Reducing Costs and Carbon Footprint

Opportunities at home and a closing cost gap with overseas sourcing are making domestic manufacturing an increasingly attractive option

U.S. OEMs that go overseas to reduce production costs often don’t realize they can still save money by using a local contract manufacturer. Consider some of the realities facing OEMs, domestic contract manufacturers, and their overseas competitors.

The Cost Gap is Closing: a 2015 study by the Boston Consulting Group has estimated that the cost gap between U.S. Manufacturing and Offshore

Manufacturing (particularly Chinese manufacturing) will continue to shrink.

In fact, the BCG reports “Within 5 years, the total cost of production for many products will be only about 10 to 15 percent less in Chinese coastal cities than in some parts of the U.S.1”

Once OEMs factor in critical aspects like shipping, inventory, and other incidentals – it becomes quickly apparent that the cost gap between U.S. manufacturing VS. sourcing in China is growing ever-smaller.

But Why?

This closing cost gap is due to a number of factors ranging from rapidly rising wages in China, lower energy costs, better quality control in the U.S., and lower transportation costs.

Overseas Travel is Expensive: The hidden costs associated with overseas travel can quickly eat up much of the savings OEMS might otherwise realize. By relying on overseas manufacturers, OEMS must also contend with the big bill of overseas travel. Plane tickets, hotel rooms, meals, and a wide variety of incidentals that can add up fast. It’s far more affordable to compensate employees who drive to a nearby contract manufacturer or even fly domestically.

Domestic Delivery Can Offer Major Cost Savings: When completed components and finished products are shipped to OEMs – and if needed, their customers – domestic shipping can be a boon to your bottom line. Additionally, materials that aren’t shipped across international borders don’t require extensive packaging. A local contract manufacturer can protect materials with reusable packaging and plastic totes, eliminating the need to use new cardboard and bubble wrap and cutting the cost of disposal for the customer. Money is saved and the carbon footprint of delivery is greatly reduced.


When it Comes to American Vs. Overseas Manufacturing: Standards and Regulations Make a BIG Difference

Choosing American Production Guards You in More Ways Than One

The news has been littered with stories over the years about overseas manufacturers stealing the intellectual property of U.S. companies. It’s gotten so serious that some U.S. companies have abandoned overseas manufacturing and returned home altogether.

Due to a combination of lax government enforcement of trade and patent laws and the highly variable nature of actually enforcing intellectual property rights internationally, protecting your intellectual property can sometimes become another hidden cost of manufacturing off-shore.  is a virtual non-issue with the combination of an American manufacturer and a simple confidentiality agreement.

In America, an NDA, confidentiality agreement, and well-established laws make this a virtual non-issue.

This has proven especially true when it comes to small and medium sized businesses, who – unlike large, corporations – possess few tangible resources outside their intellectual property itself. In the U.S. IP protection is comparably simple. In turn, U.S. contract manufacturers believe honesty is the best policy and carefully safeguard every customer’s intellectual property.

Benefit from the Best Available Safety and Environmental Standards

In the U.S. OEMs aren’t just protected in terms of intellectual property. Domestic contract manufacturers must also follow strict environmental standards. Hazardous chemicals must be properly disposed and the Environmental Protection Agency requires companies to fully comply.

Additionally, it’s incredibly difficult for manufacturers in the U.S. to cut corners when it comes to material quality. For every manufacturing relationship, keeping costs low and quality high is the name of the game. However, through a combination of distance and a higher degree of government oversight, quality can tend to fade over time when manufacturing happens thousands of miles away. Not only does this carry the risk of both reduced product quality, but also a reduction in reputation. Some worst-case scenarios have even seen products in various industries marred by unacceptable and even illegal levels of dangerous materials – all in an effort to cut costs lower and keep business overseas.

Ultimately, when it comes to overseas manufacturing – there’s often no telling what environmental and safety standards manufacturers follow.


