Gately works with a diverse customer base made up of R&D, startup and Fortune 500 Companies producing military, medical, aerospace and industrial products, as well as PCB contract manufacturers. He has increased sales at Mass Design by attracting and retaining customers who see working with a US-based company as a big benefit - especially when it comes to orders that are as few as 5-25 boards or as many 2,500 boards.
Q: We hear about outsourcing all the time. You're an American manufacturer with partners in Asia. What's the future of the Made in the USA label when it comes to PCBs?
Gately: I'm optimistic. Coming out of the worse part of the recession, we saw a big recovery in 2010 sales for US companies. According to IPC, rigid board sales were up 18 percent and flex boards showed an increase of 16 percent that year. Compared to 2010, the increase in PCB sales has not been as dramatic. Sales for 2011 are up about 4 percent for all electronic products including PCBs, however the economy is growing at 2.5 percent. I see PCB sales outstripping general economic growth as a very positive sign.
Year-to-year and month-to-month statistics only tell part of the story though. Long-term, the potential for growth in our industry is as immense as it is incomprehensible. Take a single simple item - hotel room keys. Keys have universally been replaced by card readers, all of which require electronic circuitry. That's just one small commonplace product.
The American auto industry is coming back too. Compare your five-year-old car to the 2012 models that routinely have rear video cameras, electronic braking systems, electronic tire pressure monitoring gauges and, of course, built in GPS, satellite radio and Blue Tooth - with many of these new features mandated by law.
Likewise, capital investment in US infrastructure isn't all about bulldozers and concrete. It's about improved signaling, automated toll collection, video surveillance, and improved fuel efficiency for locomotives - again increasing demand for printed circuit boards.
Q: Industry-wide that's terrific. But with the bulk of PCB boards outsourced to Asia, what's left for US and Canadian manufacturers?
Gately: There isn't much future on the mass-produced, consumer-products side of the equation - toasters, video games and cell phones. That business has gone offshore and margins are too slim for North American companies to compete.
Where there once were about 4,000 PCB manufacturers in North America now there are only about 200 with a smaller number of PCB manufacturers doing really well.
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The High Speed Schmoll Drilling Machine increases intricacy.
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The success stories though are the US companies that have developed a hybrid-manufacturing strategy by offering complete capability in the US combined with the skill needed to negotiate with and manage reliable manufacturing partners overseas - particularly China and Taiwan.
US manufacturers outperform an Asian manufacturing rep with a phone and desk, because they offer complete preproduction capability in the States and can quickly turn around prototypes. It's something customers see as a huge benefit even if their manufacturing is eventually outsourced.
Q: No matter what, aren't US production costs going to be higher?
Gately: I was just getting to that. For small quantities, in our high-reliability niche, the marginal savings from manufacturing in a foreign country are outweighed by quicker turnaround times and convenience. Just as important, we are always investing in new technology to increase quality and automation as well as decrease delivery times - our new Schmoll Drilling Machine, for example, serves as both a drilling machine and router. It enables us to fabricate boards with 6 mil. holes, meet much tighter tolerances with both rigid and flex PCBs and do it faster (massdesign.com/news).
For longer runs, we've had times when a delivery from Asia is delayed. We'll turn around the same product in-house in the USA and ship it within 24 to 48 hours to meet a customer's deadline. We've also had times when 3,000 boards are due to come in from Asia in a month or so and we'll produce 500 right away in Nashua so the customer can start production right away.
That's the kind of assurance and comfort level the successful US manufacturers are offering. It's a customer-focused way of thinking and it pays off.
Q: What about ITAR compliant manufacturing that has to take place in the US? Do cutbacks in defense spending worry you?
Gately: No. Just look at how electronics are replacing active-duty people and military infrastructure. Compare the manpower cost of maintaining a fighter squadron in a warzone or on an aircraft carrier to drones that are piloted from the US. Less manpower simply means more technology.
The same goes for missiles, satellite tracking, weapons controllers and command-and-control systems - it's all low-to-medium volume, high-reliability work and the five-year outlook is bright.
Q: ITAR keeps that work in the US. Can't high-reliability be outsourced when it comes to avionics and medical applications?
Gately: Medical devices are produced in small to medium volumes with solid markups. It's an industry where manufacturers want their boards released to them monthly or quarterly so overseas
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| US- based Mass Design assures high-reliability. |
transit times and costs become a factor. These manufacturers won't chance a production delay by going overseas.
Medical devices present a big growth area for the PCB industry in the US. Physicians are using more handheld diagnostic tools and hospitals are sending patients home earlier with electronic monitoring equipment. For some patients, dialysis can now be performed at home. We are also seeing potential as the age-at-home population increases and relies on electronic pill monitoring and other systems. All of which means smaller, lighter, more rugged and foolproof equipment.
It's good news for our industry, especially in flex where you have to cram a lot more capability into smaller spaces and the equipment has to be drop proof. We saw 18% growth in flex sales at Mass Design last year and I'm sure we're not alone.
Q: Any other indicators?
Gately: Sure. Boeing's new 787 is being produced in the US and the volumes, in terms of avionic equipment, are so low and the reliability requirements so high that it just doesn't make sense to export that kind of work.
Going green is also becoming an incentive. We're hearing from customers who feel more comfortable buying in North America, because of our high wastewater treatment and worker safety standards - something they can't count on overseas.
Q: Is there anything else a US manufacturer can do to keep an edge?
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| Mass Design's integrated manufacturing facility |
Gately: Customers want to keep as much labor out of their shops as they possibly can. Value-added products and fulfillment, such as offering box-builds to streamline the costumer's operation is a winner. For example, one of our customers does box-builds for a producer of hand-held electronic trouble-shooting devices for auto service centers and ships about 50 boxes per day.
Q: Is there a four-minute mile barrier to thin and number of layers in a board?
Gately: Smart phones have led the way to thinner boards and increasing the number of layers. Copper is ¼ ounce with thicknesses from 5 mil to 3 mil. Standard part placement is 0201. And innerlayer leaves are thinner as well.
Standards on the consumer side are simply driving expectations in the high-reliability market.
Q: You seem optimistic. In a nutshell, who will be the US PCB success stories in five years?
Gately: The companies investing in well-educated talented people, capital equipment that automates testing and increases reliability and advanced CAD-CAM software. And of course, customer service.
Editors Note: Dick Pirozzolo, a member of American Society of Professional Journalists and the Foreign Press Association, writes about global technology.
