical devices. Selective soldering can resolve this challenge. This latest soldering development handled the density issue and met high heat requirements for soldering. For those connectors, capacitors, and digital displays still requiring through-hole plus SMT components, selective soldering fits.

Some mixed-technology PCB designs can still be wave soldered with carriers and masking, but stacked and double-sided assemblies are too intricate to be given this individualized approach to mass interconnection. Most assemblies using RF components are too complex to hand solder all of the through-hole devices without errors. Selective soldering equipment can be programmed to handle both in- and off-line programming. The equipment integrates easily with the rest of the automated production equipment.

The selective soldering process — with mini solder wave nozzles beneath the circuit boards, handling precise dip, drag, and small wave actions while flux is handled by spray, drop jet, or ultrasonics — is now a familiar sight. Through programming, the equipment can control the process and maintain line speeds.

Radio (RF) technology has grown at Merrimack-N.H.-based BAE Systems, where the firm recently completed its first real-time test of improved wireless communication technology. War fighters can now dispense critical communications without interruption during battle. The technology allows more traffic on networking systems. It gives users an advantage during air-to-air, air-to-ground, and soldier-to-soldier communications.

Under a $15.5 million Defense Advanced Research Projects Agency (DARPA) contract, BAE is developing wireless radios that can untangle interfering digital communications signals. The DARPA Interface Multiple Access (DIMA) program aims to increase network capacity and performance in highly congested mobile networks. The radios will allow multiple transmissions to occur simultaneously on one frequency and can support as many as five simultaneous conversations into the same time and frequency slot, even in the presence of severe near-far interference.

“With current technology, bandwidth is shared through assignment of unique time slots, frequency slots, or code words for each user, significantly limiting network performance,” said Brian Pierce, Ph.D., DARPA. “DIMA buys back the capacity loss caused by those limitations with technology that separates multiple, interfering digital signals.”

Known as multi-user detection, BAE Systems’ real-time technology enables users to communicate simultaneously on the same channel without centralized control or infrastructure. Recent experiments validated the technology in a mobile, ad-hoc network environment and demonstrated the vehicle-mounted DIMA radio’s ability to receive up to five simultaneous transmissions from different users while traveling at 15 mph.

“By next March, we expect to operate at speeds greater than 30 mph in highly interfering scenarios, and may even operate as high as 60 mph,” said Joshua Niedzwiecki, manager of BAE Systems’ communications and signal exploitation research group. “This would further validate the technology in more operational scenarios. If fielded in Iraq, for example, it could prove vital in areas where interfering electronic transmissions reduce the amount of transmittable military communications.”

With new applications and specialized equipment, both medical and military markets hold steady for EMS assembly inside the U.S. Both serve a growing need for RF communications in monitoring and communications.

Gail Flower, editor at large

Read Editorial Advisory Board member Craig Hunter's take on SMT in rugged applications: SMT Components Toughen Up for Rugged Applications

eWaste: Establishing an Environmental Program

In the past several posts of this eWaste series, we’ve looked at electronics recycling and end of life (EOL) management from the EMS company’s and recycler’s perspectives. Today, we’ll look at the idea from one OEM’s viewpoint, and follow this networking and security vendor's internal and external initiatives to construct and implement an environmental program. David Cox, senior VP of Blue Coat Systems Inc. (Nasdaq: BCSI), describes how the BluePlanet program started, their method for laying out an environmental roadmap, and other steps that any company can take to shape their reduce/reuse/recycle program for sustainability and profitability.

The BluePlanet environmental program, designed in partnership with consultants from TFI (see Pam Gordon’s Do’s and Don’ts in the first eWaste post), operates on a company-wide level, interconnected between different departments. For example, the company implemented a take-back program when customers upgraded to new models, recycling the legacy products into their spare parts program. This required coordination between account managers in the field, channel partners, the rework and repair team, and shipping, as well as a marketing push to get the word out to customers. A simple “swap mentality” didn’t yield many returns, and since upgrades occur on the customer’s schedule, not coordinated across the customer base, distribution was highly fragmented. Logistics were difficult at first, Cox admits, but incentives for success included reduced cost of replacement/refurbished units for customers, reduced excesses in component build, and satisfying the many green info requests that come through in a request for quote (RFQ). “This program pushed us to really study our installed base, and there are additional benefits reaped from that,” Cox adds.

As much as the environmental program is global in scale and a company-wide project, it also is reliant on the individual employee. Blue Coat created an E-Heroes program, wherein employees submit ideas for how Blue Coat can become more green. This includes anything from designing products for ease of rework (reducing scrap and waste), considering the impact of raw materials used, designing for the environment (DfE) in new product introductions (NPIs), carbon footprint in travel and shipping, and more — even the kind of ink used on packaging. Since the company’s products enable increased application response times in consolidated server environments, it was only natural to execute a server consolidation internally, going from 85 servers to 3 and conserving energy as a result. Cox said these internal suggestions led to a solid program from the start, with a comprehensive approach and clear goal. As with the take-back program, secondary benefits like boosted employee morale and a recruitment edge were realized.

Blue Coat, like many EMS providers we interviewed for previous posts, chose to partner with a dedicated recycler for some of its EOL needs. “We found that 98% of some products were recyclable or recoverable,” Cox notes. Blue Coat’s hardware, manufacturing, and process engineers took a workshop on design for recyclability (DfR), which can boost this materials reuse even higher in the next product generation. Cox suggests performing due diligence on a potential recycling partner and looking for specs like a global footprint, commitment to correct practices, and satisfied clients. Read more about choosing a recycling program in the eWaste post, “Which Electronics Recycling Model Fits Your Business?”

