Within today’s global design and manufacturing environment, moving PCB manufacturing offshore is our industry’s de facto product development process. Many believe that PCB prototyping could and should be moved offshore to take advantage of the rising skill and capability levels of the offshore resources in Taiwan, China and Korea.
This has led to a crisis in the U.S. PCB prototyping industry. U.S.-based companies find it difficult to stay in business from not getting enough prototyping projects to remain profitable. In addition, the really talented people with manufacturing expertise are leaving the industry at an astonishingly high rate.
In truth, there are distinct advantages, in terms of both engineering and economic considerations, to maintaining PCB prototyping efforts in the U.S. This blog will highlight those advantages, what they mean in terms of overall product development operations and why it’s mandatory that U.S. prototyping companies remain in business.
The Basis of the Crisis
The crisis in the U.S. PCB prototyping industry is, in many ways, the result of our own successes. The vast majority of product development companies have readily embraced the OEM mantra of "If it costs less money to manufacture PCBs off-shore, then this is the path that we should continue to pursue." However, it must be kept in mind that there is a difference between price and cost. To put it more precisely, the best price is not always the best cost. Often times, people will look at the “bottom line” of manufacturing costs without taking into account the other hidden costs including:
• Losing traceability of any problems that may arise during the manufacturing process
• Incurring higher NRE engineering costs
• Maintaining viable communications between engineering and manufacturing teams
Relative to the first two points, without U.S.-based prototyping, we can lose sight as to where problems begin in the product development equation. As noted in previous blogs, some years back, we experienced a significant engineering and cost crisis when FPGA manufacturers decided to use third-party chip carriers. These carriers were never vetted from a technology standpoint. So, the functionality of the carriers, or lack thereof, remained hidden until we started seeing product malfunctions. These malfunctions were random in nature, making it extremely difficult to trace and diagnose. And, once diagnosed, the process led to the same conclusion for every company that built products with these third-party chip carriers: they had to start from ground zero. The resulting cost impacts were devastating. Product market windows were missed. Some companies went out of business. The companies that remained had to eat huge amounts of NRE costs. At one networking product development company, the process of tracing and diagnosing the problem, starting the product development cycle over, and the high NRE efforts resulted in a $25-million cost hit.
If the prototyping effort had been done in the U.S., it is likely that the problems could have been caught in time. Because prototyping is where front-end engineering happens, you are able to verify the functionality and reliability before moving to full-up production. Also, prototyping alerts you to any problems and their locations so you can resolved them before moving into volume production.
Prototyping is still the best way to “shake the bugs” out of complex designs, maintaining the ongoing communications between the design and manufacturing teams. Regardless of where you do your volume manufacturing, prototyping close to home is a “must have” that ensures that your product works out the gate as designed and developed. It is also the best way we have to guarantee well-functioning future product iterations.
When a product is prototyped in the U.S., your in-house engineering department can work closely with your U.S.-based prototype production facility to ensure that you can readily address and eliminate any problems. Essentially, the engineering department and the prototype facility personnel become part of the same team, ensuring the overall manufacturability operation success.
The Dollars and Sense of U.S.-Based Prototyping
Offshore manufacturing’s lower costs contributed towards the offshoring of prototyping efforts. While offshore manufacturing may seem the best way to cut prices, in reality, it is not the best way to cut costs. For example, the cost of running an engineering development team can be as high as $2-million per week. Getting a prototype built offshore almost never takes less than three weeks. By the time you get the prototype from an offshore manufacturer, you have incurred almost $4-million in extra NRE costs as opposed to building the same prototype at a U.S. fabricator in less than a week.
Unlike software design, hardware design is not all that forgiving. We can’t simply make some code changes and send our customers a patch to correct a design flaw. We have to replace the whole assembly to correct it, or provide an upgraded product. When prototyping efforts are done in the U.S., you can more easily and cost-effectively amend existing designs or wholesale change to new ones..
The Future of U.S.-Based Prototyping
The move to offshore PCB manufacturing led to a serious crisis for U.S. prototyping facilities. They are vanishing at an alarming rate. Further, this phenomenon impacts all the parties involved from board designers to material suppliers, from board fabricators to chip providers and packaging companies. For those prototyping companies that remain, their level of business operations is often too low to maintain the engineering expertise required to properly support their design teams.
It might be easy for product development companies to say that the financial health of U.S. prototyping facilities is not their concern. But, in truth, it is very much their concern. Without U.S. based prototyping capabilities, critical product functionality issues may be missed, manufacturing activities may impact everyone in the PCB market sector, and the entire U.S. prototype sector may see profits rapidly erode to the point that these companies may never recover.
How Can This Problem Be Addressed?
As an industry, we need to make sure that all companies involved in hardware engineering and production work together in a more collaborative, team-like manner. Near the top of the list of priorities is to ensure that U.S. prototype suppliers remain viable contributors to the hardware development process. The other members of the team need to come together to make sure this viability is maintained for both current and future product development efforts. This can be accomplished by providing enough volume at the prototype shops to make sure their skills are kept at a top level. This can also be achieved by having a small portion of the production volume remain with the prototype shops and selecting prototype suppliers based on their value to the engineering effort instead of by the lowest price.
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