Yes, this is one of the hottest areas in electronics. Plus, the manufacturing of medical equipment is highly complex (high mix low volume), so it tends to stay in North America. It's one of the shinning starts of North American manufactruing.
Rob, so this is one of the higher-value types of manufacturing you mentioned (in a different post's thread) that's remained here in the US, and not been offshored. What are the other app areas that have stayed here?
From what I've seen, the big areas in manufacturing that will not get outsourced include medical, defense, aerospace, and any other manufacturing that includes "high mix, low volume." Defense, of course, remains for security reasons.
Heavy items, of course, need to be close to their end consumers. So if white box goods (washers, dryers, fridges, dishwashers) get outsoruced, it tends to be close to home (Mexico for North America, East Europe for Europe).
Cars, too, need to be close to home. We benefit from Japan opening factories here producing cars for U.S. consumption.
Just because production is in North America, that doesn't necessarily mean outsourcing is out. There are tons of manufacturers in North America (particularly in the Midwest) that provide outsourced manufacturing services to fellow North American companies.
Thanks, Rob. That's an interesting answer. High mix low volume makes a lot of sense. What didn't occur to me before was also heavy items--doh! Also, I thought I'd heard that the manufacturing of practically all consumer electronics, including white box goods but not cars, had moved offshore, presumably to Asia.
I understand Mexico is getting a lot of white box manufacturing that is aimed at North Americna consumers. Interestingly, a lot of North American brand owners apparently prefer Mexico partly because Mexico is in their time zone. Apparently executives and managers are tired of late-night phone calls. Sounds funny, but component distributor executives have told me this is actually a factor in the decision on whether or not to go to Asia.
Rob, that's both funny and also understandable. I guess I'd just thought US manufacturers had turned into total workaholics. I've heard many of them talk about starting their day at 7 AM to talk to Europe and going until late at night to talk to Asia.
It is funny, and real. Sources at electronics distributor, Avnet, assure me that brand executives have discovered they can't just turn production over to Asia. They still have to hand-hold the process. These executives are getting tired of 4 a.m. phone calls that go on for hours. Interesting reason for some manufacturing to return to North America.
The whole changeover with tech writing I mentioned followed a somewhat parallel path. Companies thought they could just turn everything over to Asian teams. Then they discovered they needed to hire back a few native English speakers here who also were familiar with editing and production processes, and they did the handholding. The hire-backs were a small percentage of the jobs lost. Something parallel also happened with call centers, because of language and cultural difference issues. A lot of those jobs came back to this hemisphere, although many went to Canada not the US.
Yes, Ann, I've noticed the increase in calls taken by Canada in the past couple years. Perhaps the biggest change in the shift away from outsourcing is not visible - many companies that have decided in recent years to not shift their production to Asia. One thing I keep hearing is that unlike 10 years ago, companies are spending more time analyzing whether a move to Asia really delivers benefits. Apparently, the rush to Asia (without thinking it through) has ended.
Interesting point about the hidden statistic of companies not sending jobs to other countries. In any case, I think your key phrase there is "without thinking it through." I still, find it surprising (silly me) after all this time that companies can spend huge amounts of money making any knee-jerk decisions and doing anything without thinking it through.
Yes, I find it surprising as well. Yet my contacts at component distributors say the rush to Asia was based on the assumption that the savings were clearly there. What didn't get figured in, apparently, was the cost of hand-holding with plant managers, logistics, production difficulties. The logistics at first was not just a matter of shipping the product to markets (Europe and North America) but also shipping components to Asia that were not available in Asia. That part has changed a bit as the major component distributors opened up fully-stocked distribution centers in Asia. I think they also didn't take into account increasing labor costs.
I'm intrigued by some of the medical electronics developments we've seen in the last few years, Rob. We've seen implantable defbrillators that call the emergency room while the patient sleeps. (I've heard stories of paramedics arriving at the door of a patient and waking them up, based on a call from the defibrillator). We've heard of companies that are developing portable MRIs that could be rolled out onto a football field to check players. We've heard of Band-Aid-sized heart monitors. These are some of the things we're planning to discuss with our guest, Steven Dean.
Yes, I too have been hearing about a lot of developments. I've been hearing about a surge in home-based monitoring equipment like the defibrillators you mentioned. I hear there's a wide range of home equipment that connects in one way or another to a medical facility. These consumer-based devices have the added promise of higher volume production than devices for medical facilities.
A few years ago, I interviewed a cardiologist who told me that he received an e-mail from the defibrillator implanted inside one of his patients. He called up the patient, who was sleeping at the time, and told him, "Wake up. Your heart is in arrythmia. Better get to the hospital." To me, that's the ultimate in home medical care.
These types of gadgets will just grow and grow. A combination of factors will likely push the growth: An aging population, an explosion in new devices, and the medical industry's desire to send healthcare home. If health pros can monitor the vitals of patients through devices, their facilities won't be as crowded.
I would think the home devices get monetized as part of an admission-at-home program. The monitoring would be billed as a partial admission. It would be a way for medical facilities to extend their billable services without expanding facilities or hiring staff. My guess is the monetization will eventually be huge.
I agree that the industry will eventually reach agreement on a monetization model. Once that happens, it would seem natural for it to open the doors to a big new area of technology involving the use of sensors and wireless transceivers.
I agree, Chuck. As medical devices gain greater traction, it will likely help North American manufacturing. Medical device manufacturing is one of those few pockets of manufacturing that didn't try the outsourced model to any great degree. Chances are the manufacturing will continue to be centered in North America.
Charles has clearly portrayed the amazing developments in medical domain which are definitely improving the clinical workflow and also imprvoing point of care solutions which in addition to the portabolity and low power solutions are the medical device market drivers.
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