Blue Coat is over the first few hurdles in establishing an environmental program. The company is now at a point where it can see and understand all of the future opportunities available, and can leverage the steps it's already taken. With the unifying and company-building power of the BluePlanet implementation, Cox now looks forward to determining longer-term goals for the company’s environmental strategy.

Meredith Courtemanche, executive editor

eWaste: Which Electronics Recycling Model Fits Your Business?

Electronics recycling comprises several end of life (EOL) processes, from disassembly to data destruction to metals salvage and other steps. Some companies are one-stop-shops, smelting, grinding plastics, recovering useable components, and reselling raw materials. Others partner with recyclers, perhaps performing data protection and initial disassembly then handing over waste to dedicated processing centers. Beyond this are a myriad of brokers, specialists, and other processing/resale points that can make the reverse logistics of EOL more complicated than the traditional assembly supply chain. It is through this multi-tiered network that broken computer parts become flower pots, for example.

Celestica is an EMS provider entrenched in the design, assembly, ship, and after-market support of electronics. However, as Mike Andrade, senior VP and GM, North America, Celestica, points out, the company is not a major physical recycler. Instead, they use their experience with supply chains to design a network of reverse supply chain partners. Today, Celestica handles initial breakdown of waste electronics for some customers and then sends the eWaste to certified recycling partners in the U.S. and Canada. As customer interest and the company's EOL management program grows, Celestica will work to expand with a secondary network of partners globally. “We’re in the middle, orchestrating sustainability, from design for environment (DfE) to EOL,” explains Andrade. Kimball Electronics, also an EMS provider, has a repair depot, which incorporates its recycling operations. The Kimball employees are especially trained in their products, more than a recycling partner can be, so they are uniquely able to manage eWaste components, including repairing parts to avoid recycling entirely.

Li Tong Group is a dedicated recycler based in Hong Kong. The company partners with EMS providers like Elcoteq and Foxconn globally. Electronics recycling can be done correctly and make money, if you have a long-term business model, say Li Tong’s Phil Cruickshan, director, ICT. The company generally buys waste electronic products, processes them down to the raw components, and resells these metals, plastics, etc. This is different than the traditional model of charging a rate or fee for electronics recycling services. Another key to their business model is global, long-term partnerships. Much like the long-term EMS/OEM partnership, this is based on trust, total costs, traceability, and a good track record.

For those about to enter the recycling field, either as a supervising partner or as an involved recycling company, the waters can be murky. Not only are there an estimated 1,100 small recyclers in the U.S., selling to a range of brokers, but the regulatory environment is fragmented and vague. While the Waste Electrical and Electronic Equipment (WEEE) directive gives EU recycling rules, these are still unclear in some areas and unenforced, or enforced without uniformity, across Europe. In other regions the laws are even less standardized and enforced. Regulations differ from state to state, says Ed Grimes of Kimball Electronics, and many of these regulations are changing. Without security and enforcement, “recycled” electronics end up in dumps in places like China and Pakistan, creating human-safety violations, fueling the counterfeit components trade, and damaging brand reputations. With electronics infiltrating new sectors, from children’s toys to displays on washing machines, eWaste recapture requires a wider net and serious supply chain management capabilities. Every piece of eWaste should, ideally, be accounted for and traced. Recyclers like Li Tong combine Social Accountability 8000 (SA8000) and OSHA compliance with extreme traceability and quality (IS0 9001) regulation to avoid these pitfalls.

Next week, the eWaste series concludes with a look at one OEM that is nearly 2 years into their environmental program. The company used internal (employee) and external (customer) input, along with green-program consulting from TFI to shape their program, and shares their perspective on starting the green program and where they plan to take it.

Meredith Courtemanche, managing editor

Read the rest of the series:
eWaste: Turning the EOL Burden into Profitable Revenue Streams
eWaste: Is Recycling a Value-add EMS?

eWaste: Is Recycling a Value-add EMS?

Electronics manufacturers differentiate themselves in the marketplace and for contract customers with value-added services, traditionally design, final assembly and ship, or quality testing. As end of life (EOL) management gains importance — poor EOL control takes on a specter similar to that of an in-field recall — EMS providers and OEMs are considering recycling and environmental programs when signing contracts.

Ted Gardham, director, sales and business development for EMS provider Elcoteq, notes a 10× increase in OEM interest in electronics recycling. “This will spike coming out of the recession, as environmental programs will meet government and consumer demand,” he adds. A recent survey of manufacturers by the Society of Manufacturing Engineers (SME) reveals that nearly 20% have been asked to provide “environmental footprint” information to their OEM. As far as end markets go, Celestica’s Mike Andrade, senior VP and GM, North America, notes that while consumer demand/awareness and non-government organizations (NGO) pressure has led consumer electronics manufacturers to be the first companies heavily focused on green, other electronics companies such as those in the server, storage, and communications space are quickly catching up. Regional differences are also prominent. For European OEMs in particular, electronics recycling is an expected service, not necessarily a value-add. Therefore, the quality of your recycling program is evaluated against peers’. Elcoteq partners with Li Tong, a recycling company based in Hong Kong. I’ll cover the various recycling models, and what to look for when partnering with a dedicated recycler, in next week’s segment.

