Aug 20

Is U.S. Manufacturing Dead? Not Here, It Isn’t.

By Michael Curran DOOH Trends, Electronic Contract Manufacturing, Electronic Manufacturing USA, Technology No Comments »

Is U.S. Manufacturing Dead? Not Here, It isn't.

Micro Industries, Westerville, OH

In the United States and around the world, we’ve come to accept the premise that manufacturers design products with shorter and shorter lifecycles . . . that we’ll throw these products away once they’re no longer useful. Nowhere is this more prevalent than in the electronics industry, in which product lifecycles typically are six months to a year. Electronics that last more than two years are considered antiques. Each generation of a device offers more features and capabilities, usually at lower and lower prices.

Unfortunately, this cycle is driven by manufacturers that have simply become trading companies, putting their brand names on products that are designed and manufactured elsewhere, usually in the Far East. The problem is that products made over there typically have high initial failure rates—in some cases as high as 5 percent—with annual failure rates approaching 20 to 25 percent. Most manufactures find it cost effective to replace defective products or to scrap products that fail within the warranty period. This means that over four to five years, some component in a product made in the Far East probably will fail. Usually, consumers just toss these products away.

I’ve worked in this industry for more than 35 years and have seen firsthand the migration of products to manufacturing operations that produce the lowest-cost products without concern for reliability. Certainly, market economics are important. But because most of the products Micro Industries makes are unique and low-volume when compared with consumer products, we choose to make our major systems components here in the U.S.

A company like ours can’t compete on a direct-manufacturing-cost basis with the Far East. We focus instead on total cost of ownership. We buy all critical components from the highest-quality manufacturers around the world. I’m referring to industrial-grade rather than consumer-grade components, such items as displays, power supplies, blowers, etc. Our motherboards are designed for specific applications and incorporate key functions that let us manage and repair most operational failures remotely, without traveling to the site. Our process technologies are well-proven and run by experienced professionals who understand that quality and a reputation for reliability are what maintain customer loyalty.

I doubt that Micro Industries will ever make the lowest-priced products around, because that would involve too many compromises. Our goal is to provide customers with the best value over the life of a product—even if that is many years.

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Jul 06

The Fourth in Ohio: Still “Made in the USA”

By Michael Curran DOOH Trends, Electronic Contract Manufacturing, Electronic Manufacturing USA, Technology Comments Off

Everyone at Micro Industries gets together around July 4 every year to celebrate the fact that we still manufacture products here in Westerville, Ohio. This might sound unusual, since American electronics manufacturing has largely moved to the Far East over the past 30 years. Corporate consultants and Wall Street analysts believed that profits from manufacturing should fund new ventures, in higher-profit growth markets . . . like financial services. We all know where that led—to huge bonuses for executives and Wall Street managers, and to a massive recession for the rest of us. Without reinvestment, a lot of U.S. manufacturing quickly became obsolete, especially in the technology sectors.

One advantage at a privately held company like ours is not needing to worry about any negative reviews from Wall Street. Micro Industries continues to invest in the manufacturing resources that help us remain competitive worldwide. In electronics manufacturing, the cost of labor is only a tiny portion of the overall costs—typically, just 3 to 5 percent. More than 80 percent, however, goes for materials. To stay competitive, we have to shop globally for our components. Unfortunately, this also means that we have to guard against inferior Asian components and a flood of counterfeit parts.

A case study by Charlie Barnhart & Associates shows that when all costs are considered, OEMs have never achieved significant savings by shifting manufacturing to Asia. This was always the case for low-volume, high-mix production. Now, as Asian manufacturers invest in the capital equipment necessary for producing advanced electronics, it’s also true for medium- and high-volume production. And this doesn’t factor in the appalling piracy of intellectual property (think about iPhone clones, for example). If Apple can’t protect its IP in Asia, it’s not very likely that any other U.S. company can, either.

The Fourth of July represents the United States’ great independent spirit. Yet, even as we celebrate, we rapidly become more dependent on a global economy created on Wall Street. Companies make quick profits and executives get obscene bonuses, at the expense of workers and customers. America’s greatness has always been driven by dynamic leaders whose vision disrupted the status quo. Today, though, we see only consensus building to placate a financial model that is devastating the American economy and others. The Information Age has made it possible for our leaders to gauge the response to their decisions even before choosing a direction—which only ensures that we’ll sink deeper into mediocrity.

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