There was once a time when the design and manufacturing of electronic goods would all happen under one roof. The search for great efficiency and lower costs gradually changed this and the majority of electronics companies now outsource the manufacturing of their products to specialist factories with the capacity and workforce to make the process cost efficient.
Basic economics around the cost of labour has also driven large swathes of manufacturing overseas. The destinations of choice have been the Far East for consumer products and Eastern Europe for industrial products.
Yet this trend has started to reverse in recent years. Concerns about the cost of offshore production, a desire for better quality, shorter lead times and more flexibility are just some of the principal motives that have prompted many companies to move manufacturing back to the UK.
The UK has never completely lost the ability to make these products. It has preserved a solid, core, contract manufacturing sector, which has now started growing again as more companies reshore their manufacturing needs.
One beneficiary of this trend has been Trojan, which is based in Swansea. The company offers a comprehensive Contract Electronic Manufacturing (CEM) service, performing a wide range of services from PCB assembly (both through hole and surface mount), cable assemblies and electro-mechanical assemblies, through to complete product build. Through offering a complete procurement service, Trojan is able to source all elements required for a complete build.
Since it was formed nearly 15 years ago, Trojan has grown steadily but has specifically seen demand for its services rise in recent years as companies seek a reliable manufacturing partner close to home.
David O’Keeffe, operations director of Trojan, suggests there are numerous opportunities for Original Equipment Manufacturers (OEMs) to bring manufacturing back to the UK to companies like Trojan.
“OEMs should focus on assessing the costs of off-shoring manufacturing against the flexibility of local production and really look at the benefits that exist for using manufacturing services in the UK rather than outsourcing overseas to former production giants like China,” he says.
The model provides significant benefits to Trojan’s customers, which, O’Keeffe explains, can schedule their production requirement, agree phased deliveries and leverage its scale to ensure working capital requirements are optimised.
With the production and quality taken care of, customers know they are procuring assemblies finished to the level they require, at an agreed price, to the lead-times they need, he explains.
“This way, customers don’t have to source what can sometimes be hundreds of components from a multitude of suppliers. This benefits our customers with the freeing of more time and resources to concentrate on R&D and sales,” O’Keeffe says.
“Trojan’s approach has always been to truly understand the client’s requirements, and then to provide for those, first time, every time. We continually invest to ensure our equipment is the best of breed and we deploy a skilled and dedicated workforce that’s motivated to produce the quality our customers deserve.
“Trojan has never been about cutting corners; it aims to provide all its customers competitively priced solutions, be that in producing limited-run prototypes, or thousands of items for months or years at a time.”
According to O’Keeffe, Trojan always looks to understand each customer’s unique needs, understanding that requirements can change. “There’s a wealth of experience in all aspects of Trojan, with the company respecting the trust its customers place in us to produce for them. We take an approach where we continually review all aspects of our activities to ensure they are as correct and refined as possible,” he says.
The company is also very proactive in trailing and, if suitable, embracing new technologies to ensure its service is as cutting edge as possible. Trojan claims this approach keeps the company one step ahead of its rivals.
O’Keeffe believes the future of CEM will undoubtedly be tied to industry 4.0, where automation and data exchange in manufacturing technologies will continue to grow. It goes without saying that technology develops rapidly and changes the way companies work.
“CEMs have to keep up with what’s new or will simply be left behind. Being ignorant and not reacting to new technologies could ruin some manufacturers. It’s common to fear change, but in our line of work, you have to embrace it or suffer the consequences,” says Murphy.
According to figures from the Electronic Components Supply Network (ECSN), the CEM sector in the UK and Ireland at the start of 2016, in terms of demand, accounted for more than 40 per cent of all electronic components by value.
O’Keeffe suggests that solutions must come hand in hand with such demand and what industry 4.0 can bring to the table may well be the way forward. He believes demand for CEM services will only increase with work coming back to the UK, but CEM firms have to be smarter and more efficient in order to manage more demanding customer requirements.
There remain challenges faced by the CEM sector. O’Keeffe claims the UK’s vote to leave the European Union in June 2016 will provide both opportunities and challenges to all industry sectors, including CEM.
In the immediate wake of the vote, Sterling has come under pressure from the other major traded currencies, falling in value against both the Euro and US Dollar. The devaluation has meant an increase in the imported price of some components and assemblies, but on the flip side, it has made the UK goods significantly cheaper to export.
“This nets to a competitive advantage for UK-based production and has already led to an increase in activity for Trojan from Europe and beyond. It’s too early to yet know exactly what the shape the UK’s exit from the EU will take, but one thing that is known is great businesses producing quality always survive,” O’Keeffe says.
“In times of great change, those companies can actually thrive. We are making sure we minimise any adverse effects from Brexit, so then we are best placed to maximise on the opportunities that will manifest themselves over the coming months and years.”
Indeed, the Financial Times reported at the start of August that ‘…the indicator for manufacturing output remains well above the levels seen during the last recession.’
O’Keeffe too is optimistic. “Now is not really the time to panic, but look at prospects. We are confident CEM will grow over the next few years and we have to remain optimistic, continue to provide a high quality service and prove that we are better than our overseas competitors,” he says.
