EMS@C-LEVEL
As Forbes, Entrepreneur, Fast Company and SCOOP writer, Philip Stoten, continues to talk to EMS (Electronic Manufacturing Services) executives he learns more about their individual and collective experiences and their expectations for their own businesses and for the entire electronic manufacturing industry.
EMS@C-LEVEL
Charging Ahead: All Circuits Continue Automotive EMS Excellence Through Innovation and Automation
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Uncover the journey of All Circuits with their visionary leader Bruno Racault, as we navigate the ever-changing landscape of automotive electronics manufacturing. From a bold strategic pivot towards electric vehicles to the integration of cutting-edge automation, Bruno shares the roadmap that drove All Circuits to become a tier-one powerhouse. Learn how they harnessed the regionalization trend and innovation to automate and improve their production processes, while building direct partnerships with car makers.
Bruno gives us a glimpse into the meticulous planning and execution behind All Circuits' growth, from the new addition to MSL Circuits in France, to expansion into new EV product sectors like battery management.
Bruno also touches on the consistently challenging component supply chain, the role of distributors, reducing inventory and much more. Finally we wrap up with an optimistic look at 2024 expectations in both the automative and industrial markets.
EMS@C-Level is hosted by global inspection leaders Koh Young (https://www.kohyoung.com) and Global Electronics Association (https://www.electronics.org)
You can see video versions of all of the EMS@C-Level pods on our YouTube playlist.
Hello, I'm Philip Stouto and welcome to EMS at Sea Level Live. I am with Bruno from All Circuits. Bruno, pleasure to visit, pleasure to look around this super impressive facility that's grown so much in the years that I've been visiting. Let's start a little bit with that growth over the last two years. You're on the back of two years of close to 20% growth. We've seen real development in terms of your market, but also in terms of the facility here. Let's start with the market. What's changed in the market that's allowed you to grow like that in the last two years, particularly in the automotive sector?
Speaker 2So, starting with automotive, we bet on two things actually we bet on the electrical vehicle, on the EV. So there is four or five new elements in the car that were not manufacturing that we have been able to grow up, to catch up to win, one being the inverter, the board driving the motor, another one being the battery management. So at the same time, it did allow us to enter a relationship with the car manufacturer. The phenomena is that the car manufacturers were used to endow their thermal engine on, subcontracting the rest to people such as Bosch, conti and so on. Now that they do not have any more the engine, the thermal engine, they are trying to refocus and to gain at least the knowledge of the board itself driving all their engines, and they need people like us to manufacture those boards. So it's really a mutual agreement and mutual learning. They are learning how to make these boards and we are learning how to deal with those car manufacturers.
Speaker 2So we have become so-called a tier one, and being a tier one for us was really a new experience. It's different than being a normal EMS. And the second point I was on that may be your next question is that there is also a tendency now we did talk since a long time about reshoring, about producing where the market is, but it did really happen. So we have a lot of things which were made in China, in Asia, which are coming back where those products are sold. So we're also surfing on those phenomena.
Speaker 1Yeah, and it's really interesting when you see all those phenomena combined. It gives you this growth opportunity. And it's really interesting in terms of the technology because as we were walking around we were seeing lots of large through-hole components that we haven't perhaps seen in the past, and that's because we're getting involved in the power management and the drivetrain of the vehicle rather than just the infotainment and that kind of side of it. That's a shift in mindset for you and for the car manufacturers.
Speaker 2Absolutely. And there is another phenomena. I mean we have been lucky enough to have seen our process modified, evolving, where I used to see a lot of people checking the board, touching the board and so on. Now this is disappearing. We need Two people running online, okay, and you have the complete product after this line. So you have a new AOI, spi, automatic machines going faster and faster. So, bottom line, the cost of manufacturing those boards at least the direct labor, is less than five person. So when you are less than five person, you are really able to compete with low cost country. So it's also a new phenomenon for us. Well, it's going faster and faster and it did allow us, western country, to be competitive or to offer a full service. And in our job, if you are not competitive, you do not have any business, you are not attractive. So we really compete on this profitability, on this efficiency, which is making attractive to at least the European, the European, including the Mexican one but where the product is sold.
Speaker 1Yeah, that regionalization has really become an important part of it and, as you say, you've taken a lot of labor cost out there. I think this facility in particular would be the envy of a lot of companies that are looking at automation and thinking in 2024, how do we increase our operational excellence, how do we increase our performance and efficiency and how do you increase quality at the same time? You've done that and, interestingly, you've built quite a substantial extension here. You've been able to move some lines around. Tell me a little bit about how that's come about and how that's impacted the performance of the facility.
Speaker 2Well, we haven't finished. Again, we have been working on direct labor, so direct labor is less than five percent in almost all our products that we are making now. The next step was to work on our systems, not only to remove the paper on the line, but also to have efficiency on the indirect labor training, instruction, quality and so on. We are trying to motorize. What we haven't done so far, that we need to finish, is the logistic aspect. Logistics in our system is now 10 to 15 percent of our manpower, which is a lot. So we really need to improve our efficiency on logistics, maybe with AGV, maybe with automatic system, new labeling system and so on. So that's our next challenge here.
