How a US Company Intends to Compete in the Global Market
Danbury, CT, 18 Oct 2007
By John Pompea, President, Contact Systems, Inc.
reprinted with permission from February 2005 issue of U.S.Tech
When we did our business projections five years ago, it was obvious that the quantity of placement machines sold would taper off dramatically, and future machines would be faster and cheaper. It was also obvious the multi spindle gantry machine would become the de facto industry standard machine. Our product at that time was the C3 series, a split axis machine. Although we had delivered over 500 of these machines, we were not a major player.
We had a decent niche in the small CM market, which we believed would be a growth market in the US and Europe. With this in mind, we began developing two platforms - the C5 and the C7. As time passed, the market became ever more competitive, we focused our engineering on the C5, the lower cost platform. Designing a new placement machine and its associated feeders is a major undertaking. Our engineering staff quickly expanded to 22 people.
Placement machine technology has not changed significantly within the last decade. Therefore, to get the customers attention you must have either a clever idea or the lowest price. It was obvious to us that the Japanese and Korean machines would set the price standard that would be hard to beat. Their labor and material costs are lower than in the US, and they build in higher quantities because of their lock on the China market. We concluded we could not beat them in price, but we could offer a competitive alternative to their standard line configuration.
Most machines from Japan and Korea are very similar and they are typically sold as pairs, where one machine places chips and the other places leaded components. To build a reasonably complex board typically requires the combined feeder capacity of both machines. We determined that a high feeder capacity machine that could place the full range of components would be a low cost alternative to our competitors' two-machine line concept.
While our C5 machine would serve the high mix/low quantity market, we also wanted a piece of the highspeed market. Our analysis showed that the dual beam gantry machine gave the best "bang for the buck". It would out perform a single beam machine with the same spindle count for only a modest cost increase. The trick was to develop one platform for both these markets without compromising the design of either machine. By using linear motors, we were able to design one gantry system which could easily be configured as either a single or dual beam machine. With one platform, we could keep our inventory and manufacturing costs down.
Most customers today are buying their second-generation machine, and they know what to look for. Above all else, they want reliable operation and they understand that simple design, and quality components will yield the best reliability. With this in mind, we selected the highest quality components available, such as linear motors. For vision processing we turned to the best resource available: Cognex, the industry leader. Cabling is another major consideration for reliable operation. The constant high-speed motion in a placement machine flexes cables unmercifully, so our engineers specified high flex life flat cables, which are used throughout the machine. Our goal was to produce the best in its class product at a competitive price, and we have done it.
Once we had finalized the design of the C5 and its feeders, we organized our production floor into work cells so that we efficiently assemble and test the machines. With American workers costing more than double the Asian counterparts, this was crucial. Our continued commitment to use American factory workers is working out well too.
The placement machine market is much smaller today than in years past, but not many players have dropped out. Everyone, including the big brand name companies, are producing in smaller quantities. Since small lot production is our norm, and we have a good product, we expect to compete well and to offer several advantages that offshore manufacturers cannot.
