By Shawn DuBravac, IPC chief economist and Matt Kelly, IPC chief technologist According to IPC’s recent Coronavirus impact study (March update), roughly 22 percent of electronics manufacturers and suppliers reported that the coronavirus outbreak will result in fewer new product introductions (NPIs) in 2020. In a normal year, original equipment manufacturers (OEMs) would be readying production of new products to be released in the coming year. This is especially true for consumer electronics manufacturers, which tend to follow six- to 12-month cycles and aim to release NPIs in the fall months just ahead of the holiday shopping season. Electronics manufacturers in the OEM supply chain would generally prepare for NPIs by traveling several times to visit input suppliers in the lead-up to full-scale production. Each of these trips would last up to a few weeks and would involve all aspects the NPI process, including design tweaks, incoming component supply, assembly and test process definition, product qualification, reliability assurance, manufacturing yield assessment, and final product fulfillment models – all in preparation to support ramp to volume production requirements. Corporate travel bans have cancelled many of these trips and left engineering teams rushing to develop alternative approaches. Some are turning to U.S. firms to help. Because build schedules are already extremely tight, delays of any kind could impact planned product release dates. In short, the coronavirus outbreak is causing delays that could affect planned NPIs. Some companies are already reporting such impacts. Arlo Technologies, a maker of wireless security cameras, noted in its fourth-quarter 2019 financial results conference call that “coronavirus is impacting our business on the supply side as our vendors do not have sufficient quantities of the required components to fulfill our demand … Additionally, in the second quarter, we have new product introductions planned that we believe will be impacted by the component shortages, as well as delayed delivery of some of the manufacturing equipment from China.” Logitech noted in a statement that “due to the availability of labor and varying timing of component supply recovery, there is potential for delays to new product introductions.” Because of the long lead times involved, timing constraints and travel bans that hinder collaboration between designers, engineers, and manufacturing facilitates could also impact NPIs in 2021, even if other impacts from the coronavirus outbreak are reversed quickly. To read full report, click here.

by Shawn DuBravac, IPC chief economist Over the last year, electronics manufacturers have been adjusting their supply chains, driven by a variety of factors but especially trade tensions between the United States and China and the growing expectation that higher tariffs between the U.S. and its partners may be “the new normal.” More recently, the coronavirus epidemic that originated in China and now is sweeping the world is driving further decoupling between China and the United States. A recent IPC survey of its members revealed an overwhelming majority (84 percent) were worried about the epidemic’s impact on their business operations, with some looking to develop alternative sources of inputs from other countries. The primary beneficiaries to date include countries with competent workforces, modern infrastructure, and congenial business environments, including Mexico, Vietnam, Indonesia and Taiwan, where we do see some elements of the electronics supply chain expanding. If your company is contemplating or in the process of sourcing from new countries instead of China, I would be interested in hearing from you as part of IPC’s ongoing research and monitoring efforts. Your information will be held in confidence, although we are always looking for members who are willing to share their insights and experiences with reporters and policymakers.

Electronics manufacturers anticipate at least a five-week product shipment delay from suppliers due to the coronavirus epidemic, according to a survey conducted by IPC.  Shipping delays from China and other countries where the virus has spread are already having negative impacts on manufacturers. Roughly 65 percent of manufacturers report their suppliers expect, on average, a three-week delay. However, electronics manufacturers expect delays to be longer than what their suppliers are currently quoting. On average, executives expect shipment delays to be at least five weeks. “The delays will likely have ripple effects for the rest of the year,” said John Mitchell, IPC’s president and CEO. "The longer China is affected by the epidemic, and the more it spreads to other parts of the world, the supply chain will experience more and varied strains and disruptions.” An overwhelming majority (84 percent) of electronics manufacturers and suppliers are worried about the epidemic’s impact on their business operations. Delays in receiving supplier inputs can lead to factory downtime, higher average costs, transportation bottlenecks, pressure for alternative sourcing, delayed sales, and delayed prototyping that slows the introduction of new products. “In most cases, it’s not easy for manufacturers to switch suppliers, if that’s what turns out to be necessary,” added Mitchell. “Securing alternate sources requires an investment of significant time and money that must be weighed against the value gained.” IPC surveyed industry professionals at electronics manufacturing companies, including original equipment manufacturers (OEMs), electronics manufacturing services (EMS) companies, and printed circuit board (PCB) fabricators. Almost half of the survey respondents represent the contract electronics manufacturing services (EMS) industry. This segment performs an estimated 25 percent of North American electronics manufacturing for OEMs. The survey was conducted between February 11–16, 2020. IPC will continue to perform regular surveys and research on this issue.

