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
Inside Mexico's Electronics Manufacturing Industry: Adapting to Industry 4.0 with ASMPT's Ramon Hernandez
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Join the conversation with industry insider Ramon Hernandez from ASMPT and me, Philip Stoten, as we explore the landscape of Mexico's electronics manufacturing services sector. From the ASMPT headquarters in Guadalajara, we dissect the impact of global shifts, electoral influences, and the anticipated market resurgence. Ramon provides an insider's perspective on the region and the strategic moves companies are making during quieter times to focus on operational excellence and digital transformation.
This episode is a must-listen for those keen to understand the fusion of operational excellence and digital transformation in manufacturing. We tackle the critical issues of talent acquisition in a tech-driven world and delve into the collaborations shaping a skilled workforce for the future. Ramon's insights into adapting to industry 4.0 and staying competitive in the face of rising wages are invaluable for industry anyone manufacturing in México.
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 Stoughton. I am here in Guadalajara at the headquarters of ASMPT, and I'm joined by Ramon Hernandez Ramon. Great to see you. Thanks for taking the time to talk to me. Thank you, a pleasure, as usual. Let's just start with talking a little bit about what's going on in the industry here in Mexico. Globally, we're seeing a little bit of tightness in terms of demand, but we're still seeing a shift in terms of reshoring. We're still seeing projects come back to the Americas what's kind of the overall picture at the moment and much as we're seeing that inventory bubble come through our customers a lot of them are talking about improvements towards the back half of the year and kind of growing again in 2025.
Speaker 2Well, as I will say a couple of years ago, we're seeing a lot of companies coming to Mexico, like we were talking before, mainly companies from Asia, from China, from Taiwan. We're seeing a lot of these companies. However, as you mentioned, the market has been a little bit slower of what we were expecting previously, but still there are some sectors that are very positive. This is an election year in Mexico. Sectors that are very positive. This is an election year in Mexico, which that's kind of a slowdown on that sense, but we're expecting probably second half of the year, q4 of this year we will see some improvement in investment in general.
Speaker 1Yeah, and we've got the, as you mentioned, the election here. We've also got an election year in the US, and when we get both of those in the same year, it's always a little bit of turmoil. What we've found with some contract manufacturers is, whilst they're not perhaps investing in capacity in the way they have in the past, they're thinking much more about operational excellence. They're thinking about that digital transformation, and they're taking maybe some of the slightly quieter times as an opportunity to look inwards. Are you finding that with your customers, and are they starting to talk more about digital transformation and how you can enable that?
Speaker 2yes, that I will say. That is like, like we call it right, the fourth revolution, industry 4.0, in which most of the customers and us as well, if we want to keep the competitive advantage to innovate, we need to work on a lot of the digital transformation for our customers in their lines, in the way they are working, processing all the data, how they are automating their lines and utilizing all the information that is coming from the machines, from all the suppliers to make their operation a lot more efficient and automated in the data transformation.
Speaker 1Yeah, and I think in some ways that's to remain competitive and you know we've seen wages rising here in Mexico, so that competitive side is important. But also it's to mitigate talent shortages. And people are thinking how can I operate more machines, how can I grow my business with the same headcount? Is that something that comes up?
Speaker 2Yes, that's for sure. Talent has been, I will say, an issue in some areas, in some industries. Manufacturing is not deception, for sure. So it's very difficult sometimes, you know, to get talented people or very specialized people. When we talk about digital transformation, it comes a lot more to understanding networking, it, how all these different software's are are working right, and that, I would say, adds a complexity of getting the talent, people with the right skills to operate all the different softwares, all the different solutions that are coming from us, from the suppliers, to the industry.
Speaker 1Yeah, and when you look at talent as an overall picture, do you think the universities, do you think government are supporting initiatives to the industry? Yeah, and when you look at talent as an overall picture, do you think the universities, do you think government are supporting initiatives? Are you seeing the right kind of people from the next generation come through?