How Automation, Communication, and Closer Relationships Close the Gap Between In-Sourcing VS Offshore Manufacturing:

 

When it comes to making the (hard) decision to choose onshore vs offshore manufacturing, there’s often a misconception that the cost-savings with offshore electronic manufacturing simply can’t be beat.

The reality is that the political climate and changing working conditions overseas up-end this trend.

Better communication, more rigorous best practices, and robust automated assembly capabilities have proven to close the gap when it comes to offering greater value for OEMs

Competitive Automated Assembly Costs Make a Difference

There’s no denying that U.S. companies can’t drop to the low wages that foreign companies pay their manufacturing workers. Minimum wage laws, for one, ensure that U.S. laborers won’t be paid as little as many overseas workers are.

On top of this, U.S. workers assume pride, loyalty, and professionalism when they’re paid a fair wage. That won’t happen if they’re making the same money as a Chinese assembler. U.S. contract manufacturers can be competitive with the rest of the world, however, in automated assembly. Citing the Boston Consulting Group’s study, USA today reports2 that “roughly 1.2 million additional advanced robots are expected to be deployed in the U.S. by 2025” with the computer and electronics industry one of the few leading the charge – all due to the major cost savings delivered by the process, regardless of location.

This enables American companies to reap the benefit of low-cost manufacturing, while simultaneously gaining access to the communication, quality, and “just-in-time” capabilities provided by domestic contract manufacturers.

Add on tariffs, custom-delays, long cycle times, freight costs, and all of the hidden costs inherent with offshoring, and it becomes clear that U.S. built product is capable of delivering the same cost savings. Better yet, they can do it almost dollar for dollar compared with contract manufacturers in other countries.

Quality Communication Translates into Quality Products, Delivered On-Time

From the prevention of communication breakdowns to closer working relationships, onshore manufacturing has proven to reduce wasted product and costly delays.

If an OEM needs to contact an overseas contract manufacturer, it’s not always easy. First, time zones and business hours need to align. If a connection is made, the representative on the other end might not speak English. It’s one thing to exchange simple pleasantries when there’s a language gap but intricate business details are a whole other matter. Contract manufacturers in the U.S. handle customer service in English; its employees fluently speak the language of the customers. This means that orders are processed clearly and without confusion.

“What happens when communication doesn’t work?

Basically, anything can happen—and whatever happens is likely to do so in an uncontrolled manner, where the key players no longer know what is going on and therefore cannot steer things in the right direction.

Releasing a new product?

Efficient and fast communication is particularly important for OEMs releasing a new product. Having manufacturing close by, and working with a contract manufacturer that understands what’s needed and can articulate its instructions, ensures that new product introduction will proceed smoothly.

It’s critical for an OEM to hit its production target windows. With only a short drive or domestic flight standing between you and your manufacturer,  the proper resources  can easily be assigned to ensure fast development and on-demand changes.

Close Working Relationships Create A Culture of Trust

It’s not only the new products that require collaboration and attention to detail. OEMs and local contract manufacturers can work closely on all products. If an electromechanical manufacturer is only a few highway exits away, an OEM can verify – in person – if its product is being built correctly using the specified components, materials, and methods. Contract manufacturers in China and other foreign countries are known to promise one type of component but then substitute a cheaper alternative. Ultimately, the quality of the working relationship comes down to

Information sharing, communication quality, and interfirm adaptation emerged as three significant contributors to the vendor’s trust in the client; goal setting and cultural blending turned out to be significant in influencing the client’s control over the vendor.

When a product is built locally, it can be delivered locally. It arrives in only a matter of days or hours, if required. Products made overseas take weeks or months to arrive by boat. Also, OEMs occasionally need to deliver a product to their customers overnight, which means the contract manufacturer has to deliver the product overnight to the OEM. A local contract manufacturer is better positioned to provide an OEM product fulfillment service, shipping directly to the end customer.


Staying Local: More than Just a Feel-Good Catchphrase when it Comes to Manufacturing

buy-manufacturing-local

From supporting local economies to more effective disaster management, manufacturing locally keeps U.S. companies in control of their economies and their products.