By Kelly Scanlon, director of environment, health and safety policy and research Manufacturers and importers of “high-priority substances” and importers of articles containing these substances may be obligated to pay fees this year to defray the U.S. EPA's costs for administration of the Toxic Substances Control Act (TSCA). Many companies may be unaware of these potential fee obligations, especially importers of articles that contain HP substances by design or as byproducts or impurities. The regulation imposing these fees – the “Fees Rule” – went into effect in October 2018, but the obligation to pay the fees kicked in this year, as the EPA launched new risk evaluations for 20 substances. Companies should be diligent when determining the potential impacts of the Fees Rule. For starters, the EPA has opened a comment period during which companies have the opportunity to review preliminary lists of manufacturers and importers of HP substances. The preliminary lists were developed using the most up-to-date information available, including information submitted to the EPA under the Chemical Data Reporting Rule and the Toxics Release Inventory. However, EPA has indicated that the preliminary list may not be comprehensive, and companies involved in manufacturing or importing HP substances are required to self-identify to the EPA or be subject to daily fines. Thus, it is critical for companies to undertake the necessary due diligence prior to the end of the comment period, which is May 27, 2020. If a company believes it has been listed wrongly, it should consider filing a "certification of no manufacture" or a "certification of cessation" to be removed from fee obligations. Conversely, companies that do handle these substances must self-identify or face the risk of significant penalties. The potential size of the fees is hard to estimate. The EPA has determined that the HP risk evaluations will cost about $1.35 million per substance, and the costs will be distributed among all companies on the final list for each substance. The fees will vary from one substance to another depending on the number of impacted entities and a few other variables. For example, small businesses are expected to receive an 80 percent discount on fee obligations. Also, the Fees Rule allows entities to form consortia to divvy up the fees among themselves, a provision that is intended to ease compliance burdens for both the entities and the EPA. If a company does not join a consortium, then the EPA will dictate the fee amount it owes. What do you need to do by May 27? 1. Determine whether you are a manufacturer or importer of any of the HP substances or if you are an importer of articles containing HP substances. 2. Review the preliminary lists of manufacturers and importers of HP substances as compiled by the EPA. Your company belongs on the list if it manufacturers or imports any of the substances or if it imports articles containing HP substances. At present, there are no exclusions or exemptions for articles; there is no de minimis level for reporting; there are no volume or quantity thresholds for reporting; and there are no exclusions for byproducts and impurities. Here is some guidance should you need to know how the EPA defines “manufacturer,” “importer,” or “article.” 3. If your company is listed incorrectly, then a correction notice must be submitted during the open comment period. You can submit a comment to the open docket, or IPC can do this for you. 4. If you believe that your company needs to be listed, then you are required to self-identify through the Chemical Data Exchange (CDX) system. You will need to submit at least your company’s information and a technical point of contact. Here are some additional dates to be mindful of. It is expected that companies will have 60 days after the release of the final scoping documents to form consortia.  Impacted companies will need to determine whether they want to join any consortia and to join if they wish to do so. Approximately 120 days after the final scoping documents are released, the TSCA fees will be due to EPA. What else can you do? Review the draft scoping documents for the risk evaluations. Likely beginning in April 2020, the EPA will release the draft scoping documents for each of the 20 HP substances. IPC will be tracking these documents and providing updates to its members. The scoping document is the first step in the risk evaluation process, and providing evidence-based information to the EPA about your understanding of a substance will enable the EPA to identify relevant conditions of use in the risk evaluation. Also, there should be a good correlation between uses of the HP substances that are subject to risk evaluations and those who are obligated to pay TSCA fees to support the risk evaluation. Keep in touch with IPC. Let us know your questions, concerns, and suggestions about the TSCA fee obligations. To date, IPC has engaged with the EPA senior staff responsible for implementation of the Fees Rule to voice the electronics industry’s concerns regarding self-identification for those who import articles containing HP substances. You may also sign up to receive the weekly IPC Global Advocacy Report to stay informed on this subject and all the latest electronics-relevant environmental policy happenings. Any questions? Just drop me a line.

