In this blog, Peter Gutschi, member of the ESCATEC board of directors, manufacturing expert, and entrepreneur reflects on the challenges facing EMS providers and their customers as they navigate a world reeling from the shock of change.
We live in uncertain times
It’s a fact that many countries around the world are facing major existential challenges. Economic growth is stalling and we have looming problems such as climate change, food insecurity and the care of ageing populations to deal with.
But innovation will be the answer to many of these challenges - and the manufacturing industry will be a central part of the solution.
I’m proud to say EMS companies like ESCATEC continue to be instrumental in this fight, as we work with our clients to design and deliver a broad range of innovative products and solutions across industrial, medical and transportation markets.
Innovation is being held back by global instability
Ironically, the spur to greater innovation is often what’s standing in its way.
What threats do we see to the manufacturing sector?
Natural disasters
In the last few years, supply chain resilience has been repeatedly challenged by the pandemic, earthquakes, and extreme weather events caused by global warming.
"Weather-related supply chain disruptions could increase by 20% over the next decade due to climate change." Supply Chain Dive
Rising China
China’s EMS sector is moving inexorably from low to high-tech. The Asian Tiger is penetrating high-reliability sectors with mass customisation in lower volume and high mix. It is threatening manufacturers with cheaper products but also the security of the world’s semiconductor ecosystem with its designs on Taiwan.
Cyber-insecurity
Cybersecurity fears are haunting infrastructure and industry even as the need for greater global co-operation around AI and robotics becomes ever more intense.
Geo-political strife
A mixture of war and seismic geopolitical disruption in the Middle East, Asia, Europe and the USA is stalling optimism and strategies for growth.
Talent shortages
Around the world we’ve seen massive changes in workforce availability and expectations, making it harder than ever for innovators to grow and compete.
And risks continue to grow
World Economic Forum Global Risk report
Risks are rising, but if used wisely, technology could help reverse global fortunes.
“What is needed is a mindset that recognizes the full scale of the risk, while maintaining the optimism that we can and will respond.” Gill Einhorn, Head, Innovation and Transformation, Centre for Nature and Climate, World Economic Forum.
How should EMS leaders respond to these global challenges?
EMS companies will continue to be amongst the key drivers behind sustainable, economic growth. We are helping cutting-edge companies deliver solutions to many of the world’s most pressing problems. We are helping design and build medical devices, advanced robots, mobility equipment, intelligent IIOT-devices, renewable energy and much more.
We are helping with the realisation of more accessible and high-performance electronics through economies of scale and innovation in product design, manufacturing and supply chain solutions.
But to continue this support, we’ll need to focus on service and innovation support in ways that many in our industry simply haven’t considered enough.
10 ways EMS companies will lead a manufacturing revolution
1. Being agile
We need to take on new skills and competencies to provide solutions to customers fast. We need the quality systems in place to continue to do it right first time.
2. Focusing on customer needs
We need to really understand what our end products are. We need to know who and where our end customers are. Then we need to honestly figure out the most compelling solutions we can offer our clients. We must be partners to innovators rather than ‘dumb pipes’. We must be looking to add value at every stage of our interaction with them.
3. Acquisition and growth
We must be active in pursuing strategic acquisitions, so that growth brings ever more value to our customers, as well as our shareholders. But after the high growth period of M&A powered by an era of cheap money - not every EMS player will be able to continue the pace:
“The aggressive M&A growth strategy adopted by many in the low-interest past may not be sustainable for all in more straitened times. But those businesses who have grown more organically and sustainably will have more laid by for continued investment in facilities and capabilities.” Charles-Alexandre Albin, ESCATEC.
4. Supply chain resilience
We need to build and manage a resilient supply chain against the highest cybersecurity standards (e.g. CMMC Cybersecurity Maturity Management Certificate). We need the strength to withstand cyberattacks and new geopolitical challenges.
5. Meeting the highest environmental and ethical standards
Climate inaction is unsustainable. We must work towards zero CO2 emission, protect our environment from pollution and realise the benefits of the circular economy. Legislation like the EU supply chain act is on its way, as are many other international agreements around emission control. We can’t afford to compromise on our commitment to protecting the planet and its population.
6. Facing geopolitical threats proactively
We must provide regional manufacturing solutions suitable to customer needs and as close as possible to the point of use. We must lead and support the shift of supply chains to regions to build in resilience. But this will take time, effort and investment - for example, in the push to become self-sufficient in high-end semi/microcontrollers.
7. Diversifying beyond traditional electronic manufacturing services
To stay competitive and innovative, our companies must diversify beyond traditional electronic manufacturing services. This involves focusing on core technologies and vertical integration relevant to our chosen market sectors.
8. Spearheading digital transformation
We must invest in digital transformation. embrace Industry 4.0 technologies, deploy IIOT, robotisation, AI, resilience, and automate quality across the supply chain. We must give our customers the digital tools they need to plan, track and optimise their outsourced manufacturing process.
9. Investing in cybersecurity
In the wake of major cyber attacks on infrastructure and installations around the world, this has become a number one topic in the EMS industry. We must move to protect customer and supply chain data from hacking, theft and sabotage.
10. Focusing on the workforce
We must make our companies the most attractive place to work and give every job a meaning to attract the right talents. We must respond to the change in personal needs for work-life balance of diverse generations of the workforce. We must provide the learning environment to up-skill employees to win latest technological advancement.
What will the future look like?
There is no choice for EMS companies. We must adapt to changing market dynamics and new geopolitical pressures. We must pursue strategic acquisitions, deliver localised services, diversify our offerings, embrace technology, and prioritise sustainability to survive and thrive.
Digitisation and automation in all our processes will play a major role in accelerating innovation to answer the challenges of growth. But we can’t do it without the right people. Around the world human talent supported by technology will engineer and iterate the solutions that will make us all safer, happier and healthier. EMS providers must help nurture and protect these resources to build a better future.
