Learn about the upcoming EMSNOW and in4ma On Tour that will explore Tunisia's electronics manufacturing sector as I, Philip Stoten, alongside industry gurus Eric Miscoll and Dieter Weiss, examine the dynamics at play in North Africa and the United States. Our conversation at APEX 2024 bridges continents, unveiling Tunisia's cost-competitive edge, a burgeoning talent pool, and the strategic shifts reshaping the American EMS industry.
Listen as we unravel the EMS market's fabric, contrasting the high-volume of global giants with the agile bastions of small US businesses. We dissect the pivotal role of location in nurturing customer intimacy and the indispensable nature of benchmark data in steering industry fortitude. Eric and Dieter not only provide a panoramic vista of industry trends but also chart a course for navigating the complex currents of global expansion.
Filmed on location at APEX24.
Like every episode of EMS@C-Level, this one was sponsored by global inspection leader Koh Young (https://www.kohyoung.com) and Adaptable Automation Specialist Launchpad.build (https://launchpad.build).
You can see video versions of all of the EMS@C-Level pods on our YouTube playlist.
Learn about the upcoming EMSNOW and in4ma On Tour that will explore Tunisia's electronics manufacturing sector as I, Philip Stoten, alongside industry gurus Eric Miscoll and Dieter Weiss, examine the dynamics at play in North Africa and the United States. Our conversation at APEX 2024 bridges continents, unveiling Tunisia's cost-competitive edge, a burgeoning talent pool, and the strategic shifts reshaping the American EMS industry.
Listen as we unravel the EMS market's fabric, contrasting the high-volume of global giants with the agile bastions of small US businesses. We dissect the pivotal role of location in nurturing customer intimacy and the indispensable nature of benchmark data in steering industry fortitude. Eric and Dieter not only provide a panoramic vista of industry trends but also chart a course for navigating the complex currents of global expansion.
Filmed on location at APEX24.
Like every episode of EMS@C-Level, this one was sponsored by global inspection leader Koh Young (https://www.kohyoung.com) and Adaptable Automation Specialist Launchpad.build (https://launchpad.build).
You can see video versions of all of the EMS@C-Level pods on our YouTube playlist.
Hello, I'm Philip Stoden. I'm here at Apex 2024 on the CoYoung booth and I am joined by Eric Miskell and Dieter Weiss, the EMS industry's favorite couple. You're off on tour again this year. It's like Beyonce and Jay-Z. This time you're in Tunisia and other parts of North Africa.
Speaker 2:Well, no, we're just going to hit Tunisia and then we're going to be in France and Germany. So a week in Tunisia I think it's a good story. I think it's a good story within the industry and we're looking forward to being able to tell that story. We're going to visit with, hopefully, up to 10 EMS companies that are down there. I think there's something they estimate like 20 low 20s numbers of EMS companies that are about 22. So we're trying to hit about 10 of them and then we'll come up and we'll visit. We have some select meetings with about another handful of EMS in France and Germany. He can speak more to that EMS in France and.
Speaker 1:Germany. He can speak more to that. Dina, stop by just giving me an overview of the Tunisia market. How many companies there, what kind of revenue, and I'm interested to find out where the ownership of most of those companies lies.
Speaker 3:See, we have a couple of very big companies over there, but we don't only have EMS, we have OEMs over there as well, like, for example, starshipcom is a big OEM, but Vistion is another one who is very big in business over there.
Speaker 3:But then we have a lot of subsidiaries. In the majority it's subsidiaries of French EMS, like, for example, lacroix has a big factory there. Then you have all circuits who have TIS over there. You have Allianz electronics with globe over there, you have Astillesh over there. But you have as well some other countries having their factories over there, like, for example, zollner. At the moment they're building the second factory the first one wasn't the majority for coil winding, and now they're building a second factory which is going to be used for EMS work, a second factory which is going to be used for ems work.
Speaker 3:And then I missed one factory. That was c-core. See, you remember they acquired phoenix meccano last year and when they acquired the german factory they acquired the tunisian factory as well. So they are now over there as well. And then there is AfriVision, and you name it a lot, including PCB companies like, for example, fuba there. So it's, according to a big SMT line manufacturer, it is the highest SMT line density around the area around Tunis. In comparison to Europe there's more machines standing there. So we want to see that, we want to check whether that is really the case.
Speaker 1:I'm excited to see what those factories are like, how high-tech they are, whether it's seen as a low-cost environment or whether it's seen as low-cost high-tech.
Speaker 2:So what we heard from one of the people already is that the cost of labor there is about 50% of Eastern Europe and they have an unemployment rate of about 17%.
Speaker 1:So there's a talent pool, which is one of the biggest challenges in Europe and North America and a lot of other places at the moment.
Speaker 3:And flying over there is just two and a half hours from Frankfurt, and so it's not far away, and especially for French companies it's very easy because the second language in Tunisia is French, so everybody speaks French, which is quite an advantage, and there is a daily ferry going from Tunis to Marseille. So to me that is like, for example, sweden and Finland having established factories in poland and estonia because they have this ferry connection as well, so they don't need air transport to get all the stuff over back at force okay, I spoke to.