Buying Local Supports the Local Economy
Manufacturing locally, at its most fundamental level, supports a local economy. The circles of this local work ripple through many organizations and strengthen the U.S. economy. In addition, companies that produce in the U.S. pay taxes to the U.S. government.

Many small- to-mid-sized OEMs aren’t scaled to handle the nuances of offshore production, and prefer to have an intimate relationship with their electronic contract manufacturer.”

But there are other benefits to keeping the manufacturing chain local. For instance, many small- to-mid-sized OEMs aren’t scaled to handle the nuances of offshore production. Companies like these prefer to have an intimate relationship with their electronic contract manufacturer. For them, the close support throughout the design and production process helps realize a better end-product capable of delivering greater value in the long-run.

This relationship also proves beneficial when OEMs require last-minute product changes. An OEM, for example, might realize there is a design problem and it needs to change a circuit board layout. If it relies on an overseas manufacturer, an OEM has to relay the desired changes through emails, phone calls and video conferences if it can’t quickly jump on a plane. Working with a local contract manufacturer enables representatives to simply jump in a car (or a short flight) and go over product changes in person, alleviating confusion and saving time. A local manufacturer can react to those changes quickly and efficiently.

Close production ties also provide the flexibility to ramp-up or ramp-down production at almost a moment’s notice. Usually, ramping-up can be difficult to achieve, but a contract manufacturer that’s equipped to change production can handle an order increase without difficulty. It can also change the product requirements of an order without hesitation.

Flexibility, fast delivery, adherence to specifications – these aren’t promises that are made to be broken. Unlike an overseas manufacturer that can duck the tough questions and not answer why it didn’t uphold its end of the bargain, a U.S. manufacturer stands by its word. It’s easy to hide when you’re overseas.

offshore-manufacturing-vs-local-manufacturing-whitepaper-study


Stay Home, Manufacture Locally

Did you know?

In 2010, the consulting firm Grant Thornton found that 44% of respondents perceived no benefit from overseas manufacturing, while another 7 percent believed that offshoring had actually caused them harm.

Source: http://www.assemblymag.com/articles/88601-reshoring-bringing-it-all-back-home

offshore-vs-domestic-manufacturing

Fast forward to the present day, and the average wage of previously “cheap” offshore labor continues to rise – demonstrating that the value-gap continues to close.

So, does manufacturing “at home” mean OEMs have to suffer? No! Through geography, closer working relationships, and the expectations and regulations of the U.S. market – not only are both parties kept honest, but the manufacturer and their client give new meaning to the term “domestic partnership.”

Sure, overseas manufacturers offer reduced manual labor costs, but at what hidden cost?

You can’t recover your stolen intellectual property, be sure that environmental and safety standards were properly followed or, most importantly, walk onto the manufacturing floor to tweak the scheme of your product if you go outside the U.S.

A contract manufacturer in the U.S. aims for responsiveness, timeliness and full support. Its workers have high expectations for the products they deliver, and they believe in accountability. You can’t get that overseas. You can get it locally.

Interested in learning more about the benefits of contract manufacturing in America vs. Overseas?  Our mission is to be the authority. Click below to read the full white paper.

offshore-manufacturing-vs-local-manufacturing-whitepaper-study

 


Increase Your Bottom Line With Electronic Manufacturing Services

If you stop and take a look around, you can see that manufacturing plays a major role in our day to day lives. From the keyboard that is being used to type this article to the screen that is used to display it. In addition electronic components in your car, home and cell phone reply on some sort of electronic manufacturing service. Today these manufacturing services are highly specialized to specific product needs and requirements.

One would define electronic manufacturing services as a term used for companies that design, test, manufacture, repair and manage the supply chain for electronic parts and components. In today’s world, electronics are becoming faster and more sophisticated on what seems like a weekly basis. With this we have seen the complexity of operations increase rapidly and the need for electronic manufacturing services increase.