For an EMS provider managing the EOL process, traceability on the back end mirrors the look of a front-end supply chain. Customers are demanding this level of visibility to avoid damaging PR after botched recycling jobs and also to closely monitor costs and resources. The damage poor disposal does to a brand is yet to be fully understood, but the EMS providers I spoke with all saw it as comparable to a product recall: bad press, negative brand recognition, and a destroyed EMS/OEM relationship. Kimball Electronics pays special attention to the recycling of cathode ray tubes (CRTs) due to the high lead content, and cold cathode fluorescent tubes used in LCD displays. Celestica also focuses on data protection when products they manufactured enter the waste stream.

“A recycling strategy is not a stand-alone,” notes Andrade of Celestica. Design for the environment (DfE), modular products that can be upgraded rather than replaced, use of less toxic materials in product build, and limiting the transport involved in the supply chain are all environmental initiatives that should be promoted along with EOL disposal. An environmental management service was a “natural outgrowth of RoHS” for Celestica. The knowledge that EMS providers have built up through lean initiatives is easily transferable to environmental programs, such as eliminating waste (this time, carbon or energy waste) in operations. “A lot of suppliers need to understand that implementing lean to green practices can also help with the bottom line by eliminating waste,” says Mark C. Tomlinson, executive director and general manager of SME. The Society runs the Lean to Green Manufacturing Conference, September 28 to 30 in Austin, TX.

Reduce, re-use, recycle programs are consistently cited by OEMs as a service either expected or desired from their contract electronics manufacturing partners. Environmental initiatives are on many OEMs’ roadmaps, though it will not become a buying criterion for a few more years, Andrade says. “It’s clear that being a green manufacturer will be the entrance fee for suppliers in the years to come,” agrees Tomlinson, SME. Since OEMs face internal and outside pressure to implement green initiatives, they are turning to those partners with a demonstrable skill at managing supply chains, tracing multiple products through multiple use stages, and controlling costs. In many ways, the supply chain overhaul that started with RoHS ideally prepared EMS providers to take this next step and add EOL to their offerings. Once you have a sound, functional system in place, be sure to promote your program and the benefits it can provide for the customer. If you are competing in a market where the other EMS providers also have green programs, note the differentiators in your system, whether that be global reach, monetary returns, data protection, etc. Avoid “green washing,” where the client doesn’t get any tangible data on the benefits of your environmental program.

In the next segment of this eWaste series, I’ll look at different electronics recycling business models and the reverse supply chains involved. Finally, we’ll examine the environmental program one OEM implemented, and how they involved the internal workforce in shaping their green initiatives.

Meredith Courtemanche, managing editor

Miss the first post? Read it here: eWaste: Turning the EOL Burden into Profitable Revenue Streams

Ubiquitous Electronics

This summer has been one of slow improvement for electronics, and also of high growth despite a recovering economy. I spent a good part of July focused on SEMICON West in San Francisco, the major chipmaker and packaging tradeshow in North America.

When I flew out to San Francisco, I noticed that American Airlines offered Internet connectivity for notebook users while in flight. There were many other unexpected changes too, such as having to pay for my checked bag, food, and earphone buds for listening to the movie. But, hey, at least I could check my e-mail. American Airlines now uses Gogo Inflight Internet service on 318 of its domestic carriers, allowing fliers wireless access to the Internet. GoGo’s supplier, IL-based Aircell, also provides wireless connectivity service on 80 Delta/Northwest aircraft, and some Virgin America planes as well. United and others plan to follow suit shortly.

The network operates with an air-to-ground system with three antennae on the aircraft connected to Aircell’s mobile broadband network, and 92 cell towers in the U.S. The equipment weights 125 pounds and costs approximately $100,000. At 3.1 megabits per second, it’s also fairly fast.

After arriving on the coast, I spent one Saturday introducing my three-year-old granddaughter to the public library. In the library, we walked through security walls and finally found the information that Bella wanted to know about: the location of the café and lunch patio. Next, we viewed meeting rooms and met the teachers who used video and passed out flash drives to older students.

Whereas written books are important, the jungle gym of equipment and doughnut-hole seats made the library a fun place to be, even for those too young to sit still and read. “There are the computers for adults, Grandma Gail. I’m too little,” Bella proclaimed. But these rows and rows of desktop computers were on low-level desks, much too short for adults.

“These computers are for children from 2 to 12 year olds...kids just like you,” I said as I watched her face light up. The rows of computers took up more space than the rows of children’s books. We spent 45 minutes using various drawing tools and looking up YouTube videos.
We left the library with an armload of books checked out using the barcoded library card without a librarian’s assistance. It amazed me that Bella accepted the push-button elevators, sensor-enabled walk-throughs, and computers for all ages, teaching with video and flash, barcoded self-check out, and other electronics devices. What she didn’t accept was the fact that she could not keep the books permanently. Sharing remains an issue.

I spent that week attending SEMICON West. At the Moscone Convention Center, in the Extreme Electronics presentations, I found several developments in the printed electronics area. Novacentrix presented information on their PulseForge Tools, which use coated PET and Metalon ICI-001 copper ink and an Epson C88 inkjet printer. In the flex circuit area, using bulk copper for conductivity and pulse-forge processing (an excimer laser plays a role) can lower the cost of printed circuits, produced at the speed of 1,000 feet/min., according to Novacentrix.

Electronics remain a ubiquitous backdrop and focus that continues to change our lives in every imaginable aspect.

