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Electronics Products

Manufacturing Beyond COVID


Reshoring Electronics Manufacturing

Harinderpal (Hans) Hanspal


hans@thing.company

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


The global electronics sector will reach USD 7.3 Trillion by 2025

Customers Distribution Original Equipment


Suppliers
(Buyers/Users) Channels Manufacturers

Source: https://www.euromonitor.com/top-10-countries-to-drive-global-electronics-production-over-2017-2025/report

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Electronics are everywhere and impact every aspect of our lives, and
the future is full of bazillions more

Consumer Automotive Medical IT Equipment Internet of


Electronics $625B by 2030 Devices $52B by 2021 Things
$366B in 2020 $602B by 2025 21.5B Devices
by 2025

https://www.statista.com/outlook/251/100/consumer-electronics/worldwide#market-onlineRevenueShare
https://www.statista.com/statistics/1101442/iot-number-of-connected-devices-worldwide

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Investments in hardware startups increasingly take a larger share of
total VC dollars

https://about.bnef.com/blog/hardware-startups-see-revival-vc/

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Most hardware startups fail, others go down in flames wasting a lot of
money, rarely getting to SCALE manufacturing

Only 24% raised a second round compared to 46% for all tech companies

https://www.cbinsights.com/research/report/hardware-startups-failure-success/

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Life of an Original Equipment
Manufacturer (OEM)

Electronics Development and Production Process

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Buyer expectations of B2B and B2C electronics products and services
are shifting regardless of industry

Privacy and Security Frequent Product


Updates

Planet Friendly and


Sustainable Personalized Products

CUSTOMER
EXPECTATIONS

"Set and Forget" No Ownership or Single


Operations SKU Purchasing

Rapid Deployment Direct from


Manufacturer

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Buyer expectations are driving OEMs to new BUSINESS MODELS that
require many things to come together, bound by TIME and FUNDING

Finding & Keeping


Customers

Customers

Building & Servicing Integrating


Products Ecosystem
Products Original Ecosystem
Equipment
Manufacturer

Profitable Capital Talent


Accessing
Business Talent & Skills
(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal
Building a PROFITABLE business to respond to buyer expectations
requires significant changes to OEM’s legacy innovation, industrial
and commercialization processes

Delivering Customer Value And Outcomes


Customers
Customer Experience - Purchase-to-Retirement
Direct-to-Customer Digital & Offline Storefronts & Sales Integrated Channels & Ecosystems
Product Experience – Deployment, Productivity, Availability and
Uptime Component, Fabrication & Assembly Supply Chain
Service Response Time - Warranty, Maintenance, Repair, Go-To-Market Channels
Operations Products Ecosystem Freight and Logistics Partners
Security - Cyber & Physical Aftermarket Service Providers
Commercial & Open-Source Technology Providers
Original Data Integration Partners
Equipment Financing Partners
Manufacturer
Product Development & Production
Product Design
Engineer Prototypes Capital Talent
New Product Introduction
Test & Certifications
Scale-Up Production Idea-to-scale Up Talent
Aftermarket Services
Hiring Employees
End-of-Life services
Profitable Revenue And Cost Models Sourcing Contractors
Skills (Materials, Mechanical, Electrical, Software, Agile,
Transactional vs Recurring Revenue Models Lean Development, Lean Production, etc)
Product vs Services Margins
(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal
Buyer expectations of product PERFORMANCE, operating COSTS, and
LONGEVITY requires OEMs to build SMART products, enabled by electronics,
advanced connectivity, software, algorithms, APIs and new ecosystems

Source: https://hbr.org/2014/11/how-smart-connected-products-are-transforming-competition

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Electronics products create a lot of waste, 80% of which is never recycled,
leading to new regulations requiring OEM to track and manage e-Waste
recycling from source to retirement

All laws except California and


Utah use the Producer
Responsibility approach, where
the manufacturers must pay for
Flow of electronic waste worldwide in 2018, by disposal method recycling.