By completing the defined tasks listed above the customer is freed from many responsibilities. The customer then does not need to keep large inventories of products. In case of a rapid spike in demand for a product, the electronic manufacturing services company will be prepared to handle the new demand. They are also more readily equipped to have a faster and more productive turnaround.

This process is a cost efficient way for businesses to streamline their operations on a daily basis. The growth of these electronic manufacturers is increasing year to year as customers bottom lines improve. One of the leading reasons why companies are outsourcing manufacturing services is due to the fact that these business services have many more resources to obtain the raw materials that are needed for electronic components. The cost to obtain the parts themselves can be time consuming and expensive for businesses. When customers commit to outsourcing it is then the manufacturers’ responsibility to be the material handler from start to finish. These outfits already have established connections to obtain the necessary materials that are needed to complete your project on time.

Successful outsourcing programs will help decrease or possibly eliminate the downtimes that electronic companies may have previously experienced. We all know that meeting deadlines is critical for company reputation and profitability. Companies who are not familiar with large runs of a product could be at risk of having their supplier not send parts in time to keep assembly lines in motion. Also when considering a partnership with an outsourcer you might consider asking for the company’s delivery policy to ensure that all product delivery deadlines are met to your satisfactory.

Would you like to know more about Electronic Manufacturing Services at Distron? Please don’t hesitate to contact us today.


What to Look for in an Electronic Contract Manufacturer

Electronic contract manufacturing plays a vital role for businesses and industries around the world. But before getting into what separates the good from the bad, a brief definition of an electronic contract manufacturer might help.

On a very basic level, electronic contract manufacturers like Distron (otherwise known as “ECMs”) use advanced manufacturing technology and machinery to produce the intricate components many of our electronics rely on.

A number of industries take advantage of electronic contract manufacturing when they need a fast, effective, and reliable source for complex assembly. These industries often include the aerospace, defense, computer, semiconductor, energy, medical, food manufacturing, personal care, and automotive fields.

One of the most common fallacies these days is that all of the electronic contract manufacturing businesses have moved overseas in search of greater cost savings. Apart from being living proof that this isn’t true, Distron is proud to be proof that this fallacy isn’t exactly true — especially for high precision applications in the aerospace, defense, and medical industries.

But what makes a good electronic manufacturer? When looking for the right contract manufacturer for your project, you must make a few considerations. At Distron, we take all of the following into mind when optimizing our processes, services, and customer support.

Relationships:

Will another contract manufacturer push you to the bottom of the queue when a high-volume project comes along and demands next-day delivery?

At Distron, when we’re working on your project — you are number one. For any contract manufacturer, relationships are important. As a business, you have to be confident that your manufacturing will be completed in a timely fashion — not pushed back because something else came along.

What is best, is what Distron offers. A real relationship from as early as the prototype stage to full production. This gives us a full understanding of your product and the ability to identify any ways to improve it, while avoiding costly pitfalls and delays. This dedication to an actual relationship ensures that you get the patience, time, and resources necessary when it comes to developing a product that has been designed and optimized for quality and cost efficiency.

Staying Competitive:

Any good electronic contract manufacturer should be focused on helping you stay competitive. This is particularly true at Distron, where our specialty is working with small to medium sized companies. This involves a variety of processes ranging from helping you stay up to date with industry trends to helping you prepare for various regulations pertinent to your products or components.

Flexibility:

Because of the variety of different products and components that rely on effective ECM, a good provider should be able to demonstrate a high degree of flexibility in terms of its structure, processes, and equipment. Flexibility is absolutely necessary when it comes to accommodating various customers, products, and timelines. At Distron, we accomplish this flexibility by offering a wide variety of services ranging from PCB assembly, supply chain management and BGA repair to comprehensive inspection and testing services. At the same time, remaining flexible also means having strong distributor relationships for greater cost efficiency and reliability.

When all of these factors come together, businesses get a contract manufacturing resource that offers the many benefits of manufacturing in America with a level of cost efficiency comparable to off-shore manufacturing.