Gail Flower, Editor-at-Large

eWaste: Turning the EOL Burden into Profitable Revenue Streams

What does a garden pot have to do with your electronics assembly operations? In fact, you may have manufactured it, or parts of it. This pot, created by TerraCycle Inc., is a composite of 100% electronics waste (e-waste) like circuit boards and computer parts. Directives like RoHS and WEEE were implemented with the idea that less-toxic electronics would be more easily recycled into the consumer and industrial cultures. Recyclable electronics are the focus of many new product introductions (NPIs), primarily in the consumer electronics segment.

In several upcoming segments, I’ll explore the OEM demand for end of life (EOL) management, how suppliers are meeting this demand, what the “reverse supply chain” looks like, pitfalls of bad recycling strategies, and different electronics recycling business models, with the help of top EMS providers like Elcoteq and Celestica, electronics recyclers like Li Tong, and others involved in this growing industry. Let’s start with top 10 do’s and don’ts of electronics recycling, provided by Pamela J. Gordon, president, Technology Forecasters Inc. and TFI Environment. Pam contributes regularly to TFI’s blog, which often has an environment-conscious take on electronics manufacturing. Here are her Do’s and Don’ts for electronics recycling.

EOL Do
1. Before you even think about recycling, design solutions for your customers with minimal hardware — substantially (e.g., 50%+ by weight) or even completely (e.g., software on existing hardware platforms) reduce hardware. After all, your customers are buying “hardware,” they’re buying a means to meet their needs. (The EMS providers interviewed for this series on eWaste agree — the first step in EOL management is designing for it.)

2. “Postpone recycling” by designing products and your business model for reuse. Your products can live useful lives again and again with upgrades (especially via net-based software) and efficient refurbishing. Consider a leasing model.

3. Collect products that your customers are no longer using, and mine them for hard-to-find and/or valuable parts for refurbished units. Reap hundreds of thousands or millions of dollars savings. (Look for more on this Do in our recycling models segment.)

4. Design your products also for high-value recycling. Train engineers in design-for-environment (DfE) principles, including easy-to-disassemble modules for reuse and materials that are worth something.

5. Minimize the cost and environmental burden of product collection; design “reverse logistics” according to minimal distance traveled and lowest carbon emissions.

EOL Don’t
1. Don’t assume that the photos you’ve seen of unsafe “casual” recycling in under-regulated regions are exaggerated; this practice really is as bad for human and environmental health as it looks.

2. Don’t use a recycler that does not offer proof of where and how your products were recycled; the product has your name on it and publicity is given to brands whose companies irresponsibly recycle products. (Those interviewed all agree — no matter who is at fault, when photos show up of dumped electronics, only your brand is visible.)

3. Don’t wait until the end of your product’s design/manufacturing cycle before creating a reverse-logistics and recycling plan; design products for high-value recycling. (This is where the expertise of EMS providers can really make a difference, as they have done this before.)

4. Don’t think that no one wants products at the end of their first use; second- and third-hand sales are multimillion-dollar businesses for someone; it may as well be for your company than a broker.

5. Don’t choose a recycler that outsources the recycling to some unknown-to-you entity. See the first “don’t” above.

In coming weeks, you’ll see more interviews, with information on allocating resources to provide recycling as a service, how to promote this service with clients, how to select a recycling partner or run the program in-house, and the impact of EOL management.

Meredith Courtemanche, managing editor

Review Materials Enabled Designs: The Materials Engineering Perspective to Product Design and Manufacturing

Most of electronics assembly is achieved in non-mechanical bonding processes: lamination, plating, soldering, underfill, encapsulation, and so on. Even mechanical joining — such as board-to-board connectors — is based in one or more material-based interconnect. I promised a review of a materials-focused text in the blog post, New Materials for an Evolving Industry, and Michael Pfeifer's text delivers the well-rounded, prototype-to-production viewpoint of materials usage we were looking for.

Pfeifer’s new text book, Materials Enabled Designs: The Materials Engineering Perspective to Product Design and Manufacturing, published by Butterworth-Heinemann, an imprint of Elsevier, covers design, materials, manufacturing processes, reliability, quality and process control, yield, and cost management with materials as the focus. Engineers should “better understand the risks and rewards associated with…materials used in a product; the manufacturing processes used to produce the product; and the suppliers of materials, components, and subassemblies used in a product,” Pfeifer asserts.

The book also has sections focused on total product design practices and smart operating procedures, which requires most companies to specify components without strict controls over all materials used. Pfeifer offers these tips:
“Start with materials that offer a high probability of success. Do not consider the entire world of materials, components, and subassemblies for use in a product. Work out all details of a strategic custom component or subassembly before using a low-cost supplier. Consolidate materials within and across product platforms. Develop design guidelines. Include a budget for materials engineering support.”

Flow charts and matrices throughout the chapters are visual prompts to readers, asking them to consider product design with discipline and constructive creativity.

While a large portion of the text is devoted to material properties and materials science, the theme throughout is about perspective. The reader should emerge with a stronger background in properties of solders, surface finishes, etc., and — more importantly — with a concept of the role materials play in a product’s success, from design to sourcing to manufacturing and test. As Pfeifer states, poor understanding of materials science can lead to “delayed product launch, field failures, poor customer satisfaction, and poor sales.” He encourages “understanding the relationship between the properties of a material, its compositions, its microscopic structures, and how it was processed.” For example, a high-volume assembly may be dense and small with high computing power, but if the solder specified is easily degraded by the print process, frequent downtime at the printer will kill expected yields. Materials ignorance can be costly.

The text is available from Elsevier. Pfeifer is president of Industrial Metallurgists LLC. He wrote the book based on materials compiled for a Manufacturing and Design Engineering (MaDE) program course at Northwestern University.

