The time is ripe for electronic product manufacturers in Australia to bring manufacturing back home, according to the Circuitwise General Manager Serena Ross.
With the Covid-19 coronavirus causing massive disruption to the electronics manufacturing base in China, Ross says product developers should take a closer look at the business case for manufacturing in Australia.
“We know of a number of original equipment manufacturers who are in a world of pain right now,” Ross said.
“Companies that have offshored their printed circuit board assembly to China are experiencing uncertainty and long delays in product being shipped to them.”
The current situation has brought to a head a wider range of challenges to the offshoring paradigm.
“Anyone offshoring their manufacturing knows there are challenges around communication, responsiveness, unexplained price hikes and hidden costs.
“The current coronavirus crisis in China simply highlights the existing risks and challenges of offshoring electronics manufacturing anywhere in Asia.”
Historically, Asia was cheaper because old electronic designs had a lot of hand-placed components, which made the manufacturing process labour intensive.
However, new designs increasingly use close to 100 per cent surface mount components and pick-and-place machines now operate at 120,000 components/hour. Using such highly automated technology has allowed Australia manufacturers to reach price parity with Asia.
“Circuitwise recently won a manufacturing contract with Siemens against direct competition from a contract manufacturer in Asia,” Ross said.
“Siemens’ procurement team analysed all the factors of manufacturing in Asia and found that Circuitwise delivered a lower overall price position over a three-year period.
“Electronic product companies should not just compare unit costs in their quotes. When all the factors are taken into account, including the reliability and convenience of a local manufacturer, then the business case for manufacturing in Australia is compelling.”
This article first appeared in Linkedin. Circuitwise Electronics is a contract electronics manufacturer specialising in complex electronics devices.
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