Electronics Manufacturing Industry Leaders Enter 2022 With Greater Optimism

Every year, the What’s the SCOOP round of interviews conducted by Philip Stoten offers one of the most interesting round-ups of views from industry leaders looking forward into the new year and beyond. At a time of profound change and great uncertainty, this is more valuable than ever. The interviews are focused on the electronics industry and the broader manufacturing sector. Four key themes have emerged from this year’s issue:

First: industry leaders expect supply chain disruptions to persist into this year, but concern and fear are gradually being replaced by optimism that industry has already begun to adapt, via greater localization and smarter, technology-driven innovation of supply chains. The pandemic acted as an accelerant, and the faster push towards digitalization and smart factory technologies promises significant rapid gains in efficiency and adaptability. “While many of us understood the value and importance of factory digitalization prior to 2020, the COVID-19 pandemic has significantly increased the pressure for accelerating digitalization in the electronics manufacturing industry,” stresses Michael Ho, Director of Business Development at Cogiscan. Rajeev Bhalla, co-founder and CEO of CLIP Automation, thinks we are on the cusp of finally unlocking the true potential value of automation as “in the coming years more solutions like CLIP start to provide an operating system that provides factory wide connectivity, hyperawareness, the ability to aggregate data to use to plan, predict and react.”

Second: the trend towards shorter and more localized supply chains continues. Global supply chains had been under stress for several years prior to the pandemic: a revival of protectionist pressures had brought back in fashion tariffs and non-tariff barriers; occasional natural disasters had shown their disruptive potential. With geopolitical tensions still on the rise, business leaders understand that even once the pandemic fades, we will not revert to the golden age of globalization. Anastasios Arima, CEO of IperionX (formerly Hyperion Metals Ltd), puts it very clearly: “If recent events have taught us anything, it is that global supply chains are less resilient than we thought. I believe the answer is regionalised supply chains, to create more resilience, more adaptability and pose less threat to the environment.”

Third: rising awareness of the importance of sustainability among consumers, employees, investors and industry leaders contributes more and more to steering corporate strategies. The sustainability goals dovetail nicely with at least a couple of the key current trends: Localization of supply chains reduces transport emissions; and efforts to achieve greater energy efficiency in manufacturing reduces overall energy consumption while alleviating cost pressures (the recent surge in energy prices constitutes a powerful incentive). Bruno Racault, CEO and President of ALL Circuits, sees a more responsible approach to the environment as one of the key trends for 2022 and beyond, and says “That means making products that are more sustainable, using manufacturing techniques that are more sustainable and once again developing shorter more sustainable supply chains.” Gunter Lauber, CEO, SMT Solutions Segment & EVP, ASMPT, agrees: “…ethics and sustainability increasingly influence business strategies and processes also in the electronics manufacturing industry.” This synergy between industrial innovation and sustainability can bring a self-reinforcing virtuous loop: “I also expect a significant boost for electronics in green technologies. Only with the application of new technologies, and electronics always play a key role here, can greenhouse gas reduction be achieved,” says Rainer Koppitz, CEO of KATEK group, who sees electric vehicles as a sector with particularly strong potential. 

Fourth: Talent has emerged as a crucial scarce factor in corporate strategies; talent shortages are pushing up labor costs and stressing companies’ ability to scale. Companies are responding in two ways: (i) stepping up efforts to recruit and retrain the right employees; and (ii) intensifying their search for the best automation strategies. Microart CEO Mark Wood quips “We are working hard to change the term [great resignation] to “the great retention.” 

From the privileged vantage point of these industry leaders, we have entered a period of accelerating transformation, with digital innovation offering the tools and solutions to successfully meet a number of persisting formidable challenges. Cybord CEO Zeev Efrat puts it best: “All in all 2022 looks like another year of disruption with growing demand, uncertain supply, unpredictable freight and logistics, and an increasing understanding that smart digitally enabled supply chains are the future.”