Speaker 2I think. So there's a mix. You're seeing some states, some universities that are putting some programs together, that are getting actually in touch with us, with the suppliers, to go and give some seminars, or they are putting some classes specifically in manufacturing. So in that sense it's very good. On the other hand, we are in the manufacturing industry electronics industry but, as you know, the industries with the digital transformation that we're talking about, there are a lot more opportunities sometimes and that creates a lot of competition. You know, okay, maybe today I'm working for manufacturing, but tomorrow I'm going to be working I don't know somewhere else, nothing related to the electronic industry.
Speaker 1Yeah, so you need to be able to get people on the line fast, you need to train them quickly and you need to make them as flexible as possible. I wanted to touch on what you were saying about the markets. Which of the end-user markets do you think are really interesting? At the moment, we seem to have hit a bit of a bump in the road with EVs, but the general automotive market seems to still be moving forward. We're seeing more and more technology in cars generally.
Speaker 2Yes, in the last two years previous interviews that we had conversations. Right, we were talking about EVs and how that trend is pushing a lot the industry in Mexico, mainly with automotive. Right now the EVs are a little bit more slower in penetrating the market but we still see good signs with 5G, with IOTs, with digital transformation, automation, with normal automotive industries. We are seeing that is picking up a little bit. So it's kind of compensating what we were seeing before, depending a lot on the EVs investment and a little bit less on the, on the 5G, on the digital transformation, artificial intelligence and, and now it's kind of switching a little bit back to the industrial part of the business.
Speaker 1Yeah, it's interesting how it shifts. What's also interesting and very positive for 2025 and beyond is we're seeing some of those large global EV players scoping where they should be in in mexico, so that's very encouraging for the future. What I'm curious about is what are you seeing yourself in terms of regional variations? Where's kind of the next big area in mexico? Which areas are uh are pushing and winning, winning more business?
Speaker 2uh, I will say in general. In mexico, uh, the state of chihuahua and Ciudad Juarez is huge with Asian investment, asian accounts, especially from Taiwan. We're seeing a lot of that. Nuevo León is, I would say, one of the areas that are growing a lot with investment and especially, you know again, with all the EVs and everything that are coming to those states. For sure, jalisco keeps being one of the stronger. We have most of the biggest EMS companies here in Jalisco, in Guadalajara. So I will say these three states are very strong, has been very strong in the past and I think it will continue to be in the same sense.
Speaker 1Yeah, it's interesting to see the different investment coming into the different areas, but you're also seeing OEMs coming in behind that, so you're seeing a much greater penetration of OEMs in Mexico. Now we're not yet seeing Mexican brands so much and we're not yet seeing Mexican EMS companies coming through. Do you think that's likely to change?
Speaker 2That's challenging. It's challenging. You know we have a lot of companies in Mexico. You know a lot of big EMS OEMs, contract manufacturers, so for 100% Mexican companies to come up and be one of the biggest ones, it's challenging. What we have seen over the years is that a lot of the talent in regards global engineering teams, global advanced manufacturing teams, are being more focused in Mexico. So, same way, like we see a lot of software development R&D centers in Mexico, we are seeing a lot of this talent in engineering, in taking global decisions, strategies, global strategies being localized in engineering, in taking global decisions strategies, global strategies being localized in Mexico, not so much having contract manufacturers, but the talent from Mexico is basically helping globally in this different EMS.
Speaker 1Yeah, I see that and I see over the last 10 years that's really elevated the position of Mexico as a manufacturer. It's no longer seen as an environment that you move to for cost. It's an environment that has that talent and lots of the large global companies use Guadalajara or Mexico as their sandbox to develop new industrial automation applications and to really develop their software muscles. So that's a huge benefit to the region. Yeah, it's great.
Speaker 2I mean benefit to the region. Yeah, it's great. I mean uh for mexico. I think it's great. Is is one of of the advantages and and one of the reasons that a lot of companies and and globally, the world is putting their eyes in mexico. You know, because all all the different uh combination of the geography we have, being closer to us, of course, is a great benefit, but also talent that we have in mexico, um, it's, it's been great in the last last few years and, you know, with everything that is happening around the globe, I think that will continue in the future for mexico yeah, iopolitics, technology, all those things are playing into Mexico's hands.
Speaker 1So thanks so much for your time. Congratulations on your new role. That's really, really fabulous and I look forward to talking again soon, thank you, thank you. Thank you, phil.