Would you like to know more about contract manufacturing at Distron? Please don’t hesitate to contact us today.


The Balls that Keep Your Electronics Rolling: BGA Assembly and Repair

You constantly rely on BGA assemblies. Chances are you may realize that. We deal with the technical side of BGA repair and assembly every day. So sometimes its nice to talk about how the technologies are used and why they matter. No matter how familiar you are with the oh-so-important ball grid array, read on to learn more. Or contact us today if you’re looking for a quote for BGA repair or BGA assembly.

The  golden specks are actually the "ball" part of a ball grid array.
The golden specks are actually the “ball” part of a ball grid array.

There are thousands, if not hundreds of thousands of technological advancements and innovations that make the things we take for granted every day possible. From the microchip to flexible circuits, there are tiny things inside the things inside your pocket, your briefcase, and your backpack that you don’t even realize are there, and they have all undeniably changed your life. Ball grid arrays are one of those things.

A ball grid array, or BGA is a direct descendent of the pin grid array (PGA) and used to conduct electrical signals from the integrated circuit to the printed circuit board of an electronic component. Virtually all electronics contain printed circuit boards. While a PGA is comprised of pins, the BGA is made up of ball of solder – stuck to what is known to the “package”.

While pin grid arrays were effective, they did present a few disadvantages. For example, if you were to empty the contents of your pockets, chances are you would be left with your keys, some change, maybe some lint, and your cell phone. Years ago, cellular phones were the large artifacts you’ll now only see in a re-run of Miami Vice. Today, they’re small, compact, and ultra-portable. Ball grid arrays help make this possible by being the ideal solution for producing a miniature package more efficiently and effectively. With a PGA, as more and more pins were being soldered to a package, the unacceptable risk of bridging them was growing. BGA’s factory soldered to the package solved this problem, allowing for high density and reduced heat conduction.

However, there are disadvantages. One key disadvantage of BGA’s is the fact that solder balls on a ball grid array can not flex.  This can lead to fracturing, but can also be alleviated by more effective design and compatibility between the substrate of the circuit board and the BGA. Many times, BGA’s require inspection and repair. This is done with special X-ray machines, microscopes, and industrial CT scanning machines.

After inspection, if a BGA is badly soldered or in need of repairs it can be removed at a rework station with an infrared lamp, a thermocouple, and a vacuum for lifting the package. This allows technicians to replace, refurbish, reball, and reinstall the BGA to return it to working order. Many times, because X-ray and CT Scan testing is cost prohibitive, the go-to solution for inspection and repair begins with electrical testing and boundary scanning – a method for testing the interconnects on a printed circuit board or integrated circuit.

Regardless, ball grid arrays are responsible for many of the compact electronics you use today. Chances are, if you were to violently throw your laptop into oncoming traffic, one of the pieces you would recover would be a ball grid array. While it’s not a recommended course of action, it simply goes to show how widespread BGA assembly and repair is.


Electronic Contract Manufacturing Flex Circuit Assembly

Flex circuit assemblies are important. If you’ve found us, you probably know what they are already. But if you’re just stumbling in (or looking for a quick read) feel free to learn a little more about the flexible circuits you frequently rely on. Or, for more info on how we work with flex circuit assemblies, you can always contact us today.

Have you ever heard of a flex circuit assembly? If not, chances are you used one recently – in fact, you could be using one right now.

Flexible circuits, otherwise known as flexible electronics, use mounted electronic devices on flexible plastics such as PEEK, conductive polyester, and polyimides. But why? By mounting electronic parts on durable and flexible plastics, manufacturers benefit in a number of ways.

First, flex circuit assemblies allow manufacturers to tightly assemble electronic packages where connections are being made on every face of the product. Also, when it comes to products like a cell phone that flips open, flexible circuits make that motion possible. Additionally, in products or components where space and weight is a concern, flexible circuit assemblies help cut back on the requirements for both.