Speaker 1:I spoke to one of the one of the companies you mentioned earlier today that has a a facility there and they were telling me that getting product from the factory there back into central Europe is quicker than many parts of Southern East Europe. That is connected by the mainland, so it's pretty practical. From that, I wanted to come back to where we are right now in the US. I've spoken to a lot of EMS CEOs today and previously through the EMS at sea level podcast and my sense is in the middle ground of the industry here. They're doing pretty well. They're seeing a strong reshoring trend. They're seeing plenty of opportunity. Their challenge is again recruiting talent, but they're looking at automation options as a way of mitigating that. I'll start with you, eric, because you've interviewed a lot of these guys as well. What are you seeing as key trends in the US EMS market at the moment?
Speaker 2:Yeah, you know I'm stuck on something you just said, which is this, pardon me, recently, this is the issue of labor. Right, it's everywhere and we hear it and we've talked here recently. If we were paying 50 bucks an hour in the industry, the lobbies would be full, right, there would not be a labor issue. The issue really becomes the profitability of the industry and the margins with the industry, and so it's really for the companies and it has been for a long time how do you add greater value? How do you get a better, more profitable work into into there? Right, some of that grows with growing customers and being long-term and and and developing, taking on more of that. And some of it is, uh, frankly, could be developing, uh, your own sub-assembly or something that you can have some ownership to, that you can sell at a higher margin. So that's big, I think so. Thank you for allowing me that.
Speaker 2:No, I think it's important, I think here, I think there's still it's such a diverse industry, there's still so many, and Dita can speak to the amount of companies that there are here and they're spread all over, and whereas in Europe there's more of a community around the industry, that's really not that way here in North America, right. And then there's the other issues, obviously the low cost region, the on-shoring, re-shoring, what ex-shoring is? Yeah, all that good stuff. I like the ex-shoring right, which is all the other shoreings, which in Mexico, is definitely the beneficiary of that, and I think we see more companies expressing interest in Mexico and I think that story is going to continue to be a good one for us.
Speaker 1:I see that as a big story for the next decade and ongoing. It's interesting what you say about margins. As I go around the world and talk to different EMS companies, it's those companies that have got the stronger margins. And it's those companies that have got the stronger margins, have got those really long relationships with their customers, that have learned from the fragility that was exposed by COVID, that are doing really well and are delivering those 10% EBITDA numbers. And as well as seeing that here, certainly in what the Germans would call the Mittelstätten in the middle ground, I'm seeing it in Scandinavia, in spades. Those companies in Scandinavia seem to be performing better, maintaining longer customer relationships, getting better prices for their products and delivering better margins for their shareholders. That's an interesting European anomaly, isn't it?
Speaker 3:Looking at America, you can as well say that number one in regards to the structure, 80% of the EMS companies over here and that is similar to Europe are companies with less than, let's say, 20 or 30 million US dollars. And then you have the global players and the big players. And the big players normally serve a totally different market. They are working on the high volume low mix, whereas the 80% are working in a different field. And then you have to differentiate as well. What state are they in?
Speaker 3:For example, if we look right over here in California, you have nearly 400 EMS companies and there is heavy competition. If you go to Montana, there's only two companies, small companies, One is Indian-owned, native-owned, and the other one is employee-owned. And those two companies, they serve the few industrial sites that need PCBAs in the area. And then when I talk about the area, I mean probably in the area of 300, 400 kilometers radius. So it's a different business. Yeah, that is. And their customers they love to have someone close by. Yeah, and they are willing to pay a better margin. Yeah, in in California, over here. But if you look at it from a location, you can say the top 10 industrialized countries over here in the United States they have about 70% of all EMS companies and that is, I hope, gets them together California, it's Texas, it's Ohio, Pennsylvania, Illinois.
Speaker 2:It was not Florida. You told me no, it's not Florida.
Speaker 3:Well, at least that's what I learned from the internet. It might be different on the EMS industry because there is, as far as I remember, more than 50 EMS companies in Florida. But from industrial look, if I just look at how industrialized a state is and assuming the industrialization of a state is equal to the demand for PCBAs, then Florida is not part of it. Probably might be number 11.
Speaker 1:Well, there's a reason to extrapolate that data isn't there and to use that and that, similar to the data you presented yesterday at the EMS Summit for Europe. It's hugely valuable for companies here to benchmark their performance and look at how they're moving forward. So I was excited to hear you say that you are going to start to produce some research out of the US market. It's a pretty big undertaking.
Speaker 3:Yeah, well, first of all, at the moment we are finalizing our research on how many companies there are. That's the first thing you always have to do. If you don't know exactly how much there are, it makes no sense. So at the moment we have a list of 1,300 to 1,350. But we, for example, when we started researching California, our list just had 250 and now we are at 400. So you see that there is a gap. In montana we had just zero and now we we get two, which is infinitely more, as, yeah, and in louisiana we had zero, we now have.