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Not all electronics products are created equal

SENSOR WATCH PHONE TURBINE AUTOMOBILE AIRPLANE


< 10 components 10s components 100s components 1000s components 10,000s components 100,000s components

Low Mix/Complexity High Mix/Complexity


High Volume Low Volume
1-10 Year Product Lifespan 10+ Year Product Lifespan
Low Product Unit Cost High Product Unit Cost
Low Customization High Customization

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Getting from Idea to FIRST CUSTOMER SHIPMENT of products takes
upfront WORKING CAPITAL & significant TIME to market

Pre-Seed Seed Post-Seed


< $500K < $2M $2M-$4M+
Founded: 2002
Time 12-18+ Months 18-24+ Months Launch: 2007

Founded: 2013
Launch: 2016

Design & Prototype & Pilot Small Batch


Idea Scale
Engineer Test Product Run Ramp Up

Founded: 2012
Non-Recurring Engineering & Tooling Costs Launch: 2014
Costs
Inventory Costs (Raw, Work-in-Process, Finished Products, Spare Parts)
(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal
Physical products require many components that need to be
DESIGNED, SOURCED, FABRICATED and ASSEMBLED

MECHANICAL COMPONENTS ELECTRICAL CONNECTIVITY SOFTWARE PACKAGING


Metal, Plastic, Fabric, Sensors, Screens, Integrated Circuits, Ports, Antennae, Embedded, Edge, Branding, Materials,
Wood, Glass, Cables, Printed Circuit Boards Wired, Wireless Mobile, Cloud, Interactive, Flexible,
Composite Semiconductors External Data Sources Smart
Power Sources,
Storage, Batteries

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Getting to profitability requires managing costs across multiple areas in
addition to reducing “UNIT COST” of finished product

Freight-In &
Raw Duties & Tariffs
Freight Out
Fabrication
Materials &
& Assembly
Components Selling,
Warehousing
General &
& Fulfillment
Administration
Production
Reworking &
Labor &
Scrap Defects & Financial &
Overhead Returns Billing Fees

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Buyer ownership preferences are shifting from bulk purchase and ownership
to on-demand, single SKUs paid for by subscription, usage or delivered
outcome, and moving costs to deploy, maintain, operate, repair and secure
products to OEM

Customer Responsible OEM Responsible for Delivering


for Delivering Outcome Outcome (”As-A-Service”)

Pay-Per-
Buy/License Lease Subscribe Pay-Per-Use
Outcome

COSTS to Deliver Outcome = Product Costs, Product Deployment, Operations, Maintenance, Repair, Security

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Smart products create new monetization opportunities for OEM to
increase customer/asset/contract lifetime value using any
combination of traditional, subscription, pay-per-use, and pay-per-
outcome revenue models

Hardware Smart
Legacy + Smart Connected
Warranty Product Product
End-User responsible for + Product + + Product
product CAPEX and Parts + Condition Multi- System
+ Monitoring Monitoring Device +
deployment & MRO OPEX Aftermarket Service Service Support Partner
to deliver outcome Service License License License Services

Smart
Smart Product System of
Product Connected
Product System Systems
Product

As-A-Service Subscription Subscription Subscription Subscription Subscription


Or Or Or Or
OEM responsible for Pay-Per-Use Pay-Per-Use Pay-Per-Use Pay-Per-Use
Or Or Or
CAPEX for product and Pay-Per-Outcome Pay-Per-Outcome Pay-Per-Outcome
Deployment & MRO
OPEX to deliver outcome

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


AS-A-SERVICE and ON-DEMAND business models take longer to get to
profitability and require UPFRONT CAPITAL for device deployment and
operating costs

Customer Customer Device


Customer
Acquisition
Support Costs Lifetime Lifetime
Costs Value Value

Device Device Average Average


Acquisition Deployment Revenue Per Revenue Per
Costs Costs Customer Device

Finished Device Customer Device


Product and Operating Retention Retention
Parts Inventory Costs Rates Rates

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


As-A-Service business models impact every aspect of an OEM’s
business

Customers
Customer engagement with products and
product utilization determine success

Customers

Products Ecosystem
Products designed for eXcellence with Products Ecosystem Ecosystem impacts product unit,
frequent release cycles and deployments Original customer/asset acquisition and cost-to-
serve costs
Equipment
Manufacturer

Profitability
Customers and products monetized overtime with Talent
significant upfront investment in product and Capital Talent Every functional group in product, customer
customer operations and revenue operations is impacted

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Recurring Revenue Models require continuous improvement, efficiency and
agility across PRODUCT, CUSTOMER and ECOSYSTEM operations

Customers & Distribution Channels Product (OEM & Suppliers)