By Kelly Scanlon, director, environment, health and safety policy and research, IPC Kudos to IPC-member company TTM Technologies, Inc. for reducing air and water emissions while continuously improving their printed circuit board production processes. On February 11, 2020, the Sterling, Va. facility was recognized by the U.S. Environmental Protection Agency (EPA) Regional Administrator and the Region 3 Director for Land, Chemicals, and Redevelopment Division for these improvements as demonstrated by the Toxics Release Inventory data from 2018. TTM’s Sterling facility has optimized production processes resulting in reduced air emissions of ammonia and reduced quantities of nitrate compounds discharged to the local water treatment facility. In addition, TTM educates it customers and staff about chemical and material selections resulting in reduced off-site transfers of lead and copper sent for recycling. The company is passionate about what it makes as well as how sustainably it makes it. Printed circuit board fabrication in the United States is essential to defense systems and other critical applications. Producing these essential products reliably and without increased cost to the environment is a challenge that TTM Technologies has taken head on. “TTM’s lean management system enables them to demonstrate continuous improvement across all that they do and the Sterling facility is no exception,” said Chris Mitchell, IPC vice president of global government relations. Across the United States, TTM is investing its capital and engineering intelligence -- the skills of its own employees, to design, fabricate, and install new Ion Exchange (IX) wastewater treatment systems. In 2019, the Sterling facility’s IX system came online and it is expected that this will further improve the company’s water footprint through increased capacity and improved metal recovery efficiency. IPC worked with the Sterling facility staff to host the EPA’s Smart Sectors Program and Toxic Substances Control Act (TSCA) staff for a tour of the new IX system in July 2019. Read more here. We look forward to this facility’s and this company’s efforts to shape and define achievable sustainability goals.

By Chris Mitchell, vice president, global government relations IPC APEX EXPO is always a fascinating kaleidoscope of electronics manufacturing excellence, and APEX EXPO 2020 was no exception. Most of the show’s content is relatively technical in nature. But it all comes down to making amazing things possible for the industry’s customers. Here are my top take-aways from this year’s show, from the perspective of someone whose job it is to explain our industry and its concerns to non-technical government policymakers. 1) The factory of the future continues to be a priority. According to a recent McKinsey survey, more than two-thirds of industrial companies are making digitization of their factories their top priority. This trend was reflected at APEX EXPO in the growing number of committee participants in the IPC Connected Factory Exchange (CFX) standard, which standardizes machine-to-machine communications and makes possible a range of “Industry 4.0” applications. Accelerating the flow of information across equipment and throughout the manufacturing process will improve the economics of manufacturing in all nations that foster the factory of the future. But when will these digital advancements start paying major dividends? And how can we prepare the workforce of the future to manage smarter machines? These difficult questions continue to loom even as the industry signals that we are the cusp of radical change in electronics manufacturing. 2) Ever growing interest in environmental issues and corporate social responsibility. While the U.S. government is currently focused on reducing the burden of regulation, the European Commission that recently took power in Brussels is pointed in the other direction, seeking ways to gain global competitive advantage with stricter environmental standards. Perhaps this environmental action in Europe explains nearly filled meeting of our revitalized Environment, Health and Safety (EHS) Committee. APEX EXPO attendees were also able to take advantage of sessions on California’s Prop 65 and lead-free electronics. But it’s not just regulation driving interest in environmental issues. IPC President and CEO John Mitchell’s keynote speech emphasized purpose-driven innovation, and that kind of innovation was well-represented on the floor. One company that caught my eye was Indubond, whose lamination press performs using 10 percent of the energy of traditional technologies. 3) New faces reflect IPC's commitment to the industry. A quartet of new IPC executives attended APEX EXPO for the first time, reflecting the association’s commitment to supporting the industry globally. Matt Kelly, formerly of IBM, joined IPC in January in the new role of chief technology officer. Matt’s mission will be to lead IPC’s “factory of the future” standards and technical research; develop a new “industry intelligence” function; and launch an Industry CTO Council. Shawn DuBravac is IPC’s new chief economist, expanding IPC’s research and member services around the economic trends shaping our industry. Alison James is IPC’s new senior director for Europe, working closely with IPC’s European members as well as European government officials, institutions and public policy stakeholders. And Kelly Scanlon is coming up on one year in the role of director of environment, health and safety policy and research. Please reach out to them if you have questions or suggestions. 