Contract Manufacturing
The future of contract manufacturing: bringing business home
The design and manufacturing of electronic goods used to all happen under one roof. However, the search for great efficiency and lower costs gradually changed this and the majority of electronics companies now outsource the manufacturing of their products to specialist factories with the capacity and workforce to make the process cost efficient. Amy Wallington, CIE editor, talks to David O’Keeffe, operations director of Trojan about bringing business back to the UK
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t’s no surprise that the basic economics around the cost of labour is one of the things that has driven a lot of manufacturing overseas. The Far East has seen to be popular for consumer products while Eastern Europe has been popular with industrial products. However, in recent years, this trend has started to change and manufacturing seems to be slowly returning to the UK. Some of the main motives for this include concerns about the cost of offshore production, a desire for better quality, shorter lead times and more flexibility. The UK has never lost the ability entirely to make these products and has always preserved a solid, core, contract manufacturing sector, which has now started to grow again as more and more companies reshore their manufacturing needs. Trojan, a company based in Swansea, is benefitting from this reshoring trend. The company offers a comprehensive Contract Electronic Manufacturing (CEM) service, performing a wide range of services from PCB assembly (both through hole and surface mount), cable assemblies and electro-mechanical assemblies, through to complete product build. Through offering a complete procurement service, Trojan is able to source all elements required for a complete build.
Since forming nearly 15 years ago, Trojan has grown steadily but has seen a
significant rise in demand for its services in recent years as companies seek a reliable manufacturing partner close to home. David O’Keeffe, operations director of
Trojan, said that he thinks there are numerous opportunities for Original Equipment Manufacturers (OEMs) to bring manufacturing back to the UK to companies like Trojan.
“OEMs should focus on assessing the costs of off-shoring manufacturing against the flexibility of local production and really look at the benefits that exist for using manufacturing services in the UK rather than outsourcing overseas to former production giants like China,” he says. The model provides significant benefits
to Trojan’s customers, which, O’Keeffe explains, can schedule their production requirement, agree phased deliveries and leverage its scale to ensure working capital requirements are optimised. “With the production and quality taken
care of, customers know they are procuring assemblies finished to the level they require, at an agreed price, to the lead-times they need,” explains O’Keeffe. “This way, customers don’t have to
source what can sometimes be hundreds of components from a multitude of suppliers. This benefits our customers with the freeing of more time and resources to concentrate on R&D and sales. “Trojan’s approach has always been to truly understand the client’s requirements,
and then to provide for those, first time, every time. We continually invest to ensure our equipment is the best of breed and we deploy a skilled and dedicated workforce that’s motivated to produce the quality our customers deserve. “Trojan has never been about cutting
corners; it aims to provide all its customers competitively priced solutions, be that in producing limited-run prototypes, or thousands of items for months or years at a time.” O’Keeffe continues to say that the company always makes sure they completely understand exactly what the customer needs. “There’s a wealth of experience in all aspects of Trojan, with the company respecting the trust its customers place in us to produce for them. We take an approach where we continually review all aspects of our activities to ensure they are as correct and refined as possible,” he said. Trojan is very proactive in testing and, if suitable, embracing new technologies to ensure its service is as good as possible to ensure they stay one step ahead of competitors. O’Keeffe believes the future of CEM will undoubtedly be tied to Industry 4.0, where automation and data exchange in manufacturing technologies will continue to grow. It goes without saying that technology develops rapidly and changes the way companies work.
“CEMs have to keep up with what’s new or will simply be left behind. Being ignorant and not reacting to new technologies could ruin some manufacturers. It’s common to fear change, but in our line of work, you have to embrace it or suffer the consequences,” says O’Keeffe. According to figures from the Electronic Components Supply Network (ecsn), the CEM sector in the UK and Ireland at the start of 2016, in terms of demand, accounted for more than 40 per cent of all electronic components by value. O’Keeffe suggests that solutions must come hand in hand with such demand and
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what Industry 4.0 can bring to the table may well be the way forward. He believes demand for CEM services will only increase with work coming back to the UK, but CEM firms have to be smarter and more efficient in order to manage more demanding customer requirements. There are still challenges for the CEM
sector. O’Keeffe believes the Brexit vote has provided both opportunities and challenges to all sectors in the industry, including CEM.
Since the vote, Sterling has come under
pressure from the other major traded currencies, falling in value against both the Euro and US Dollar. The drop in value has caused an increase in the imported price of some components and assemblies, but on the flip side, it has made the UK goods significantly cheaper to export. “This nets to a competitive advantage for UK-based production and has already led to an increase in activity for Trojan from Europe and beyond. It’s too early to yet know exactly what shape the UK’s exit from the EU will take, but one thing that is known is great businesses producing quality always survive,” O’Keeffe says. “In times of great change, those companies can actually thrive. We are making sure we minimise any adverse effects from Brexit, so then we are best placed to maximise on the opportunities that will manifest themselves over the coming months and years.” At the start of August, the Financial
Times reported that “… the indicator for manufacturing output remains well above the levels seen during the last recession.” O’Keeffe also remains optimistic. “Now
is not really the time to panic, but look at prospects. We are confident CEM will grow over the next few years and we have to remain optimistic, continue to provide a high quality service and prove that we are better than our overseas competitors,” he says.
www.trojanelectronics.co.uk Components in Electronics October 2016 23
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