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Thoughts on the Electronics Manufacturing Services (EMS) Industry

by Leo Reynolds,  Electronic Systems, Inc.

I came into the electronics assembly industry in 1972 through the back door. I had just graduated with a BS degree in electrical engineering and started working for a major OEM that produced business equipment of all sorts. Since I was an EE and they had just bought a wave solder machine they put us together. It was the job of every good employee of that company to develop what were called "programs for profit", a methodology for encouraging cost reduction efforts by all associates. The company had installed a wave solder machine in the belief that they could produce their large variety of printed circuit board (PCB) assemblies at lower cost than their vendors could. It was up to me and a small band of "intraprenuers" to make that happen.

We were off and running and writing programs for profit on a weekly and sometimes daily basis, saving this large OEM hundreds of thousands of dollars a year, or so I thought. While doing this I became the company's main liaison with its many subcontractors, getting to know many of the people who eventually became my competitors. Somewhere along the way on my blissful path of saving bucket loads of money one of the production managers at the plant asked me if I thought we were really saving all the money we were claiming. I assured him the analysis for savings were carefully prepared and the numbers spoke for themselves, we were saving anywhere from 5% to 10% on each assembly we brought in from the outside vendors. He then asked if I'd read the latest annual report from the OEM that we both worked for and pointed out that the corporation was making 23% pre-tax profit. He suggested that actually if I didn't save at least the 23% I was wasting the corporations' resources since they were able to do 23% profit and a much higher ROI than our internal assembly facility.

This production manager was not a business school graduate or an accountant but he put his finger on a concept that the rest of the hard goods manufacturing industry would learn to embrace many years later. It was at that point that I decided I wanted to be part of the assembly industry. I stayed at that OEM and worked for one other, but in 1980 started Electronic Systems, Inc. in Sioux Falls, SD.

I credit that OEM's production manager and many of my competitors for my enthusiasm for being part of what has become the EMS industry. I've always said, and believe to this day, that my competitors are the best and brightest in industry. This is a low margin business with very little tolerance for poor performance or even mediocrity, the waters are fast and deep and only the very strong even survive, let alone prosper. Specifically some of my mentors include Dick LaBorde, former president and founder of Ramsgate and Hibbing Electronics as well as Bonnie Fena, also a founder and later president of Hibbing Electronics, first female IPC Board Member and first female Chairman of the IPC Board of Directors. Many of the people I've had the opportunity to learn from came about due to the EMS Council of the IPC.

The EMS council formed in 1988/1989 and consisted of a small band of industry professionals including, but not limited to, Bonnie Fena, Steve Puddles, Mark Trutna, Dave Fradin, Stan Plazk, Sue Mucha, Brian Throneberrry, Harry Bowers, Mark Wolfe and others. It was immediately agreed that we shared many common issues and concerns and that the value we saw from helping each other far outweighed any potential downsides. This group started enthusiastically and has remained strong through to the present day because there is obvious continuing value for each member of the council. In its simplest and most powerful form, it is a place where EMS industry professionals can go and learn from carefully selected programming and, most importantly, from each other.