4) IPC Education Foundation continues to expand its outreach. Last year, the new IPC Education Foundation hosted more than 100 San-Diego-area high school students at APEX EXPO for panel discussions, hands-on training in soldering PCBs, and tours of the expo floor. This year, IPCEF hosted almost 200 kids from area schools! In its second year, IPCEF is continuing to partner with several organizations to distribute basic electronics curricula to hundreds of high schools, and to create IPC student chapters at universities and community colleges across the country. 5) An influx of younger engineers is revitalizing our membership. IPC launched the Emerging Engineer program in 2016 to provide early-career professionals with an opportunity to learn from the dedicated industry volunteers who participate in IPC standards development. This year at APEX, they seemed to be everywhere. Younger professionals are also stepping into leadership roles in several key standards groups. And John Mitchell’s keynote speech highlighted the rise of millennials like Melby Thelakkaden of Raytheon, who has gotten herself involved in eight technical committees! 6) U.S. manufacturers see opportunities and challenges in defense electronics. The U.S. Defense Department is devoting increasing attention to the nation’s defense industrial base, including the electronics supply chain. Representatives of the DoD’s Industrial Base Analysis and Sustainment (IBAS) program attended APEX and focused on several key issues. Cyber security and resilience also played a prominent role in APEX discussions, with the DOD’s Cybersecurity Maturity Model Certification (CMMC) causing quite a few furrowed brows. IPC is stepping up its member support in these areas and exploring new platforms for industry engagement with DoD. 7) The Coronavirus outbreak is affecting our supply chain. One of the biggest headlines outside the convention center – the Coronavirus epidemic – was also felt inside the building, as attendees and exhibitor personnel from China stayed home due to the virulent outbreak in that country. People across the industry are worried about the human toll as well as the supply chain disruptions that could arise in this crisis and future crises. IPC is collecting data on the impact of the coronavirus on the industry. To share your insights, please reach out to Shawn DuBravac. These were my top take-aways from a government relations perspective, but it cannot be said enough: The power of IPC APEX EXPO lies in the thousands of attendees who take part in standards committees, policy committees, executive forums, technical conference sessions, and professional development. Many thanks to the hundreds of companies who exhibited their products and services and brought so much excitement to all aspects of the show.

By Mark Pritchard, director, media training Delta Group Electronics of Dallas, Texas hosted the production of a new IPC video on Wire Crimping, December 9-12, 2019. This is the sixth IPC video that Delta Group Electronics has hosted. Four of these videos have already won industry awards for video training. Safety in Electronics Assembly – Albuquerque, N.M. Wire Assembly Terminology Training – Rockledge, Fla. Electronic Assembly Inspection – Albuquerque, N.M. Reflow Soldering – Albuquerque, N.M. Handling in Electronics Assembly – Albuquerque, N.M. Founded in 1987, Delta Group Electronics Inc. is a full scope electronics contract manufacturer with five facilities — serving the southern portion of United States from coast to coast. More information can be found at www.deltagroupinc.com. “The pre-production planning and technical support for this video was exceptional,” according to Mark Pritchard, IPC video producer. “DGEI had everything laid out and ready to demo, along with the help of their top production staff. We felt completely welcome and supported, for which we are deeply grateful.” Participants in the video were: Damir Cocic, production manager; Flor Hernandez, engineering support; and Avelito Hernal, engineering. Flor Hernandez created all of the new wire-crimp samples that will be featured in this video and in the new IPC A-620 Certificate Course. Tod Cummins, DGEI/director of corporate quality, coordinated the production with Trey Johnson, general manager of the Dallas facility. Additional tools, equipment and samples were brought in by Jonathon Guay of Schleuniger. IPC sincerely appreciates this exceptional contribution to the educational efforts of our industry. Subscribe to our online video library: https://my.ipcedge.org/static/vtl.html for these and other training programs from IPC.

By Kunil Shah, Ph.D., chief scientist, LiloTree The advent and ongoing evolution of internet-enabled mobile devices has continued to drive innovation in the manufacturing and design of technology capable of high-frequency/high-density electronic signal transfer. The combined requirements for both fast, always-on data transmission, and small geometric form-factors can be difficult to satisfy without compromised performance and signal loss. Among the primary factors affecting the integrity of high frequency signals is the surface finish applied on PCB copper pads – a need commonly met by technology manufacturers through the electroless nickel immersion gold process, ENIG. However, a well-documented limitation of ENIG is its insertion loss due to the inferior conductivity of nickel over copper, leading to higher conductor losses. Additionally, nickel’s ferromagnetic properties adversely affect circuit performance. The result is an overall reduced performance in high-frequency data transfer rate for ENIG-applied electronics, compared to bare copper. The selection criteria of surface finish for 5G, high frequency, high density application involves minimal insertion loss, long shelf life, cost-effective and high reliability. There are few options (EPIG, EPAG, DIG, etc.) available in the market and there are limitations involved with each offering. You can learn more at IPC APEX EXPO Technical Conference Session 15 (Surface Finishes 1) on Wednesday, February 5 at 1:30-3:00 pm. For more information, visit www.ipcapexexpo.org.

