Leveraging local and state stakeholders for future growth.

One positive of the last election is that the Trump administration is pro-US manufacturing and is considering tax incentives to reward companies that manufacture in the US and tariffs to punish countries restricting US-made goods. That creates both opportunities and challenges for the electronics manufacturing services (EMS) industry.

Tariff policy is definitely a looming challenge. The earlier China tariffs had the net effect of driving production to Mexico since components imported into Mexico were typically not subject to tariffs and could be reimported without duties once transformed in Mexican-made products. That may change, as Chinese companies have invested heavily in Mexican manufacturing to avoid tariffs. Tariffs may also impact the attractiveness of facilities in countries subject to them.

Another challenge is industry identity. Most politicians don’t have a clue what an EMS company is. During Covid, GM and Kodak were the heroes of ventilator manufacturing ramp-ups in the press when EMS providers would have been the better primary source, given their expertise in rapid new product introduction. For many politicians, outsourcing is synonymous with offshoring. The concept of a domestic industry of regional contract manufacturers or multinationals headquartered within the US is news to them. Given prior less-than-favorable tariff policies on components that couldn’t easily be sourced elsewhere and potential new tax policies that could reward OEMs for manufacturing in their US facilities – but not for outsourcing in the US – it is important EMS companies get to know their local, state and federal representatives.

In my 40+ years in the EMS industry, I’ve seen political outreach be a mixed bag within the industry. Companies with defense contracts conduct political outreach, but many regional EMS providers and some multinationals have no interaction with most elected officials. Various industry trade groups coordinate lobbying days in which member company leaders meet their elected representatives in Washington, DC to increase visibility. That is a good opportunity to show strength in numbers.

One-on-one outreach with local community colleges and state, local and federal officials is also important, however. A push toward increasing domestic manufacturing will increase the availability of workforce training funds, favorable regulations and tax incentives. Elected representatives and education partners must understand your company’s economic impact on the region in terms of jobs, local supply chain purchases and visibility to companies outside the region. Highlight the transformative nature of manufacturing jobs that involve on-the-job training and pay for additional skills programs. It is a far better career path than those found in entry levels in the service sector.

At my first EMS employer, the CEO called the governor at least quarterly, highlighting how many jobs he was creating, what his workforce training needs were to create more jobs, and what infrastructure was necessary to ship product. That got him state-funded training trailers in his parking lots where state-funded trainers taught solder skills to entry-level employees. The best of the bunch got hired, and the rest went to other local employers that needed similar skills. It also got him a highway spur because, at the time, the city was not connected to the interstate by a fast highway, as well as an intermodal center to make it easier to transfer shipping containers from trains to trucks. He also worked with local educational resources to ensure necessary technical and management courses were available at night at the community college and university level. In short, he built a business case to support better funding for what his company needed to grow, which benefited other businesses in the area and employees while giving that city a sustainable economy that continues to attract diverse manufacturing industries.

It’s been a long time since US manufacturing had that kind of political influence. So, if you haven’t already calculated your company’s economic impact on your region and built a wish list of the support needed to grow, it’s time. Work with other local manufacturers to identify ways requested resources benefit multiple companies. Take advantage of advocacy resources like IPC, PCBAA or regional economic development entities. And remember that any political advocacy effort needs to answer one main question, “How does helping you help that politician get re-elected?” The benefits you stress need to translate to better employment levels, better employee compensation, improved opportunities for local suppliers and overall economic growth. It is also important to emphasize reshoring success stories. The EMS industry is better than most OEMs at transitioning manufacturing because it is core to the business model. That skill set should be emphasized.

Other challenges include new economic policies with unintended consequences and a rapid growth in manufacturing jobs translating to labor shortages. Consider what benefits may glue employees to you and whether you need to enhance your onboarding program.

The next two years will bring many opportunities for EMS companies that think strategically. Develop a vision for how to capitalize on them and a plan for dealing with your most likely challenges.

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. She can be reached at smucha@powell-muchaconsulting.com.

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