Speaker 3:So we are working on it. We hope to be finished by the end of September with the full list and then we take it from there. It's going to be very difficult then to set up an annual survey. See, in Europe everybody knows me. To supply confidential data to someone you don't know doesn't work. So I need the support and the backing of IPC, because everybody knows IPC and I need IPC to back this, and I'm pretty sure IPC backs it, because we are working very close together in Europe as well and it's beneficial number one to the EMS industry, number two to IPC and to everybody.
Speaker 3:So we'll see how we're going to set it up over here. But I think there is still over here too much gut feeling rather than real data. If you want to make a qualified decision, you need benchmark data to compare.
Speaker 1:And I think everybody wants that. You have better data, you to compare, and I think everybody wants that you know you have better data, you make better decisions.
Speaker 2:Yeah, and that you know. Obviously my history was we used to do it right. There used to be a lot of firms who did this for a long time and we had a lot of the competitors who did that. There used to be a handful of people doing those types of things that you could get that benchmarking data from. But the challenge is always and as you know well, in Europe everybody loves the idea of market research, but nobody wants to pay for it, nobody wants to contribute to it, but they all want to know kind of the output right. So it's really monetizing the efforts and that's the important piece. But I think that there's definitely an appetite and I think it would benefit the industry here.
Speaker 1:And, I think, delivering what the customers want. You know, for me, it's not just data, it's taking that data and converting that data to insight and sharing that insight in a way that is directly relevant to the customer, and that's something you do uniquely well with your key accounts in Germany. You take great care of them. You present to them almost at a strategic level to say here's the data. But beyond that data, this is where you should, these are the regions you should double down. This is where you should be thinking about locations. These are markets that you need to be looking long and hard at.
Speaker 3:Yeah, and see I not pushing to to sell reports? Yeah, that's not my, uh, my approach, uh, everybody can have our reports free of charge. If they supply the data, they get a report free of charge. Simple as that. Yeah and uh, but I need to build up the trust. That's the first thing, and then I think we can do a lot of things to make sure that we have a substantial market over here in the United States which is competitive to the Far East, and we need this. We need this in Europe, we need this in the United.
Speaker 1:States, and being well informed is part of it. Luckily, you're hanging out with this guy, and everybody in this industry does know this guy. You've got your basking in his reflected glory a little bit, so that's going to help you out. Tunisia is the next tour. I think you're ending that with a visit to your PCB and EMS forum in Ulm, so that should be an exciting one. Is there another tour planned for later in the year around the electronica window, or is that still confidential?
Speaker 2:We're talking about that.
Speaker 1:Yeah, we're talking about that. I told them.
Speaker 2:I'd like to get into just and we haven't committed to anything. It would be nice to get into some of the top-tier EMS in Europe. Right to get that? Because I think we've done this now for our fourth year of traveling around Europe. We've done mostly the indigenous ones, but the other part of the market there is certainly the multinationals that are there. So including them to some degree, I think, would be insightful, because that's part of the picture obviously.
Speaker 1:Yeah, and actually visiting some of those billion dollar factories um you know like, like flex in chav and some of those huge 17 20 line facilities, is really interesting let me mention that there will be an ipc ems seminar in london on the 13th of june.
Speaker 3:I will be presenting there as well then. Then there will be an IPC EMS seminar replacing the past Estonian seminar, which will now be in Gdansk, in Poland, on the 26th of September, so a little earlier and closer to the center of Europe, because we always had the problem. Number one we have been doing this seminar in Estonia now for five years and people came up to us and said well, you should change the location. Time to make it Not only Estonia, there are other locations as well. Who should benefit? Number one. Number two getting to Estonia back and forth was always a three-day trip and a lot of managers said, hey, we don't have the time.
Speaker 1:The dance is pretty easy and you can go ice swimming.
Speaker 3:And Eric and I we are thinking of taking a couple of locations. We are building up relations with global companies like, for example, Flex. It would be interesting. Ipc did a seminar last year in Romania where they visited Flex as well, and that would be interesting. Then we are in discussion that on the IPC seminar in gdansk there is a flex factory close by. Maybe we get a chance to to.
Speaker 3:Yeah, that's chance yeah and then there is another development which we think we need to look at, and that is teltonika in lithuania, who are building a PCB factory something very unusual for Europe, because we are all just seeing the PCB industry tanking. So they are different. And even so, they are not only EMS, they are an OEM as well and they probably will manufacture the PCBs in the majority for their own purposes. But still, it's very important to see how do they do it, how can they manage this in a cost-sensitive manner? And, in addition, they are talking about semiconductor manufacturing as well, making a fab. So we think we need to have a closer look at that, I think so, yeah, you do absolutely.
Speaker 1:And you mentioned moving, moving events around from from talia and from estonia to other locations. One of the things that everybody loves about the tours you do is you do shine a light in different locations and you shine a light on different companies, um, and I think to everybody that listens to the podcasts, um, and is aware of what you're doing, that's, that's absolutely. And again, that connection up and down the supply chain is great. Thank you so much for stopping by to talk to me. I think they're going to start serving beers on the show floor pretty soon, so we should get on to that. Enjoy the rest of the show and we'll talk again soon. Thank you, thank you, thank you.