The electronics manufacturing industry is cyclical. It’s a tough industry, hammered by forces including cost pressures, global supply challenges, and economic tides. In the national capital region, we have seen many electronics manufacturing service (EMS) companies falter and fail.
We’re often asked to what we at OCM Manufacturing attribute our success over more than two decades—how have we remained able to consistently service clients through the many ups and downs that the manufacturing industry presents? With our 25th anniversary on the horizon this fall, we’ve been reflecting on what success and stability in this industry takes.
For OCM, it boils down to these four things:
We’ve always taken a positive view of our business, yet we’re also realistic about the risks associated with asset-intensive manufacturing. Our business decisions are generally aimed at reducing risk and exposure; at the same time, we strive to be innovative.
Really, these two things go hand-in-hand. Because we are cautious about risk, we are motivated to find new ways to do things. For example, one of our corporate goals is to become a paperless organization. At times we felt like pioneers in doing so, but we believe that the benefits outweigh the hassles. Today, as a result of going paperless, we have reduced administrative staff, storage costs, and improved our productivity.
Another example is the decision we made to become lead-free-ready well in advance of new international trade rules coming into effect. Optimistically, we saw the opportunity to provide value to our clients and to educate them about the impact of upcoming changes. Cautiously, we foresaw the risk—both for our business and for our clients businesses—of being unprepared to meet new guidelines regarding products that could be exported abroad.
As a company, we are economical in our business decisions and sparing in our expenditures. Our recent expansion, during which we doubled our capacity and space, was undertaken carefully to reduce financial exposure. We ensured that volumes would support the expansion, worked hard to create a state-of-the-art facility on a budget, and hired staff dedicated to keeping our expanded production lines busy.
And, no part of the business is overlooked in terms of watching costs. We watch all costs and track actual direct costs (materials and labour). This is in contrast to the approach of using “standard” (estimated” costs. We meet weekly to review these costs on an operation-by-operation and order-by-order basis. We review and work to minimize scrap costs and indirect labour costs. And, we track operating expenses work to minimize them.
Being frugal doesn’t mean being “cheap”, especially when it comes to ensuring that our staff are taken care of. A stable workforce is one of the most important elements in being able to provide high-quality and consistent service to our customers. Taking care of our workforce extends beyond mere compensation—it also manifests in a commitment to keep as many of them employed even during slow periods. To make this possible, we have cross-trained our staff and foster a cooperative culture. For our core group of full-time staff, most of whom have been with us since our first years, there is always work to be done and value to add.
Another aspect of maintaining a stable workforce is treating staff with respect and enabling them to participate meaningfully in the company’s success and operations. For example, we often support staff-led initiatives, such as an enhanced recycling program started in 2012, and charitable causes that are meaningful to employees.
We have always used an “open-book” approach, both with clients and with our staff. For clients, this means that they have visibility into pricing and can engage with us in productive conversations about improving product designs to reduce manufacturing costs. That kind of trust is instrumental in maintaining a stable baseline of long-term customers.
For our staff, “open-book” means that they are fully aware of the company’s financial performance and participate in both the good times and the thin times. This enables our company to operate as a true team, creating a vested interest in customer success because it’s clear how customer success impacts the company’s—and each individual’s—success.
A Stable Manufacturing Partner
A sudden need to change EMS providers can be incredibly disruptive to a business or product line. This most often occurs in two scenarios:
- The provider goes out of business or substantially downsizes
- During slow times, the provider takes on lower volume work than its business supports, and then must offload low-volume orders in peak cycles
For nearly 25 years, OCM Manufacturing has provided high-quality, stable, and open-book contract electronics manufacturing services to customers with low- to mid-volume product lines. It’s clear to our team that hitting home runs doesn’t guarantee long term success; rather, it is a combination of many initiatives—some big, some small—implemented consistently over time, which enable an enterprise to survive and thrive in the business of North American manufacturing and innovation.
We take pride in being part of the success of “made in Canada” products and innovation!