In 2006, Microtronix set up a separate division that was purely dedicated to small volume runs and for prototyping. The division is manned by a small team of people whose sole function is to turn small volumes and prototypes around in the shortest possible time. The reason behind this move was to avoid small runs and prototypes from stopping the main production lines and causing a backlog of jobs on the production floor.
The company has found that, although some prototypes can be hand built, it is often more productive to set up a single machine and do most of the resistors and capacitors on the machine and only place a few of the ICs by hand. This also had the advantage of getting the SMD programme set up correctly and ready for the production run when it comes. This division has been tremendously successful in its function of not stopping the production line for smaller runs.
In 2008, however, the company was faced with a similar problem but on the other end of the scale. Many of its small to medium sized customers had grown over the years and now required much larger volumes of between 10 and 50 000 boards at any one time, which was now causing some backlogs where lower volume customers were having to wait for the bigger jobs to get through the lines, a common problem experienced by small to medium sized contracting companies. Based on the success of its separate prototyping department, Microtronix embarked on an expansion project to setup a dedicated high volume factory to cater for larger volume production requirements.
In August last year, the company secured an additional 1000 square metres of production space and set about equipping the new factory with all the bells and whistles based on its manufacturing experience in South Africa. As the largest user of Yamaha in South Africa, the choice of machines was obvious; four brand new Yamaha XTg 100s and two Xg88s supplied by Hawker Richardson found their way onto the new production floor. Actum Electronics provided a brand new fully dissipative floor, professionally installed, together with a positive air pressure system and airconditioning. Two inline DEK printing machines and two Soltec Vitronics XPM4s supplied by Zetech were installed before and after the placement machines. All board handling equipment was supplied by Techmet, thereby completing two new versatile yet fast fully automatic placement lines.
With the two new lines, Microtronix now offers its customers two to three day turnaround times in its SMD department. All seven of its production lines are now supported with fully automated AOI camera and scanning systems. In order to meet the challenge of getting all the new machinery to run smoothly and efficiently, approximately 30 dedicated and skilled staff was hand picked and placed into the new facility, and each member was given extensive training and equipped with tools and protective clothing. The new facility is run on a 24 hour shift programme to ensure maximum usage from the new equipment. Typically Microtronix keeps runs of 1000 PCBs and more in the new facility and smaller runs of 100–1000 in its main factory.
At the same time, the company launched a new customer manager system where every customer is allocated a dedicated manager to deal with them personally and provide them with a single point of access to the company. The action of splitting up the production into small, medium and large has of course made each section easier to manage and to control, as each section must cater for completely different needs and simply cannot be run on identical systems. Each section operates more or less independently and has created a good sense of team spirit, with a sense of competition for achievement between the sections.
Microtronix’ project for 2009 is now to create a completely isolated section for its military, aviation and high-precision customers, based on the same theory of having a separate team trained for the specific needs to cater for that particular type of work. The company aims to have this division up and running by October of this year.
On an economic note
According to managing director Michael Goodyer, 2009 has been one of the most challenging years in the history of Microtronix as an electronic contracting manufacturing company. As a small to medium sized enterprise managed and run in a typical entrepreneurial style, the tendency is to overtrade slightly and the order book has always been full for the current month and at least half full or full for the following month or two. So by February this year, with the order book starting to diminish as the world recession started to take effect in South Africa, the company’s initial reaction was not to panic as it clearly had enough work for March and April, and some for May. It remained convinced that by June and July, usual customers’ orders and intake would start to kick in and it would be business as usual in the contracting world.
However, by June this year, it was decided that it was time to do some more effective cash flow forecasts, as many of Microtronix’ customers were feeling the economic slow down and order intake was starting to get low. The company is geared to service a wide variety of customers and the majority of them are small to medium sized customers producing volumes of around 100 to 1000 PCBs per month. And it was exactly this sector that seems to have been the hardest hit. In Goodyer’s opinion, it is times like these when companies in South Africa should take stock of their operations and start to think of ways to combat quiet times.
Microtronix has put much effort into conveying to its staff that first and foremost, everyone in the company has to become more efficient. More work has to go out of the door in a shorter space of time and words like overtime must be banned in times like these. The company has had to implement cost savings systems such as a new voice-over-IP telephone system with more cost effective billing structures; solder paste costs per kilogram have been considered; the electricity costs of ovens staying on all day; the wastage of components; printing and stationery costs and delivery costs – all of these things have now come under scrutiny. The company has been astounded at how much it has saved by focusing on expenses that are generally taken for granted when times are good.
As a result, Microtronix has been able to make considerable savings and in so doing has been able to limit the number of staff cutbacks considerably, which is seen as being vital considering that it is, after all, the skill of the trained people on the floor that hold the value and expertise within the company. Microtronix recently set up a high volume factory and although the timing at first did not seem very good with the looming economic cut back in 2009, the company has found itself in the fortunate position where all new enquiries leading up to 2010 can be quoted and executed with ease.
A further challenge for 2009 has been the unexplained and unexpected strengthening of the local currency. It is now a perfect time to reinvest in capital equipment, and yet it is very hard to motivate capital expenditure at a time when work load is down. According to Goodyer, “Component suppliers are carrying stock of parts that they procured when the rand was weak, and it is amazing how few companies lower their prices as the rand strengthens. It now seems prudent to get component suppliers to invoice components at a variable rate rather than fixed, and to pass these savings onto our customers accordingly.”