Meredith Courtemanche, managing editor

SEMICON West: Top Topics at the Show

Now that I live in the San Francisco area, I’ve noticed that each day starts out slowly with cool fog, and then gently warms up to a predictably sunny day. SEMICON West in the Moscone Convention Center, July 14-16 was a bit like that: warmer and more enthusiastic and upbeat than I expected. Major discussion points included the recession, supplier/customer interaction, 3D packaging, and solar energy.

Of course, what everyone wanted to talk about was when the recession would end. George Burns, president of Strategic Marketing Associates said that, in the fab area, increasing chip sales and activity will drive equipment and related capital equipment spending up in the remaining months of this year and for all of 2010. Capital spending is predicted to be at $24 billion this year, a decline of 41% from 2008, and next year it will be at $31 billion, a growth of 30%. Semi projects 2009 semiconductor equipment sales to reach $14.14 billion, according to the mid-year edition of the SEMI capital equipment forecast. “We expect 2010 spending to show double-digit improvement off of extremely low levels in 2009,” said Stanley T. Meyers, president and CEO of SEMI. Watch the archived Webcast of Meyers' SEMICON presentation here.

The Intersolar North America hall at Moscone West was hopping with activity. In that area, where many of the solar module interconnect paths are screen printed, traditional methods used for printed circuits can expand into the solar area, providing growth opportunities for our industries.

I spend quite a bit of time with the materials providers for SMT companies, and in this space, industry has begun to pick up. Henkel, for instance, reported profitable growth in each of the past five months. Heraeus had booths in the West Hall with Intersolar and in the more traditional semiconductor assembly South Hall, and couldn’t have enough to say about specialty metals, solders, bonding wire, and ribbon.

Kyzen’s Tom Forsythe reported that the cleaning consumables company didn’t cut jobs or salaries during this economic down time, but found other efficiencies and waste-cuts to remain profitable with precision cleaning chemistries for advanced packaging and other electronics applications. Testing cleaning in systems at Kyzen’s lab offers a way to get close to customer’s specific problems as well.

Tom Mealey of Virtual Industries Inc. showed us the smallest vacuum-handling tweezers and accessories imaginable. He also had spatula-like vacuum devices for picking up large BGAs or even whole wafers.

At Finetech’s booth, we talked about the next challenge for advanced rework systems, now that rework systems can handle small passives, such as the 01005, and difficult bonding challenges with placement accuracy as low as 0.5 µm.

At Asymtek’s booth, they were talking precision dispensing, jetting, and automated fluid dispensing. Asymtek engineers are working on a range of precision applications in LED assembly, FPD assembly, and biotech product manufacturing.

All in all, SEMICON West was a great show. Senior managers need to make tough bets during difficult times, said keynote speaker Ananad Chandrasekher of Intel. Every economic crisis over the last 40 years has resulted in significant innovations. “Toward the tail end of the oil shock of the early 1970s the first cell phone emerged, produced by Motorola. The second oil crisis in the 1980s eventually led to IBM’s PC,” noted Chandrasekher.

Perhaps stacked 3D packaging or solar energy will emerge as the innovations of the recent recession. For now, we are beginning a healthy climb back up out of poor economic conditions, and that climb was evident at SEMICON West.

Gail Flower, editor-at-large

SEMICON West Week: Products and Predictions

SMT assemblers are the middle ground between chips' computing power and end-product functionality. The week of SEMICON West, co-located this year with Intersolar North America, brings together semiconductor manufacturers and packaging and test experts to evaluate new products, confer over technical issues, and make educated predictions for the short- and long-term future. SMT group editorial director Peter Singer is Twittering from the show. SMT editor-at-large Gail Flower also will be reporting from the show floor. What is celebrated, panned, and decided upon at SEMICON will affect SMT assemblers immediately and down the road.

Check out the new products at SEMICON with this booth guide from Advanced Packaging: SEMICON West Exhibitor's Products

Preview the Mentor Graphics keynote, "World Semiconductor Dynamics: Myth vs. Reality"

Get into the technical aspects of next-generation wafer inspection with this product preview from KLA-Tencor

Check out the MEMS, LEDs, and other emerging electronics technologies at the Extreme Electronics section of SEMICON

Learn more about 3D wafer metrology at SEMATECH's workshop

and get more information about the show on the SEMICON West homepage.

Assemblers Weigh in on Pick-and-Place Systems

SMT’s September/October issue will include a pick-and-place round-up article, the third annual component placement round-up article I’ve written. Overall, it has been an interesting experience working with worldwide users of placement equipment. Judging by their workload, and current news, I’d say that the industry is gaining strength.

Users complain about the cost of nozzles, and that pick-up nozzles don’t always match the size of miniaturized packages, nor do their vacuum and shape fit for large dense connectors. Custom-made nozzles from a third-party supplier may work for the components, but the machine software might fail to recognize these custom ID markings. Assemblers also say that many manufacturers are hesitant to provide access for custom nozzle markings to be input into placement programming by the customer. Also, there are not enough nozzle connections for many jobs, especially with facility’s the existing equipment, which may be older.

Some SMT line operators have complaints about feeders and trays: the changes coming from the package design world are not in sync with pick-and-place systems. This forces users to buy custom feeders at a high price. Different weight of components may require a different rate of vibration, so in some cases a stick feeder is required for a single IC — taking out up to 8 positions on a placement machine for a single part.