Awareness Design

Devices/Assets
Retire Engineer
Customers Product Inventory
Billing & Rev Parts Inventory
Rec Lifetime Value Acquisition
Acquisition Costs Deployment
Fulfillment Costs Maintenance
Recurring Revenue Repair
Retention Rate Overhaul
Cost-to-Serve Operations New
Service Remote Support Product
Field Service Introduction
Customer
Support &
Fulfillment
Service Scale
Operations Production

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


CONTINUOUS IMPROVEMENT, AGILITY and EFFICIENCY across product
DEVELOPMENT and PRODUCTION cycles reduces product unit costs

Scrap & Rework


Design

Overproduction

Retire Engineer Waiting


Learn Build Product Underutilized Talent

Lifecycle Transportation
New
Service Product Inventory
Measure Introduction
Talent Motion
Scale
Production
Over Processing

Continuous
Improvement Agility Lean

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Outsourced electronics manufacturing is growing and will continue to grow
as OEMs focus on product design and their customers

$ For Year Source

Printed Circuit Boards Prismark


$62.4B 2018
(PCBs) Partners

Electronics
New Venture
Manufacturing Services $542B 2018
Research
(EMS and ODM)

Reed
Electronic Equipment
$1,892B 2018 Electronics
(Including Components)
Research

https://newventureresearch.com/the-worldwide-electronics-manufacturing-
services-market-2020-edition/

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Half of US and European Hardware startups manufacture in China

https://blog.hardwareclub.co/5-things-you-didnt-know-about-hardware-startups-28291bb2da16

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Outsourced & offshore supply chains can create massive delays and
cost overruns

https://www.supplychaindigital.com/scm/boeing-787-dreamliner-tale-terrible-supply-chain-
management

https://www.seattletimes.com/business/boeing-787rsquos-problems-blamed-on-outsourcing-lack-
of-oversight/

Source: https://www.compositesworld.com/columns/aerospace-
composites-in-the-more-for-less-era

https://www.strategy-business.com/article/19984?gko=c8d43

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Concentrated manufacturing of electronics, far from customers
creates additional roadblocks and has been an ongoing problem

Source: Electronic Design

Source: US Census

Source: EE Times Asia

Newsweek

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Offshoring requires more CAPITAL, TIME, and TALENT to resolve
roadblocks in manufacturing

Ensuring quality

Designing
manufacturable product

Financing production

Scaling production

Managing supply chain

Finding contract
manufacturer
Source: http://hardwareclub.co/pages/hardware-startup-report

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Many industries have been reshoring before COVID, lead by
Transportation Equipment and Computer & Electronics products

Transportation Computer & Electrical Chemicals Plastic & Rubber


Equipment Electronics Equipment, Products
Products Appliances &
Components

Source: Reshoring Initiative 2018 Data Report

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Primary drivers for reshoring go beyond “LANDED UNIT COST” of the
finished product

Offshoring Negative Factors Domestic Positive Factors

Quality, Rework, Government Customer


Freight Costs Total Cost Skilled Workforce
Warranty Incentives Proximity

Supply Chain
Delivery Inventory Made in USA
Optimization

Source: Reshoring Initiative 2018 Data Report

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


The case of GE Appliance: The lean “startup” that reshored

Lean Development – Jet Engine Blades to Algorithms Lean Production – Enabled by Reshoring and Automation

“With FastWorks we’re learning that speed is our competitive advantage.”

Source: https://hbr.org/2014/04/how-ge-applies-lean-startup-practices
Source: https://www.theatlantic.com/magazine/archive/2012/12/the-insourcing-boom/309166/

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Lean Manufacturing @ GE’s Appliance Park in Louisville, KY

https://www.youtube.com/watch?v=ajhIRz61zxU&feature=emb_logo

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Final assembly close to customers enables OEMs to leverage agile and lean
methodologies to move fast, reduce product development and production
costs, and free up working capital resulting in a CHEAPER product

Before After
Made in China

5 Weeks
-20% -25% -30%
Number of Material Equipment
Made in USA

30 Mins
Factory- to- Parts Costs Costs Factory- to-
Warehouse Warehouse

Months 6 Days
Inventory Turn
-50% -50% -30%
Cycle Development &
Inventory Turn

GE GeoSpring™ Time Resources Production Costs


Hybrid Water $1599 $1299
Heater
The Insourcing Boom - The Made in America Movement
GE Opens Hybrid Electric Water Heater Plant, Says 'Lean' Helps Make U.S. Manufacturing Competitive | IndustryWeek

