Contract Manufacturing
director of Custom Interconnect Limited, “Post 2008 we saw a shift in our customers with them looking to adopt a much leaner approach, freeing up cash in their business by de-stocking and running just in time models and some projects as ‘just too late’ models. In doing so, they pushed the risk of holding work in progress further down the supply chain. “However, as confidence returns, we are seeing the same customers switching back to holding a limited amount of stock for the first time in 4 years. This, coupled with placing orders within the supply chain that are longer than 9-12 weeks, means we are all going to be in a better position to meet the demand of an increase in economic activity.”
reliability solutions so a big issue for us is compliance and risk management. We need to be able to manage technical uncertainties.”
While skill levels in the UK have
increased and new automation is being applied, costs crucially need to be controlled.
“Any well run business keeps a close eye on costs, ensuring efficiencies across all areas of the operation, while also seeking out and investing in the right areas to remain competitive,” explains Boston. “While many costs can be managed,
there are some areas that present more difficulty and these tend to exist in the component supply chain. Unforeseeable events, such as factory fires of floods can
described the nascent recovery in the UK as a "dangerous situation" which could see politicians turning their attention away from the economy just when they should be focusing on growth. In an interview with the Guardian newspaper Longworth accused politicians of all parties of neglecting the economy. "I think there is a lack of ambition in the political class for economic growth without a doubt. The economy should be the number one issue all the time. Not just in the downturn, also when the going is good." "We have got to relentlessly focus now on long-term sustainable growth and not be satisfied to just get back to where we were before Lehman Brothers collapsed but go beyond that."
Access to finance for businesses, spending on infrastructure projects and help for exporters were highlighted by the BCC and Longworth talked about the need for a state-backed business bank. The access to funds hasn’t been a
problem for Axis, according to Inness. “Banks have been ‘as gold as gold’ for us. You talk to any EMS company and banks want to be able to lend to companies but businesses need to be a good credit risk. “One of the biggest issues for us going
Phil Inness, managing director of Axis
Electronics agrees that the market has turned. “Axis saw growth of 6 per cent in the past financial year. The strength of any EMS business depends on the success of its customers and the mix of customers you work with will drive your business. Our customers may benefit from a general economic recovery, or they may experience counter cyclical growth or decline. For companies like Axis we need to hedge our risks, so we look to work in a variety of different markets whether that’s aerospace, automotive or renewable energy. “We’re expecting a relatively flat year, in the next twelve months, but we have sown the seeds for future growth having started work with five new customers. A key trend among these customers has been that they are looking for high
not only be devastating, but can cause significant problems for supply chains. Understanding the risks in the supply chain and how these can be managed is crucial in minimising risk.” Murphy sees cost pressures from rising
energy, transportation and raw material costs “Not only this, but we also have pressures from competition from lower cost manufacturing regions. It is what it is, so from our perspective we address those challenges by driving smarter more agile supply chains, investing in capability and skills that not only complement our core EMS offering but provide us with a competitive advantage and differentiator allowing us, hopefully, to stay ahead of that cost curve.”
John Longworth, director general of the British Chamber of Commerce (BCC),
forward is that we’re seeing onerous contract conditions being demanded and imposed by end customers. That could affect bank lending if the bank’s legal people see that as a risk to getting their money back. It’s a question of whether you work with these clauses or hold out and negotiate that clause away.” According to Inness banks are bringing on specialists to better understand the needs of companies working in sectors like electronics, aerospace and manufacturing. Long term success comes from continuous investment and investment certainly remains a priority.
“Over the past two years we have invested heavily in support staff and business systems. In addition, over the past six months our headcount has increased 20 per cent following investments in manufacturing and test skill, especially in relation to our expanding RF test capability,” Boston explains. There is recognition in both the US and UK that manufacturing matters, not only because of the jobs it creates but also because of its stimulus to innovation and its contribution to exports.
Advanced engineering is playing an
increasingly important role in the UK’s economy. The specialist skills required,
together with technological advancements, are helping the UK to maintain its focus upon high value manufacturing, rather than high volume production.
Boston believes, “CEMs play an integral
role in helping to deliver the technological advances being made in engineering. While we provide all the expected services of other CEM providers, we see ourselves as a hub of innovation not just an assembly house. “We not only invest in state of the art equipment, but our people too, creating an environment of skills and knowledge development for our staff. In addition we also invest in our systems and procurement staff, as they provide the vital supply chain management. Murphy agrees. “There is an underlying challenge for the industry to produce skilled engineers of the future and attract qualified workers in other disciplines. With a shortage of employees in manufacturing, it is imperative that CEMs do more to support and engage with our local colleges and higher education institutions.”
Axiom has been working closely with its local FE college in the hope of fostering the next generation of high-tech manufacturers and engineers, and has taken on six apprentices as a result. “By attracting more of the brightest students to study engineering at university, they will be better prepared for a vibrant and innovative electronics career that will help maintain the growth and stability of the industry. Success comes when we nurture talent at the grassroots level. The UK electronics sector is among the best in the world, but we need to attract the students back into the courses if it is to remain successful.
But as Murphy argues it is not only skilled engineers that are needed. “The term ‘manufacturing’ encompasses many skills e.g. sales, purchasing, logistics, software development, IT, finance etc. Many people fail to consider these disciplines when they think of a career in ‘manufacturing’; meaning there is an image problem that the government needs to help address.”
While the UK certainly has a vibrant base in industrial, medical, automotive, aerospace and defence employers supported by a strong group of contract manufacturers, manufacturing industry and its long-term sustainability is just as dependent on attracting high calibre, innovative and creative individuals as it is on winning business. ■
www.cieonline.co.uk
Components in Electronics
October 2013 23
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