As usual, the annual ECIA Executive Conference was a mix of information and inspiration. Attendees of the conference this year, held Oct. 25-27, found out what happened to the FIRST competition winner of 2013; how to take a proper selfie, and the difference between French fries and crisps.
On a more serious note, presenters broke down what all of those big numbers mean in regard to the IoT and what U.S. businesses really need to worry about regarding the economy.
Here are a few select sound bites from the ECIA Conference:
Millennials are a lot nice than you think.
Executive Recruiter Carla Mahrt, founder and president of JJM Search, hosted a panel of millennials that currently work in the electronics industry. In an interactive visual presentation, the audience (mostly Baby Boomers) was able to share the terms they most associated with millennials. “Entitled” was the winner. When the millennials turned the table on the audience, their most popular term was “experienced.”
Two of the four millennials did not originally intend to work in the electronics industry, but all four identified “opportunity” as one of the reasons they’ve stayed.
China is not our biggest problem.
Although China’s lagging economy is driving much of the sentiment on Wall Street and Q4 business forecasts, China accounts for only 8 percent of U.S. exports, according to Scott Brown, senior vice president, chief economist, Raymond James. By the numbers, China’s slowdown should not impact the U.S. that much:
China’s Impact on U.S. and others:
– Direct effect on U.S. economy is small
- China accounts for less than 8% of U.S. exports (less than 1% of GDP)
- Consumers and businesses benefit from lower prices of oil and other commodities
– Impact on exporters of raw materials should be greater
- Australia, Brazil, Canada, South Korea all export a lot to China
- We’re looking at a broader global slowdown
- Official economic data from China are unreliable
- Recovery may come sooner, but hard to say…
It’s Washington D.C., Brown said, that is poised to have the biggest impact on U.S. businesses. Medicare and increasing costs of healthcare remain a major concern, although a negative impact from the Affordable Care Act on U.S. businesses has largely been hype. Depending on which party is in power in 2016, changes to entitlements; taxes; the debt ceiling; the Fed and interest rates all bear watching. Manufacturing in the U.S., he added, has not rebounded from the recession. “I wouldn’t call it a renaissance,” he said.
IoT: Money is in services, not hardware.
Rob Shaddock, EVP & chief technology officer for TE Connectivity, reiterated most of the things we know about the IoT: it has explosive potential for growth but still has security concerns. Although hardware stands to play a leading role in the ramp-up of the IoT, Shaddock, citing research from McKinsey & Co., reported the service sector stands to benefit the most. Electronics companies have expertise in both of those segments.
In a related article, EPS cites the McKinsey report: “[Semiconductor vendors’] traditional focus on silicon, which allowed them to profit in many industries, may not be optimal for the Internet of Things because chips represent only a small portion of the value chain,” McKinsey added. “Instead, semiconductor companies will be required to provide comprehensive solutions—for instance, those that involve security, software, or systems integration services in addition to hardware. As with any major change, this move entails some risk. But it could help semiconductor companies transform from component suppliers to solution providers, allowing them to capture maximum benefits from the Internet of Things.”
The kid is alright.
Tim Balz, a high school student who presented at the 2013 executive conference, returned to demonstrate the benefits of a STEM education. Balz, now a junior at Rose-Hulman Institute of Technology, was encouraged by a high school teacher to get involved in the FIRST robotics contest. Two years ago Balz’s resume was being battled over by ECIA presenters from Cisco and Intel. Balz ultimately took an internship with Intel. His biggest achievement is Freedom Chairs, which customizes refurbished wheelchairs for children. Balz has used the skills he gained from FIRST to work at Intel, a design firm where he is a named inventor on a patent, and do robot programming.
In a related session, Glenn Bassett, co-founder & managing director, NuVentures Limited, explained why component makers and distributors should pay attention to FIRST and initiatives such as the Maker Movement:
- Tens of millions of makers
- Broad swath of commodities from drones and robots to jewelry and furniture and lighting
- Maker Faires around the world with hundreds of thousands of attendees
- Online marketplaces to share your goods with the world
- Newly accessible manufacturing capabilities
- Multibillion dollar economic impact on the US economy
- Hundreds of millions of dollars crowd funded for thousands of projects
- Tens of millions of robots being created
In other words, these are tomorrow’s customers.
EMS providers are investing in start-ups, but must see ROI.
Electronics manufacturing services providers are investing significantly in start-up companies and in ideas. To offset low manufacturing-services margins, EMS are moving up the value chain and are positioning themselves to invest in and then manufacture the products of the future. Jennifer McCabe, director, business development and alliances; innovation and new ventures for Flex, explained engaging companies early in the product development cycle helps them mitigate technology adoption risks and reduces time to market. Investment is another tool companies can use to build alliances with early-stage, nimble new teams and nurture relationships as the startup grows. An ideal portfolio includes:
10 companies Y1
- Robotics (industrial or consumer)
- Enterprise 1
- Enterprise 2
- Vehicle (smart car)
- CE 1
- CE 2
- CE 3
- CE 4
- 1 BIG PICTURE
McCabe also shared some techniques used by EMS companies to keep costs in line and increase a start-up’s ROI.
In a BOM, for example, the startup and its EMS partner will receive a quote (BOM 1) and bring the suppliers in for a round of negotiating. The average cost of the BOM 2 is reduced, on average, by 37 percent, McCabe said.
One of the overall themes of the conference is the IoT provides an exceptional opportunity for the industry and businesses are vying to position themselves as part of the IoT ecosystem. Component makers are providing the building blocks for IoT products and supporting maker initiatives such as FIRST. Small manufacturing and prototype laboratories will help an inventor design a product and then manufacture a prototype. Funding for these products is now coming from crowdsourcing, but also from more traditional models (such as direct investment from a corporation. Electronics distributors can play in both the hardware and services sector of the IoT. The biggest hurdles to be overcome? Data security and the economy, which remains uncertain for the foreseeable future.