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Talent and Skills

Idea-to-Scale Manufacturing Expertise

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


EVERY OEM is becoming a “full-stack” hardware AND software TECHNOLOGY
company requiring new processes, tools, skills and talent

40% of the on- board


components in car are Software represents 10% of
estimated to be overall vehicle content
electronics based. (Frost & today for a large car
Sullivan) (Mckinsey)

Average share
of software is expected to
grow at a compound
annual rate of 11%, to
reach 30% of
overall vehicle content in
2030 (Mckinsey)

https://www.cbinsights.com/research/industry-market-map-landscape/#unbundling%20the%20car

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


It takes more SKILLED TALENT to build hardware products compared to
software-only products

Software Hardware

Mobile Software Frontend Software Backend Software


Engineer Engineer Engineer Industrial Designer Materials Scientist Mechanical Engineer Electrical Engineer

DevOps Engineer Embedded Software Manufacturing Testing & Certification


Supply Chain Manager
Engineer Operations Engineer

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Legacy OEM business operations are siloed, as-a-service business models
require cross-functional teams to maximize lifetime value and recover
acquisition costs quickly

Legacy As-A-Service
One-time purchases | License Fee | Parts |Maintenance Services Subscription | Utility | Outcome

Product Products & Services


“As-A-
Service”
Products

Marketing Awareness
Billing/Rev
Awareness
Rec
Product
Sales & Legal Acquisition Marketing
Sales
Customer Success
Customer Success Deployment
Legal
Engagement
Finance Acquisition
Finance Billing & Rev Rec

Customer Success Aftermarket Services Fulfillment &


Deployment

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Productivity gains in US have shrunk China’s labor cost advantages,
but low labor cost is NOT the reason why China dominates electronics
manufacturing

“The truth is China


stopped being the low
labor cost country many
years ago. For us, the
number one attraction is
the quality of people.”
Tim Cook, CEO, Apple

https://www.bcg.com/publications/2018/china-next-leap-in-manufacturing.aspx

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


US manufacturing jobs peaked in the 1970s but have been steadily
increasing since the Great Depression (2008) and still nowhere near
the peak

All Employees, Manufacturing – 1939 to present

19.6M

17.3M

2008-2009*
16.5M

1981-1982*

2001*
1953-1954*

12.9M
1960-1961*

1990-1991*
1973-1975*
1970*
1948-1949*

1958-1959*

11.4M
1980*
11.5M
1945*

9M

*Recession Period https://fred.stlouisfed.org/series/MANEMP

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Employment in the US Electronics Sector was steadily growing until COVID

Electronics Sector Employment 2019 Employment


(1000s) 25,710 17,790
1120 26,750
1100
1080
1060
1040
1020
115,200
1000
980 Computer hardware engineers
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Electrical and electronic engineering technicians
Jan Feb Mar Apr May Jun Electrical and electronic equipment assemblers
Jul Aug Sep Oct Nov Dec Semiconductor processors

https://www.bls.gov/iag/tgs/iag334.htm

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


HIRING skilled MANUFACTURING professionals is challenging due to skills
shortage, takes time and puts billions of manufacturing GDP at risk

https://www2.deloitte.com/us/en/pages/manufacturing/articles/future-of-manufacturing-skills-gap-study.html

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Competing for hardware and software talent with big tech companies
is challenging as OEMS shift to “full-stack” hardware and software
products

https://adage.com/article/btob/ge-debuts-owen-ads-oscars/302844

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Manufacturing & Supply Chain

Contract Manufacturing Services and Supplier Networks

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


OEM supply chains are multi-tiered, global and involve many
suppliers and contract manufacturers

https://s3-prod-europe.autonews.com/s3fs-
public/CA5426991.PDF?adobe_mc=MCMID%3D084
19304579124193301202501356805438831%7CMCOR
GID%3D138FFF2554E6E7220A4C98C6%2540AdobeOr
g%7CTS%3D1596560996

https://www.researchgate.net/figure/Immedi
ate-suppliers-in-Dells-global-laptop-supply- https://www.predictiveanalyticstoday.
network-Barnes-2008_fig2_236658896 com/iphone-supply-chain/

https://www.seattletimes.com/business/boeing-aerospace/boeing-to-cut-
management-layers-in-streamlining-of-supply-chain/