But how does a flex circuit work? A basic flexible circuit is constructed of a flexible polymer which is then laminated to a sheet of copper. This thin sheet of copper is then etched to product a circuit pattern on one or both sides. Interconnections are made adding plated-through holes to the piece – allowing for compatibility with almost any part. Sometimes, an overcoat is added to give insulation and protection to the circuit for products subject to a wide range of operating conditions. Once the flex circuit is created, it can bend as need while still conducting the necessary electricity to power the device.

Flexible circuit assembly can also accommodate single or double sides circuits, surface mountings, shielding, and multi-layer designs for flexible and rigid circuits when devices need it.

Flex circuit assemblies are frequently used in products where rigid circuit boards are uneconomical, too heavy, or a design constraint (such as in the case of a product that requires flexibility). Presently, you will find flex circuit boards in many of the electronics you use in your day to day life, from cameras, computer keyboards, LCD products, and more.

Many times, OEM’s require very small tolerances and extremely accurate micro-vias. A “vertical interconnect access” (via) combined with the obvious prefix micro, makes a microvia that allows for flex circuits needed in small, precision instruments like those used in operating rooms.

With this capability, many businesses that provide electronic contract manufacturing flex circuit assembly specialize in flex circuit assemblies that enable the use of the high-tech precision electronics that make a serious impact on our lives. Whether they impact us by enabling us to connect with our friends and loved ones around the with portable and reliable smartphones or keep us alive with precision medical equipment. Some other products and tools containing flex circuit assemblies include: music players, radios, phones, cameras, medical instruments, radios, computer parts, aircraft components, military equipment, and more.

Whether you’ve thought of what makes your many compact electronics possible or not, there you have it. A small insight into flex circuits and electronic contract manufacturing flex circuit assembly.  It truly is one of the technologies we rely on every day without ever knowing it.


Electronic Contract Manufacturing Services: Keeping You Connected to the World

Have you thought about EMS lately? No, not the EMS that will come to the rescue in an unfortunate pinch, but Electronic Manufacturing Services. While we might not think of electronic manufacturing services (referred to as EMS for now on), they have influenced us as a society much more than the Ambulance has.

Companies that design, test, distribute, manufacture, and repair electronic components for original equipment manufacturers (OEMN’s) are known as providing EMS, which is also referred to as electronic contract manufacturing (ECM). While it might not be something the average consumer thinks about, contract manufacturing impacts a majority of the products and tools you interact with everyday.

If you were to suggest that the more commonly known acronym for EMS, characterized by flashing lights and paramedics was more “important” than contract manufacturing, it would be important to remember that many of the electronics commonly used by the medical industry as a whole are the result of modern day medical engineering combined with contract manufacturing services. With that in mind, you could reliably trace many of the things you rely on every day to their origin: a contract manufacturing facility.

For example, every day electronic contract manufacturing provides the necessary manufacturing of printed circuit boards for consumer electronics, industrial machinery, medical instrumentation, and military equipment. But where do you think electronic manufacturing began?

In the early 1980’s electronic manufacturing began its reign, easing human resources issues for small companies and streamlining processes for businesses everywhere. By the 90’s, with contract manufacturers providing on demand manufacturing, warranty, repairs, and more – the advantages of electronic contract manufacturing were so obvious that most electronics businesses actually sold their manufacturing plants to established contract manufacturing providers.

Most frequently, EMS providers have focused on printed circuit board fabrication, with the OEM’s taking care of actual system assembly.  While many electronic contract manufacturers have outsourced their production facilities to cheaper geographic regions, many American EMS providers still exist, providing manufacturing for industrial clients, consumer electronics, medical instrumentation, and more.  Today, many EMS capabilities have stretched beyond fabrication and into a number of added services such as design assistance, system assembly, testing, and repairs, software, and more.

So next time you are tempted to take your smart phone or computer for granted – don do it! Think about everything that has gone into making it’s fantastic technology possible for so many things we all rely on every day.