How Can Manufacturers Recover and Prosper After The Pandemic?

By Joe Booth, Altus’ Director – Business Development & Marketing

The UK electronics industry has faced unprecedented times over the last 12 weeks of official UK lockdown to battle the Covid-19 pandemic. Very few people predicted the depth or gravity of the impact to the financial market, consumer demand and component supply across the globe. What we have found particularly reassuring however is the ‘can do’ attitude of so many of our partners and the wider UK manufacturing sector that are keeping the economy moving. Nevertheless, some manufacturers have faced a complete shutdown and enforced the utilisation of furlough. Desperate times call for desperate measures! This is especially evident in the automotive sector as large vehicle manufacturers that were already facing difficult times prior to the pandemic, have had to shutdown to reduce the spread of the virus. There is also the impact of limited demand for vehicles further affecting the UK supply chains.

Conversely, those in the CEM space or those developing products to enable remote working and connectivity in the ‘new normal’ saw demand and production requirements skyrocket. Needless to say, those producing medical equipment, and involved in the ventilator build endeavours, have not only benefitted the population through their efforts, but this has also helped with the companies’ bottom line. Ask Eric Yuan (CEO, Zoom) what Covid did to his net worth?!

Another realisation for many production managers is the efficiency and ability of a smaller team which has been implemented to keep operating, whilst keeping within government guidelines. Questions will no doubt be asked about whether the same amount of people are needed to produce product and operate daily as companies aim to be as economically competitive as possible. Do companies need all their administrators, middle managers, purchasers etc. or in truth are they surplus to requirements? Clearly the aim is to recover and continue to compete on the global stage, tempting offshore production back to the UK and away from Asia and Eastern Europe. For example, with a few clever investments, could a site reduce operator requirements that could be repurposed for other value-added work internally- probably. Would a customer relationship management tool increase sales and marketing effectiveness? Well, I am sure there would be a lot of Saas (Software as a Service) companies saying ‘Yes, of course it would!’

With electronics manufacturing in mind, what was very clear was the large delta between the lights out factory of the future and how many manufacturers are operating today. Clearly those with forward thinking automation have fared far better than those that have not made those investments so far. This is compounded in component management and the conventional electronics build space that is heavily labour intensive (through-hole assembly and inspection). But what does it mean in terms of capital equipment and investment? For many projects, a hold period was inevitable as companies assessed the future demand and risk. However as of June the taps are turning back on full as executive suites look to reduce future risk by ramping back up at speed and maintaining the safety of their teams under the guidelines.

And what capital equipment are people investing in? Firstly, there has been heavy investment in thermal measurement solutions, hand sanitiser and dispensers to ensure staff safety, an important investment. Further to that, because of Altus Group’s focus in inspection and automation, we have seen recent sales in the form of new AOI equipment and PCBA handling from leading manufacturers Koh Young & YJ Link respectively.

Altus expect to see many more investments in equipment from Koh Young and YJ Link as they are one of the most renowned suppliers year after year in their sector in the UK. Surely SMT will continue to be an area of significant investment, especially for manufacturers operating in island processes and not fully automated.

However, what we are especially excited about is the interest and leads in conventional assembly and the processes to support automation. Even through the Covid period, we have had unprecedented interest in AGVs, X-ray component counting, inline routing solutions, robotic soldering, conformal coating and inline X-ray. All these processes indicate that the forward-thinking site is looking to reduce operator reliance which Is intuitive given the issues involved. 2019 was a record year for Altus in relation to Cencorp Automation in terms of solutions installed, a market leader and originator in the field of odd form assembly and spindle routing and the back end of 2020 looks to carry on that trend with another odd form placement cell sold in June to a leading EMS company.

The reason for this growth in conventional and component management automation is that these seem to be the most neglected processes to date and the area with the largest delta to achieving the gold standard industry practices. Many CEMs for example will state their site CPH (Chips per Hour) with pride, but not many are boasting a highly flexible batch size one production line with fully automated conventional assembly, or for that matter an automated component management solution. Why add another pick and place when efficiency gains and return on investment is much larger elsewhere in the facility? CPH does not seem very important when conventional production is delayed because social distancing measures cannot be adhered to, or you cannot find the BGAs you need in stores. Furthermore, it is difficult to get manual labour to keep up with conventional production or quality processes because their isnt the capacity, skill level or reliability needed or provided by a computer.

In times of volatility there is clearly an opportunity for companies that are willing and nimble enough to adapt and plan for the future. We are excited to see how our industry develops and strives to new and higher standards and pushes the boundary forward. What is for certain, is that companies making smart investments early will reap the largest rewards of increased profitability in the long term. It would be amazing if coming out of this pandemic situation we saw a large rise in onshoring of product and production to the UK & Ireland. It is our belief that with further automation increasing our commercial competitiveness, alongside the higher quality and greater experience of high complexity builds that our national manufacturers offer, it would be difficult to ignore the UK & Ireland for electronics production.

https://www.altusgroup.co.uk/

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