Speaker 1Yeah, that's key to have that automation integrated through the whole line. And when you look at logistics and you know it's that big topic of inventory that comes up every time you started to push down the, the inventory load you have. But it's still quite substantial, isn't it? There's still quite a lot of inventory sitting in EMS companies throughout throughout the world at the moment.
Speaker 2Yeah, it's still too much, Definitely worth targeting in the automotive to have 20 days of inventory, in the industrial maybe 45, so a little bit of business. Today we are more in the 40 days for automotive and maybe 90 days in the industrial. So it's still too much. I will say twice to many. But at the same time we have been able to reduce by 10% our global inventory last year. We are still struggling.
Speaker 2We have one advantage that we are buying and purchasing a lot of our components from the manufacturer and there are a lot more reactives than the distribution Distributions, so to speak. Those days are still pushing a lot to send us all their extra inventories. They have rather the but, which I don't understand, because it's really their job to hold inventory for us. We had the battle with the manufacturer last year and over last year I think it's over. Now they are really recovering. They are not happy of the slowdown of the activity, but they manage it. The one who are not managing it is the distribution and they prefer to push the component back to their customers and back to their supplier, which for me it's a big mistake.
Speaker 1Yeah, and it doesn't build a relationship going forward. And when we look at the component crisis and the challenges, one of the things that I saw EMS companies like yourself do really well was communicate well with your customers, share the issues with your customers, discuss and develop solutions. It doesn't feel like that's been done on the other side of the supply chain, which makes things more difficult than they should be.
Speaker 2Absolutely. First we have automatic systems. We are working on 3DI from our customer. I'm not saying the idea I've seen all for the car manufacturer is fantastic, but at least we are avoiding all the manual mistakes, the human mistakes, and then we are signing also all our needs 3DI to our supplier. We are doing that as much as we can. This is explained due to our automotive background.
Speaker 2There's a lot more automatization in the automotive world. Now, having said that, this is for the administrative workload. We're also trying to communicate with our supplier as much as we can, to be honest and transparent. If we made a mistake, we made a mistake, I'll try to fix it. They also have to bear some uncertainty of our economy.
Speaker 2There is one important point, which is the volatility of the demand. With the electronic car, there is a lot of newcomer coming in Chinese, but only Tesla and so on. The job size is a lot smaller and you have a lot of more newcomer. We will win. We have no idea. There is a fluctuity in all of the demand. This is new for us in the automotive. We are not used to have it In the automotive.
Speaker 2In the old age it was plus or minus 20%. Now it's plus or minus 100%. You have no idea who will win. That's why we are putting a lot of pressure to have shorter cycle time. That's why the idea of having the manufacturer close to us, at least electronically speaking, is a better deal than having distribution in between, distribution of the distribution. We're really trying to shorten the cycle time.
Speaker 2Last but not least, we have also the quality problem. It does happen very rarely, but when you have a quality problem coming from a car manufacturer, you're really doing to be quick to react. You have about 24 hours to decide if you can use those parts or not. You have another 24 hours to replace the parts. Sometimes it's really a challenge. We have to be ready and very agile and reactive. I think agile is the term Agile in the communication, agile in the activity, agile in your equipment. That's why our strategy to have a rather big site when I say big site it's in the at least 10 SMT line to be able to be reactive, to be reactive enough to really catch up when you have a problem.
Speaker 1Yeah, I think that agility is really important. That agility, if you're going to have that agility through the supply chain, it requires Really rapid collaboration and, as you say, it's it's closeness, but it's digital closeness, so you can, you can see and you can respond. But it also needs a mindset where everybody is. Everybody understands what the demands of each other and you know that their partner to to to create successful outcomes. You talk about the volatility of the market changing being in the automotive industry. One of the benefits you've had over the last two years is you've been able to see this demand coming from a reasonable distance and you've been able to scale to it. When you look through twenty four and twenty five, what do you see as the the growth potential? A lot of companies, perhaps in the industrial sector, see twenty four is a bit of a flat spot and twenty five is a growth here. How does it look from from all circuits point of view?
Speaker 2So yeah, we definitely have two different business segment. In the industry we have a drop. The industry guy realized that they have a one year, maybe two years of inventory so they're cutting the order, part of the order, which to reset as a drop of order. For us this will certainly Length for one year. So we definitely see that twenty twenty four will be an average year. I will say I'll do to restart it again in twenty twenty five.
Speaker 2For the automotive is different because you have a lot of new program, mainly due to the new product. So so we're really rush of things about. We don't know who will win. So our strategy is to try to be present in as much as program program as we can, for example on the BMS for one, or were present for all the BMS for the Renault car. So we don't know which car will win, but at least you have an average number which will come. And then To give you another number, last year, the year before last, we're doing one person of the component for a train car. This year we did 13% on our target this year in twenty twenty four will be to be twenty twenty five person.
Speaker 1Our total turnover.
Speaker 2So the impact is pretty big. We are not intending to be more than twenty five because we have no idea if really the electric car will fly or not, but it's definitely a part of our growth. So we're seeing a growth in twenty twenty four still in the In the car business, automotive business, yeah, and ongoing program development.
Speaker 1Thanks for your time, bruno, pleasure chat, absolute pleasure to tour the facility again and you know changes every time I come here and more and more impressive automation. So thank you for that and we'll talk again soon, thank you, thank you.