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Electronics Manufacturing Services (EMS) companies are tiered based on
revenue, and offer a range of services to help OEMs address skills shortage
and reduce the idea-to-scale timeline

Tier 2
Tier 1
$500M -
$5B+
$5B
Design & Prototyping & Supply Chain revenue
Engineering New Product Management revenue
Services Introduction Services

Tier 3 Tier 4
$100M to < $100M
$500M revenue
revenue
Finished Product Warranty, Build-to-Order
Manufacturing Repair & Fulfillment
Refurbishment Services
Services

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


EMS providers have their struggles, also driven by B2B and B2C buyer
needs, and require economies of scale to improve margins

Short Product Lifecycles

Uncertain Demand

Complex Global
Supply-Chains

Supplier Quality
Management

eWaste & Sustainability


Regulations

Shrinking Operating
Margins

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


China, the World’s Electronics Factory

World Bank Manufacturing Output 1990-2018 ($)


4.5
TRILLIONS

China
4 China enters China accounted for an estimated
WTO
3.5 37% of electronics production in
2018, up from 2.6% in 1995 while
3
low-cost geographies overall
2.5 USMCA
EU
accounted for 71% of the total in
2 USA 2018 (25% in 1995). In the same
period production in the mature
1.5
Japan geographies has fallen to 29% from
1 Germany 75% in 1995
0.5 UK
Canada http://www.rer.co.uk/image/data/Downloads/Yearbook%202019%204%20Page.
0 pdf
2001
1990 1995 2000 2005 2010 2015

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Printed Circuit Board (PCB) fabrication and assembly is highly fragmented
with 1800+ companies globally

Global PCB Manufacturers & Fabricators USA PCB Manufacturers and Fabricators

600 480 200


489 542 162
500
400 150
300
100
200 121
100 41 50 55
0 9 3 20 72 59 90 1 13 1 11 6 26
0 6
2 1 2

Source: http://www.pcbdirectory.com/

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


US Manufacturing CAPACITY UTILIZATION peaked in the 1970s, has been
stable since 2015, but has dipped to historically low levels due to COVID

Manufacturing capacity utilization in US factories – 1972 to present Manufacturing capacity utilization in US factories – 2015 to present
1981-1982*

88%

2008-2009*
84%
2001*

79% 78%
78% 76%

2020*
1990-1991*
1973-1975*

71%
68% 71%
1980*

63%
60% 60%

https://fred.stlouisfed.org/series/TCU/

*Recession Period

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


North American Electronics industry growth is slow, but positive with
surging demand thanks to COVID

Source: https://www.ipc.org/ContentPage.aspx?pageid=Current-Industry-Trends http://www.ipc.org/ContentPage.aspx?Pageid=IPC-Releases-PCB-Industry-Results-for-April-2020

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Majority of EMS providers in the US cater to High Mix, Low-Volume and
High-Margin products with Low Mix High Volume located in Asia

Mostly Domestic
Very Few Mostly
in Asia

https://www.rbbsystems.com/blog/bid/301811/why-high-mix-low-volume-does-not-equal-small-batch-job-shop

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


There’s more to reshoring than just picking up and moving production
from China

https://www.jsonline.com/story/news/2017/07/26/scott-walker-heads-d-c-
trump-prepares-wisconsin-foxconn-announcement/512077001/

“But exporting Foxconn’s Chinese


strategy is virtually impossible. “Rather than employing a
manufacturing workforce, the Foxconn
The global supply chain for Wisconsin facility is now focused on
electronics remains firmly rooted engineering and research, which are
in Asia, where advantages like resources that are already in high-
low-cost labor and an demand and low-supply.”
abundance of skilled engineers
https://www.forbes.com/sites/daveevans/2019/01/30/lear
have been crucial to the region’s ning-the-right-lessons-from-wisconsins-foxconn-
https://www.theverge.com/2017/8/10/16125792/apple-foxconn- development as a manufacturing deal/#262b59a170ef
wisconsin-deal-jobs-profitable-2043
base.”x
https://www.nytimes.com/2017/09/20/business/foxconn-
trump-wisconsin.html

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Enabling Technology & Industrial
Automation

