Contract Manufacturers In Growth Mode
By Tim Gouldson
While tier-one contract manufacturers (CMs) such as Celestica continue restructuring as a result of the industry downturn, a flurry of activity by their smaller counterparts shows tier-two companies are preparing for significant growth.
For example, the result of a merger between materials management firm Valtrie Marketing Inc. and engineering design company The Baranti Group Inc, Markham, Ont.-based CM Artaflex Inc. opened for business in October.
At the new company’s recent open house, president Gerry Iuliano said the timing is right for CM start-ups. "The business climate is improving – it’s a perfect time to get into this, with the market coming back up again," Iuliano said.
Iuliano also noted that the skilled labour shortage of the late Nineties is no longer a factor. "There is plenty of technical staff available," Iuliano said.
While skilled labour seems less of an impediment these days, the need for new assembly equipment is certainly critical in electronics manufacturing. With European lead-free solder regulations scheduled to come into effect in 2006, CMs must be equipped to produce printed circuit boards using environmentally-friendly solder pastes.
Artaflex has installed all new equipment in order to comply with pending lead-free guidelines, Iuliano said.
Also in Markham, EPM recently added a third manufacturing line. The new line gives the company 80 per cent more capacity, says chief financial officer, Lianne Bastien. Bastien says that the company also developed lead-free manufacturing processes and spent over a year and a half researching thermal and profiling issues involved with mixed (lead/lead-free) products.
The company has seen new business from major accounts in the U.S. over the last six months which, along with new programs from existing clients, will provide it with 45-50 per cent growth over last year, Bastien says.
Ottawa-based OCM Technology is helping its customers in the transition to lead-free processes and materials, ahead of pending legislation, according to company founder and president, Michel Jullian.
"By 2006 lead-free manufacturing requirements will affect most of our clients, no matter where in the world they do business," Jullian said. It’s important so customers can plan their lead-free funding and avoid the risk of stranded inventory, Jullian added. The new program includes initial bill of material analysis and recommendations and associated costs for moving a product to lead-free.
Finally, on the acquisitions front, Vancouver-based Creation Technologies Inc. is continuing its foray into the U.S. market with the purchase of Second Source System Inc. of Richardson, Tex. The new operation, which will be renamed Creation Technologies Dallas, will provide electronics manufacturing services for medium-volume, highly complex electronics products.
Second Source, a privately owned company in operation since 1986, is forecasting 2004 revenues of $16 million. The company operates surface mount technology lines and has 15 customers that participate in the communications, industrial controls, computers and medical product markets. The current Second Source operation will be moved to a new 40,000 sq.ft. location in Plano, Tex. in January.
As for lead-free capability, Creation’s director of environmental initiatives Jeff Kuypers says the company has been lead free for a while.
"Our design group is ready to redesign if required," said Kuypers. "By the end of the year, one facility in each of our locations will be ready to go lead free."