This is just the tip of the iceberg. Some parts require too much time to program into vision software because image data is not available to suit the configuration, especially with ball grid arrays (BGAs), chipscale packages (CSPs), and fine-pitch quad flat packs (QFPs).

The more I study the pick-and-place sector, the more interesting this round-up cover story becomes. Though most users acknowledge that business is not booming, all said that economics have not stopped or slowed their business. Responses came from the Ukraine, from China, from U.S. military contractors, and other widely dispersed production engineers.

Looking at the current news, some areas show fairly steady growth. Amsterdam-based TomTom said that Q’02 shipments (and prices) are up. As a user, I can certainly understand that. Even my new Nokia E71x phone has a GPS in it, just in case. How did we ever find our way around without GPS devices? Intel has had a pretty good year, since mobile internet devices (MIDs) and other small computers using their Atom processor have sold well. LG is considering additional LCD production for flat-screen TV panels as the LCD industry slowly recovers with healthy TV sales.

All of these products have SMT components in them. Though engineers using pick-and-place may have legitimate complaints, the complaints are usually because they want more efficiencies, better software, more nozzles, and up-to-date component handling. Perhaps they’re anticipating future growth.

Gail Flower, editor-at-large

Read the 2007 and 2008 Round-Up articles on Pick-and-Place:

Annual Pick-and-Place Round-up 2008

Pick-and-Place: Users and Vendors Speak Out

Look for the 2009 Round-up on Pick-and-Place in the September/October issue of SMT

How Do You Use The SMT Website?

Electronic information delivery — through digital magazines, e-newsletters, Websites, RSS feeds, etc. — is essential to the modern business world. Global and instant availability via the Internet has made information accessible, useful, and impactful in a way as momentous as the advent of the printing press. SMT is redesigning our Website, smtonline.com, to better fit you, our readers. While we engineer this Website, we’d like to hear what you want.

We’ve organized our technical features into focused categories, where you can find an article about lead-free rework easily, and click straight from that article into a section about cleaning residues from lead-free assemblies. All the while you’ll have recent news and product releases updated daily and accessible throughout the Website. The goal is to make information as easily accessed as if you had editors sitting with you, suggesting an article to meet your needs.

SMT usually polls its readers about industry challenges, such as lead-free, or business direction, such as capital equipment investments. Today, we want to know how you use the Internet, and what you’d like to see on the new-and-improved smtonline.com. Click through to our survey, “What do you want more of on smtonline.com?” and let us know what you want. We’ll keep the survey open through to the launch date of the new SMT Website, incorporating as many of your suggestions as possible. Got an idea for the site that isn’t on the survey? Leave a comment here on the blog.

Meredith Courtemanche, managing editor

Cleaning Electronics Assemblies — How Far We’ve Come

In the May/June issue of SMT, I wrote a round up of comments on cleaning, but there just wasn’t enough room to include everything. And, in the desire to say it all, here are some important facts that weren’t covered in the article, “Cleaning Equipment and Materials Trends.” The history of SMT cleaning helps us understand modern cleaning technologies as well as what’s in the research pipeline.

We have come a long way from the 1985 Montreal Protocol to methods of improved cleaning that have less of an environmental impact. The cleaning trend since the 1980s has shifted from a no-clean process to an emphasis on cleaning, especially with lead-free pastes/fluxes and higher processing temperatures. Defluxing used to be reserved for military and medical manufacturers, and now even boards for commercial products require defluxing.

Modern cleaning equipment generally performs faster with less power, less water, and fewer chemical additions. Strict quality control tolerances and traceability via statistical process control (SPC) data recording are expected from the latest equipment. As operators place assemblies into defluxing equipment, barcode information is immediately scanned, and one more step in the assembly process is recorded.

Technology has moved upstream. Conventional SMT assemblies use low-residue, no-clean soldering practices. Modern challenges for PCB cleaning hinge on high-density miniaturized assemblies with lower standoff heights and decreased area-array pitches. I also discussed the training and education necessary for the modern cleaning processes in "Spring Cleaning: Facility Implementation Is Key.”

There are a variety of ways to clean: aqueous, semi-aqueous, plasma-based, sonic-based, or through specialty chemical formulations that fit the particular paste/flux/component combination.

We didn’t talk enough about the amazing research work being done in this field. Ning-Cheng Lee is one of the researchers working on the best cleaning method to fit each lead-free material/flux application. He has tested many methods and materials and has come up with a best-fit system for many materials and equipment. His research will be presented at SMTAI this year in San Diego.

The High Performance Electronics Cleaning and Coating Symposium is a premier conference focused soley on cleaning to be held September 30, 2009, in Coventry, England. All types of presentations — from high-reliability and high-performance electronics assembly cleaning to case studies from manufacturing experts in aerospace and defense, automotive, consumer telecom, and medical products industries — will be heard in Coventry.

Finally, what I didn’t get a chance to say in my round-up cleaning article was thank you to all the great suppliers, researchers, and users in our industry who helped me put together this piece. I would like to thank all of you who contributed your time and effort including the Mikes:

Mike Konrad, Aqueous Technologies
Mike Jones, MicroCare
Mike Bixenman, Kyzen

And many other experts:
Harald Wack, Ph.D., Zestron America
Steve Stach, Austin American Technology Corp.
Doug Winther, Technical Devices
Chris Merow, Blue Thunder Technologies
Scott Symanski, March Plasma Systems, Inc.
Bill Schreiber, Smart Sonic Corp.
Yeqing Su, Freescale
Jun Choi, SII NanoTechnology USA, Inc.
Maurice Collins, Ph.D., Stokes Institute
Ning-Cheng Lee, Indium Corp.

