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52 SMT Magazine • March 2017 This month we complete our analysis of la- bor cost reduction in electronic product assem- bly. A new organizational model is proposed to replace the traditional burdensome one that has in most cases been taken for granted in our industry. For years, many of us in high labor-rate re- gions of the globe have jumped on the band- wagon, claiming that moving product assembly and test to geographic areas of inexpensive la- bor was the only way to compete. We've heard the management plea shouted from the rooftops in high direct labor-rate com- panies, "We will always assemble prototype and preproduction quantities here, but high-vol- ume production is lost forever to sources with low labor rates." What's Wrong with this Picture? Think about it: Based solely on labor costs, if everything else is equal, in what arena should a high labor-rate assembler compete more effec- tively—low volume or high volume? Since start- up costs, process development, line set-up, as- sembly and test tooling and fixture expenses and recurring production support are all amortized over larger numbers in volume production, the price per production unit is less. So, high vol- ume assembly should be more competitive with a high labor rate direct labor workforce. After several decades of producing prod- ucts remotely, the total cost and impact of pro- ducing products on a distant shore is being ful- ly realized. Many in management, in their in- finite wisdom, initially jumped on the low la- bor rate bandwagon, are starting to pull back on the bandwagon's reins and say, "Whoa!" Some, who actually know what their products cost to assemble locally, and can develop and main- tain a statistically capable process, have begun to jump off the bandwagon. It seems the pic- ture of low costs, protected intellectual property by Tom Borkes THE JEFFERSON PROJECT A New Organizational Model Using Logic, Cost-Effectiveness and Customer Service, Part 4 JUMPING OFF THE BANDWAGON

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