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Open-source and commercial IoT and Industry 4.0 technology
enables efficient, agile, and continuous improvement for OEM’s
INNOVATION, INDUSTRIAL and COMMERCIALIZATION processes

Enabling Technology OEM Processes


Finding & Keeping
Customers
Customers

New Materials & Additive Hardware Dev Kits, Sensors Power Sources & Battery Device & Edge
Manufacturing & Electronics Technology Connectivity Technologies

Building Integrating
Products Products Ecosystem
Ecosystem
Original
Equipment
Embedded & Edge
Software Platforms
Device-to-Cloud IoT
Platforms
Embedded, Edge & Cloud
AI/ML Platforms &
Applications
Human-Machine
Interfaces
Manufacturer

Profitable Accessing
Capital Talent
Business Talent
Cloud Computing Robotics Autonomous Systems Computer Vision

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Manufacturing is behind many industries in the adoption of digital and
automation technologies

https://www2.deloitte.com/us/en/insights/focus/industry-4-0/digital-leaders-in-manufacturing-fourth-industrial-revolution.html

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Commercial and Open Source hardware & software technologies are
enabling OEMs to build prototypes and finished products FAST, COST
EFFECTIVELY and full of RICH (SMART) FEATURES

Device & Edge


New Materials & Hardware Dev Kits, Power Sources & Battery
Connectivity
Additive Manufacturing Sensors & Electronics Technology
Technologies

Embedded, Edge &


Embedded & Edge Device-to-Cloud IoT Human-Machine
Cloud AI/ML Platforms &
Software Platforms Platforms Interfaces
Applications

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Open-Source Hardware and Software facilitates a community-driven
approach to solving challenging problems and democratizing access
to enabling technologies

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Mechanical parts can be manufactured using TRADITIONAL
(SUBTRACTIVE, FORMATIVE), and ADDITIVE Manufacturing Methods

Subtractive Manufacturing Formative Manufacturing Additive Manufacturing


Making objects by removal of material by Uses processes like injection molding, die Process of joining materials to make objects
milling, drilling, grinding, carving, etc., from a casting, pressing, and stamping to form from 3D model data, usually layer upon
bulk solid to leave a desired shape materials into the desired shape. layer.

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Additive Manufacturing (AM) uses different forms of raw materials and
binding processes to build physical products layer by layer

AM Materials AM Binding Processes


Powder
•Laser Fusion/Sintering, Electron Beam Melting,
Binder Jetting, Powder + Laser

Metals Plastics Polymers Glass


Liquid
•Laser Polymerization, Light Projection
Polymerization, Material Jetting

Filament
Fabric Wood Ceramics Bioink
•Fused Deposition, Wire + Electron Beam

Sheet
•Ultrasonic bonding, Laser Lamination
Bone Medication Skin Food

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Additive Manufacturing eliminates many constraints in getting from
idea-to-scale manufacturing using traditional methods

Traditional Additive
Manufacturing Manufacturing
Production Time Long Short
Mass Production Yes No
On-Demand No Yes
Material Waste Increased Reduced

https://www.slideshare.net/GEKorea/how-to-uncover-successful-
Complex Structures No Yes
additive-applications-that-lead-to-profitable-growth
Customization Low Infinite
Prototype Costs High Low
Finished Product Costs Low High
Labor Costs Increased Reduced
Part Inventory Needs High Low
Part Consolidation No Yes
Weight and Durability Improved No Yes

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


3d printing applications exist at every stage of the product lifecycle
and across industries

Prototyping ELECTRONICS ORTHODONTICS SPACE HELMETS

Tooling
MEDICATION SHOE SOLES CERAMIC ART

Functional Parts

FOOD JET ENGINE NOZZLE HOUSE

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Additive Manufacturing ecosystem enables agile and lean product
development and production process for prototypes and finished products

3D Printing Machine Post Processing 3D Scanning


Material Suppliers
OEMs Equipment Equipment

Design-to-Scale AM
Service Providers Marketplaces
Software

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Digital end-to-end: Software – from design to QA – manages the
manufacturing and quality process for Additive Manufacturing

•3D Geometry Design •Optimize Design for •Part Orientation •Manufacturing •Process Monitoring •Data Protection
•AM-specific CAD AM •Support Generation Execution Systems •Inspection •Encryption
•Generative Design •Optimize •Near-net shape •Enterprise Resource •Traceability •Rights Protection
Manufacturing Process expansion Planning
•Finite Element Design •Nesting •Product Lifecycle
•Computational Fluid •Slicing and Toolpath Management
Dynamics Generation