Gail Flower, editor at large

What Are Flex Circuits, and How Do We Use Them?

Flex circuits are a minority sector of the North American PCB fab market — rigid PCBs represent an estimated 90% of the current PCB industry in North America, according to IPC's World PCB Production and Laminate Market Report — but this 10% of the market can be found in every end-use sector from medical to consumer. Mark Finstad and Mark Verbrugge, from Minco, recently spoke to the IPC and SMTA chapters here in New England, providing design and manufacturing best practices for those that are, or would be, using flex circuits in an electronics assembly. Some of their advice may surprise you.

Design best practices are of utmost importance with flex, not least of all because most OEMs and ODMs have only a passing familiarity with the capabilities and limitations of flex circuits. The bend ratio is the fundamental principle of flex design. It describes the ratio of circuit thickness to radius of the circuit bend. Bad bend ratios lead to field failures from rippling and cracked copper. Some other helpful design tips? Design elements that are good for a circuit mechanically are bad for it electrically, so find a balance. Copper thickness and shielding materials can make the difference between a bouncy flex circuit, like that in a flip cell phone, and a flex-to-fit circuit, that will not bend once installed. Finstad and Verbrugge recommend placing small conductors on the inside of the bend; keeping plated thru-holes away from bend areas, and debonding substrates for more flexibility.

Once the flex circuit is fabricated, it must be shipped to the electronics assembler, who will handle and install/form the circuit. Every effort in design and materials specs can be wasted by improper shipping and installation procedures. Forming and handling are the two main causes of flex disasters, according to the Minco engineers. Switching from bags to formed hard plastic packs for shipping will protect circuits from scratches, ESD, and other damage, Finstad and Verbrugge explained, showing us the damage mounted components will do to neighboring flex pads in transit. This method applies to storage and cleaning as well. Have you ever taken a $400 thick, multilayer flex circuit, and bent it over a table edge to form it for assembly? Even if the circuit is $4, this is an undesirable technique. Forming tools, which range from simple to complex, apply uniform and repeatable force and create the specified bend radius every time. ROI is all but guaranteed.

Finstad and Verbrugge have many more tips for successful flex use, and if you’d like to hear them, email mark.finstad@minco.com and mark.verbrugge@minco.com. Since flex circuits are often misunderstood or foreign to electronics assemblers, I’d like to go over a few of the definitions Finstad and Verbrugge presented.

Does a flex circuit really flex? All flex circuits can be exercised, or bent, but the spring in a circuit varies from case to case.

IPC 6013 breaks flex circuits out into four types: single layer (Type 1), double layer (Type 2), multi layer (Type 3), and rigid flex (Type 4).
Type 1 single-layer circuit.






Type 3 multi-layer circuit.

Types 1 and 2 circuits are generally very dynamic, meaning they can be exercised many times without performance-affecting damage. However, layer count isn’t the only determinant for how dynamic a circuit is. Layer thickness differences and materials specs can make two double-layer circuits as different as a Type 1 and Type 3.

Rigid-flex
Rigid-flex PCBs are a combination circuit, and they are expensive. Some applications, like double-sided surface mount, require the rigid-flex construct; however, the Minco engineers see a lot of unnecessary specs for rigid-flex. If the application calls for single-sided surface mount with flex, mounting a stiffener will do the job. It also will give you a 25–30% cost reduction from rigid-flex.

Stiffener used instead of rigid-flex.
Materials for the laminates of flex circuits include polyimide/acrylic — which dominates the North American flex market — LCP, and FEP. The copper in a flex circuit can be rolled annealed or electrodeposited, each with pros and cons.

No matter how small flex circuits’ slice of the overall circuit board market is, they can make or break a design. Spending some time familiarizing yourself with the terminology and methodology of flex can lead to better assemblies and smarter budgets, as well as deeper PCB fab relationships. One trade association meeting, or one class at a tradeshow conference, can pay exponential dividends.

Meredith Courtemanche, managing editor


*All images courtesy of Minco.

Adjusting to the Market: Merix Repositions for Mil/Aero Growth

It’s remarkable how some companies can adjust quickly to take advantage of a changing environment. In 2007, Merix Corp. (Beaverton, OR), saw an opportunity to expand from an under-diversified PCB manufacturer working mainly in networked communications to a company providing high-volume military and aerospace PCB manufacturing. Now, the company, which has been in operation for more than 40 years, has completed the transition to mil/aero PCB manufacturing house.

Michael Burger joined Merix as president and CEO in 2007, bringing with him the experience of many years with Flextronics. “We committed to a strategic realignment with a focus on expanding our technology and manufacturing capability to increase market share in the defense and aerospace sector,” said Burger. Now, the company has completed that phase, which Burger says will position it for long-term growth and profitability.

The military market has remained strong compared to the rest of the PCB market space. Nine percent of overall sales at Merix today come from military contractors, up from two percent in the past. One reason for the deluge in defense/aerospace business is that 16 new and potential clients have pushed the company to get qualifications going in the mil/aero space in just the last quarter. Merix San Jose is MIL-PRF-55110F certified and applying for MIL-PRF-31032 certification. Customer demands and increased business in this area have prompted growth in this market.

