Returning to normal is bringing new and familiar obstacles.

As I look back on 2022, I’m thankful for the return to normalcy I’ve seen. That said, this normal has new and continuing challenges for the electronics manufacturing services (EMS) industry. Here are a few that I see and some tips on better preparing for them.

Materials availability may become even more unpredictable. Cellphones, personal computers and data servers have been driving much capacity demand in the semiconductor industry and these segments are now slowing down. That isn’t going to be a silver bullet for material availability issues overall, but it is a warning to start watching trends carefully. Inflation and rising interest rates are going to slow down other segments as well.

Consumers are already choosing between groceries and gas, and winter heating bills will exacerbate that situation. The downside of carrying two years of inventory is that, when the market turns, it will be difficult to liquidate that material if not consumed by planned demand. Next year may start with shortages and end with excess.

OEMs are shopping again. While material availability concerns have glued OEMs to their contract manufacturers regardless of performance through 2020-22, product teams have reached the point where they realize they need to release new products and update their sourcing strategy. The past two years have been a stress test for the EMS industry as whole and not every company is performing as well as necessary to keep customers locked in. And if material availability really improves, there will be a flood of shopping activity. For EMS companies, this is a signal to:

• Review contracts to ensure adequate protections are in place for all inventory liability and termination costs
• Review internal metrics and start focused improvement on anything you can control that needs improvement, particularly if customers are indicating it is an issue
• Review quote resources and cycle time to determine improvements that can be made, particularly if RFQ activity is increasing
• Ensure program management and sales are discussing any new trends in existing customer ordering patterns or prospect interest to make sure adequate new business development/support resources are in place and drops in demand are monitored.

Good workers are still hard to find, but inflation is increasing the incentives to find higher-paying jobs. This is a time when HR marketing in nontraditional resources may be a good idea. One of the reasons people don’t apply for factory work is because they don’t know anyone who works in a factory. The electronics manufacturing environment offers a significant number of benefits not found in service-sector jobs. More flexible full-time work schedules, a full range of benefits, the ability to increase salary by learning new skills, and tuition reimbursement are just a few of the benefits commonly offered by EMS providers. Consider doing a day in the life of a production worker with your local newspaper, and include posts about work-life quality in your blog and link to your Facebook or LinkedIn feeds.

Incentivize employee referrals and consider providing them with handout material to give to friends. In the retail sector, people in some areas are taking two jobs to pay their heating bills, and one upside of this economy is that those in jobs with little advancement potential are rethinking their options. That said, not everyone is cut out for the structure of working on a production floor. Companies with good pre-employment screening processes and first 90-day mentoring programs for production workers have lower attrition rates.

Quiet quitting is worse than an empty slot. Today’s quiet quitting is similar to what we used to call burnout. In the dynamic environment of EMS, someone who is taking up workspace but not putting in any effort to do more than their basic job description is not an asset. The stress in EMS has been high for several years and burnout is a predictable result., In that type of environment, however, quiet quitting can be as contagious as Covid if quiet quitters are allowed to slack off without consequences. Why put in 110% when your coworkers aren’t helping you solve problems?

That said, draconian one-size-fits-all measures are seldom effective in changing behavior. The best option is to discuss the issue with the underperformer and determine if any workplace or work schedule issues could be changed to improve the situation. In conjunction with HR oversight, try to reach an agreement on quantitative performance goals to bring the employee back to expected productivity levels over a defined time period. If that doesn’t happen, then follow HR policies on next steps.

Is your organization incentivizing quiet quitting? Quiet quitting can also be a symptom of an understaffed and overchallenged workplace. Covid drove a culture of doing more with fewer resources in an environment with new challenges every day. That level of effort is achievable when necessary for a short period of time, but when the challenges keep coming and additional staffing isn’t put in place, a toxic work environment can develop. If that symptom is present in your workplace, it may be time to re-examine workplace quality of life. Surveys can be a good start to get a baseline on what employees find satisfying and dissatisfying in the workplace. Review recognition programs. Look at work scheduling and the benefits package. Are advancement paths clearly outlined? Could mentoring be improved? Can some repetitive tasks be better automated to free employees to focus on work that requires more critical thinking skills?

2023 will be a year with a lot of opportunities for companies that are able to stay responsive in the face of the challenges encountered over the past two to three years. That said, those challenges have left marks. Companies that are presently doing damage repair to address workplace quality of life and are assessing the risks of shifts in market dynamics will be better positioned to thrive. •

Susan Mucha  is president of Powell-Mucha Consulting Inc. (powell-muchaconsulting.com), a consulting firm providing strategic planning, training and market positioning support to EMS companies, and author of Find It. Book It. Grow It. A Robust Process for Account Acquisition in Electronics Manufacturing Services; smucha@powell-muchaconsulting.com.

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