By John Mitchell, IPC president and CEO The U.S. economy has remained surprisingly resilient, and the result has been that the country’s unemployment has continued to inch lower. It’s now at 3.5 percent, the lowest rate since 1969, and that rate could go even lower as the U.S. boasts more than 7 million job openings. Those job openings suggest an opportunity for workers but a tight labor market for employers. For the industry I represent, electronics manufacturing, talent and retention have always been top concerns, but the situation is worsening. Today, more than 60 percent of U.S. manufacturers say that an inability to find and retain skilled workers is constraining their growth and undermining their global competitiveness. The same story is true around the world. During my latest international listening tour of manufacturing plants in France, Germany, India, Japan, Taiwan and Thailand, I noted again that the challenges faced in the United States extend beyond our borders. The good news is that, through shared experience, we can develop shared insights and solutions. In that vein, I’d like to offer the conclusions I’ve drawn from my meetings with operators and managers across the electronics industry about the current labor environment: Lesson 1: An open-minded approach to hiring based on industry interest, not just skill, can result in new long-term talent During the recruitment process, seeking out potential employees that hold genuine interest and passion for the industry even if they don’t yet pose the skills can provide a new source to fill long-term workforce gaps. It’s okay to hire an employee with minimal training – that's where company education programs come in. In Japan, one manufacturing plant hires operators interested in the job without a background in the industry. The workers are trained with pay for a full year before joining the assembly line. Once thoroughly vetted and trained, operators have the avenue to move up through the ranks to become managers. Among the factory managers with whom I spoke, none of them had college-level training; their education was solely completed through intracompany training. As an added bonus the longevity and loyalty of this workforce is impressive, but more on that in Lesson 3. This model, used in some Japanese companies as well as others in Europe, underscores the point that we can find talent by embracing workers with little to no experience – but with industry passion – to build the worker pipeline. That is where the next key lesson comes in. Lesson 2: Career progression is important to workers Hiring is the first step, but companies need to keep thinking of new ways to keep employees engaged and motivated by prioritizing both their personal and professional growth. Job security and location to home remain pillars for workers within the industry. However, with a younger generation entering the workforce, convenience isn’t enough to retain workers. Workers want to know they have a career path they can build in their companies. In Thailand, operators who lack a college education, along with management staff from top schools, can grow within their roles and continuously be promoted. The job culture there exposes workers early on to self-improvement paths that help them attain specific knowledge or capabilities. Having this type of transparency helps create trust among employees and companies, where the workers invest in the companies and the companies invest in the workers. During my latest trip, I spoke with college-educated engineers who expressed appreciation for their companies’ focus on personal growth. One manager emphasized that it was during his time as a quality engineer that he learned how to meet his goals and prioritize learning additional skill areas, allowing him to become a senior production manager. Lesson 3: Worker retention relies on effective workplace communication to maintain worker happiness As I engage with workers and management, I’m always reminded that companies address and troubleshoot challenges in the workplace in a variety of ways, and how they do so impacts the employee experience. A successful environment champions collaboration to lessen the stress placed upon employees closest to the supply chain or any other production issues at hand. In Bangalore, India, I saw how deliberate and collaborative employee interaction could solve product processing challenges. For more arduous job tasks, such as accommodating factory capacity, maintaining various product delivery schedules and facilitating cross-department collaboration, a company systemized procedure review. When they encounter an issue, operators stop the production process, brainstorm solutions, bring these potential solutions to a quality assurance team and then implement the changes through a management system in place, fostering a new type of learning environment with its people and collaborative problem-solving at the core. The success this brings isn’t just apparent through workers’ happiness and loyalty – their mantra of “zero defects,” helps ensure their products demonstrate the highest quality standards through their production process. Conclusion: Lessons can be learned on a global stage to ensure company efficiencies and worker satisfaction for future growth Seven million jobs unfilled is a staggering number, but U.S. economic growth and innovation hinges upon addressing this workforce need. Companies are stepping up through commitments to hire interested but untrained workers, employee initiatives geared toward career progression, and c-suite focus on finding ways to retain workers. These initiatives are helping to drive record growth in the electronics industry. But the U.S. industry should take note of the lessons I saw around the world. For too long, countries have been resistant to learn lessons from others. But with our ever-shrinking globe and ever-expanding workforce, our neighbors have solutions that should be embraced.