Read more about the transition to military/aerospace products in this news story: Merix Strengthens Defense and Aerospace Capability

Merix started as a board house for Tektronix more than 40 years ago. In 2004, the company expanded, buying Data Circuits, a quick-turn (10 days or less) operation in San Jose. Today, quick-turn prototyping of standard and advanced PCB technologies can be performed in 24 hours at Merix’s San Jose facility. A fully reconfigured 250,000-sq.ft. facility in Forest Grove, OR, also offers quick-turn prototyping to full-volume production, handling advanced technology options as high layer counts and high density interconnect (HDI) solutions. The company has always been a PCB manufacturer with a lot of prototyping business around communications (about 40% of sales) with the remainder in auto, computer and peripherals, medical and telecom.

Merix has two Asian facilities. A Huiyang, a 450,000-sq.ft. facility designated for high volume, low-mix PCB assembly and one in Huizhou, at 135,000 square feet. Approximately 40% of its business comes out of the North American customer base, starting out in quick-turn prototypes and then moving to high-volume production in the Asian facilities as designs prove robust enough for high-volumes. “Helping customers go from prototype in North America to volume production in Asia works well for us,” said Mike Zelman, VP of marketing.

Electronics manufacturing suppliers have to listen to what the market demands, relate to a variety of customer concerns, and keep in touch with technology trends to grow larger, no matter the market sector.

Gail Flower, editor-at-large

Stocking Up: Component Orders During Turbulent Times

During the 2000-2001 technology bubble burst, inventory was a looming evil that hung over the assembly houses, dragging the sector under and preventing fast recovery. The notion of lean manufacturing, regardless of company size or end-market, took hold, and electronics assemblers have been wary of building up chip inventories ever since. With the current recession battering other sectors more brutally than it is hitting technology companies, we can ask, Did we learn a valuable lesson nearly a decade ago? One indicator is the monthly chip buying indices from the Electronic Components, Assemblies, and Materials Association (ECA) and the Semiconductor Industry Association (SIA).

“I think we are seeing adjustment of inventories from manufacturers and distributors based on market slowdown,” said Bob Willis, ECA president, adding “The industry learned a lot from the train wreck of 2000. There is more transparency in the supply chain, enabling companies to better anticipate changes in demand and adjust accordingly.” To measure the success of supply chain management, we can examine the numbers for component orders in 2009. In January, orders were in freefall, as the global recession slashed consumer demand, corporate spending, and auto sales. New projects were put on hold, and volumes decreased. Did this lead to overstock? It seems not, as component orders continued to fall in February, but not as sharply as in January, according to the monthly index compiled by the ECA. The 12-month average, comparing 2009’s results to last year’s, continued a descent that began last summer and has continued through the present. By March, orders ticked up slightly.

Worldwide sales of semiconductors were $14.7 billion in March, a gain of 3.3% from the prior month when sales were $14.2 billion, the SIA reported. ECA’s numbers confirm that component orders bounced back slightly in March from lows in the first two months of the year. “The modest sequential rebound in worldwide sales in March suggests that demand has stabilized somewhat, albeit at substantially lower levels than last year,” said SIA President George Scalise. For SIA's geographic breakdown of orders, see the above charts. So demand was lower than the prior year, but without the stocking hangover experienced in the last recessionary period.

Electronic component orders dipped again in April, ECA reported (see graph). Worldwide sales of semiconductors rose to $15.6 billion in April, SIA saw, an increase of 6.4% from March. April sales were 25% lower than April 2008 when sales were $20.9 billion. ECA's Willis thinks that many OEMs, wary of continuing uncertainty in the market, are only buying parts for which they have firm orders from customers. “As stimulus programs begin kicking in, the consumer electronics industry could see some stabilization,” said Willis. “If so, this should be reflected in new orders that would bring a slow recovery beginning in late summer or early fall.” Economic stimulus measures in the U.S. combined with other countries’ stimulus plans will begin to impact sales as we enter 2010, was Scalise’s SIA assessment.

SIA reports that sales for Q’01 2009 amounted to $44.0 billion, a 29.9% decline from the first quarter of 2008 when sales were $62.8 billion. Sales declined by 15.7% from Q’04 2008 when sales were $52.2 billion. Sales in all geographic regions except Japan showed month-to-month gains. Sales in Japan were sharply lower, reflecting a drop in the country's economic output. All geographic regions reported lower first-quarter sales compared to the same period of 2008 (see graph).

Smaller volumes and longer consumer purchasing cycles are hallmarks of recession and truly are destroying some giants of industry, particularly in the automotive sector. With component purchasing at levels below those pre-recession, no one can claim surprise. However, seeing demand rebound so quickly as to be measured in months rather than years impresses upon us that the electronics sector has made good use of hard lessons learned earlier in the decade.

REFERENCES:
Beginning with July 2008, ECA made two major changes in its monthly order index. The first change was to update the index baseline year from 1996 to 2006 to better reflects today’s market realities. The second change is to report numbers for North America only, which is expected to improve the consistency of results from reporting companies. The index has proven to be a leading indicator of market movement and sales trends. Actual sales numbers tracked by several marketing firms have shown that the index provides a four- to six-month glimpse of potential ups and downs in the market. The new index reflects more dramatic movement in the adjusted four- to five-week order trending. Results from the 12-month moving average are expected to be similar to previous reports based on the 1996 baseline. ECA Website: http://www.ec-central.org/

The SIA Global Sales Report (GSR) is a three-month moving average of sales activity. The GSR is tabulated by the World Semiconductor Trade Statistics (WSTS) organization, an independent, non-profit organization established by the global semiconductor industry to compile industry statistics. SIA Website: http://www.sia-online.org/

Meredith Courtemanche, managing editor