Issue link: https://iconnect007.uberflip.com/i/565949
40 The PCB Magazine • September 2015 Due to the increased cost pressure from OEMs, most PCBs for autos are sourced from China, either direct or via a domestic PCB man- ufacturer. This is most likely to be the case if you choose to become an automotive PCB sup- plier. Even though you worked hard to achieve TS16949 certification, you will most likely have to purchase boards from overseas and then re- sell them to your automotive customer. We had a similar arrangement years ago when we were awarded a program for back-up cameras. During launch, boards started failing at functional test—which is about the worst time it can happen since this was an en- tirely new program that was under a microscope. Despite our concerns, the decision was made by our customer, a Tier 1 supplier, to ship prod- uct that passed test while we performed root cause analysis with the overseas supplier. So what about halting a produc- tion line when bad parts are known to exist? Yes, that can be done, but the costs there are astronomical. When an automotive production line is shut down, you are charged for the cost of each vehicle that can- not be produced, which can run $1–2 million per hour. I can see why they pushed forward. We ended up finding rough hole-wall issues that contributed to failed vias in these parts. Not only did we have to pay for the assemblies, our customer charged us administrative time to recover the efforts by their personnel. Needless to say, our profit was more than eaten up by the total bill of about $120,000. This was 2008. The thought was, "At least it's over—let's move on and hopefully make up the losses over the life of the program." Unfortunately, some of the assemblies that made it to the field (that is, into cars), had issues too. Only the condition wasn't as bad as those that failed during functional test, which is ac- tually worse. These vias were actually causing latent failures, blowing after spending time in hot and cold conditioning. We actually weren't made aware of any issues until 2011—right af- ter the warranty period ended. We received an e-mail from the Tier 1 supplier with a bill for $1.2 million! Basically, the OEM's thought process was that since we did have this issue at launch, any issues that came to the dealers with the back-up camera must have been due to the same root cause. Dealers were authorized to replace faulty cameras with new units, and just toss the faulty units without any need for root cause analysis. Essentially, no evidence was presented that the boards were bad, but the bill was presented all the same. The biggest kick in the walnuts was that, based on the number of units affected by warranty repairs, the to- tal selling price of the associ- ated bare boards was roughly only $1,750! And here we are being presented with a seven-figure bill for brokered boards that may have gener- ated a couple hundred bucks in gross margin. Naturally, there was much wrangling back and forth— shouldn't the Tier 1 pay some of the cost, since the bad assem- blies slipped through, which was clearly their fault? We settled for about half the amount, well over $600K. I don't know of too many PCB manufacturers who would say this was chump change and I am sure there are any number who would quickly be put out of busi- ness. We survived it, but our business model has since changed from 90% automotive to less than 15%—and those are for prototypes or low- risk, small-run business. This is my tale of woe, but this is not being written so I can cry on a shoulder or two. We learned some hard lessons and want to pass on a few of the things learned to others. Still interested in supplying PCBs to the automotive industry? First, understand that it is a very price-sensitive industry. Lowest cost is everything. The volume is definitely going overseas (read China or another low-cost Asian area) where the labor costs and even some ma- BECOMING AN AuTOMOTIVE SuPPLIER—PROCEED WITH CAuTION continues FEAturE During launch, boards started failing at functional test—which is about the worst time it can happen since this was an entirely new program that was under a microscope. " "