SMT007 Magazine

SMT-Aug2014

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66 SMT Magazine • August 2014 by Michael Ford MenTor grApHiCS VAlor DiViSion EssENtIaL PIONEER's suRVIVaL guIDE ColuMN Reshoring Made simple For many years, manufacturing has sought to increase competitiveness by moving offshore to countries with lower labor costs. The simul- taneous rise of EMS manufacturing was an es- sential element to allow the offshore transfer to happen more quickly, with further cost reduc- tion opportunities from load balancing. Initia- tives are in place to reverse that trend—to bring manufacturing back, closer to the market it serves, notably in the United States. Through- out the off-shoring process, fierce arguments were put forward to protect the loss of local jobs, even though the result was, in almost all cases, inevitable. Today, however, the whole market of PCB- based electronics products has changed signif- icantly. Companies are waking up to the fact that the pros of offshoring are no longer what once they were, and that the cons are becoming more significant. The key question is whether reshoring is really commercially viable or is government trying to push water uphill once again? Reshoring could turn around the local labor markets and resolve balance of payment issues. This reshoring opportunity, coordinated with the seemingly unstoppable current market trends, can either be taken advantage of now, or if delayed, could represent the final loss of onshore manufacturing opportunity. Changing Market Demands Demand patterns for electronic products in the market continue to change and evolve. As technology-based products become fash- ionable, the demand from customers becomes more volatile, more heavily influenced by en- dorsements and trends. It is more important than ever before to get the latest technologies out into the market as fast as possible, with a range of product options to match people's in- dividual tastes. The trend of direct shipping of products, driven by Internet shopping and di- rect ordering, means that this variation in de- mand pattern is now felt directly at the door of the factory. Putting these factors together would seem to spell very bad news for offshore manufac- turers, who require longer shipping times with higher costs. Their trade-offs are delays in deliv- ery versus the cost of shipment by air and the

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