Quality
Design Simulation Pre-Processing Manufacturing Security
Assurance
Manufacturing
Software
Additive

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


“Manufacturing-As-A-Service” marketplaces and service bureaus provide
supply chain resiliency and elasticity for fabricated parts by leveraging
spare capacity in existing factories

SHEET METAL INJECTION URETHANE PRINTED CIRCUIT


3D PRINTING CNC
FABRICATION MOLDING CASTING BOARDS

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


China has more Industrial Robots than Japan, USA, Rep of Korea,
Germany and Italy put together

https://ifr.org/ifr-press-releases/news/record-2.7-million-robots-work-in-factories-around-the-globe?

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Automotive and Electronics Industries lead in Robot deployments

https://ifr.org/downloads/press2018/Presentation_WR_2020.pdf

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Robotics in manufacturing like it’s 1985, but we’ve had a national
Robotics Roadmap since 2009!

Industries and Use Cases Roadmap Research


Manufacturing Architecture & Design
Logistics Mechanism
Transportation Grasping & Manipulation
Food Production Sensing & Perception
Quality-of-Life Planning and Control
New Services Multi-Robot System
Healthcare Learning and Adaptive Systems
Security and Safety Human-Robot Interaction

https://www.therobotreport.com/wp-
content/uploads/2020/09/roadmap-2020.pdf

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Incentives & Investments

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


“Made in China 2025” is China’s answer to “Industry 4.0”, and China’s
investment (as % of GDP) in advanced manufacturing technology has
been outpacing US

Comparing Global Industry 4.0 Readiness

High-end numerically
New information Aerospace
controlled machine
technology equipment
tools and robots

Ocean engineering High-end rail


Energy-saving cars
equipment and high- transportation
and new energy cars
end vessels equipment

New materials, such


Electrical equipment Farming machines
as polymers.

Bio-medicine and
high-end medical
equipment.
https://industrytoday.com/comparing-global-industry-4-0-readiness/

http://english.www.gov.cn/policies/latest_releases/2015/05/19/content_281475110703534.htm

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Revitalize American Manufacturing and Innovation Act of 2014
convened public-private institutes under one umbrella, supported by
NASA, the NSF, and Departments of Commerce, Defense, Education,
and Energy

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Future of Manufacturing Initiatives are not unique to China or the US

https://ec.europa.eu/futurium/en/content/digitising-european-industry-catalogue-initiatives

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


COVID! COVID! COVID!

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Manufacturers are expecting COVID-19 to have a massive impact on
their business

78.3%
Anticipate financial impact

53.1%
Anticipate change in operations

35.5%
Facing Supply Chain Disruptions

Source: National Association of Manufacturers Survey Feb/Mar 2020

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


COVID-19 has increased interest in reshoring of manufacturing

Source: Forbes

Source: Boston Herald

Source: Financial Times Source: Thomas Publishing Company

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Computer & electronics sector accounts for almost half the drop in US
imports from China due to COVID and is leading the charge to
reshoring

Percentage Drop in Imports Sectors Driving Reshoring

Source: Rabobank calculations, Macrobond, US Census Bureau.

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


COVID-19 was a showcase for additive manufacturing and the
benefits of decentralized and local manufacturing at scale

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Are we ready?

Source: New York Times

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Reshoring questions to ponder…

Talent Gap How do we train, retrain and upskill talent to fill the manufacturing skills gap?

Short Supply What would it take to reconfigure the existing electronics manufacturing ecosystem to support locally
manufactured low-mix products?
Chains
Manufacturing Is there capacity available in existing electronics manufacturing infrastructure to support reshoring?

Capacity
Technology What infrastructure upgrades and automation is needed to modernize existing electronics
manufacturing and supply chain infrastructure in the US to support reshoring and can manufacturers
Gap afford them?

Incentives and What incentives, investments, and public-private partnerships do we need to encourage OEM’s to
reshore and are these enough to quickly scale-up talent, ecosystem and manufacturing & supply
Investments chain infrastructure?

(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal


Thank You

Feedback?
Harinderpal (Hans) Hanspal
hans@thing.company
(c) Thing Company llc | Harinderpal (Hans) Hanspal | hans@thing.company | @hanspal