If you read The Economist you'll now know all about The Third Industrial Revolution - but for anyone working in the electronics industry it looks a lot like business as usual.
This week The Economist published one of their regular special reports - this time focussing on manufacturing and innovation. The report looks at the way in which changes to the manufacturing process are challenging the common view of manufacturing as a labour intensive process to be moved offshore as cheaply as possible. For those that missed the print edition, the content of the report is currently available online at the following link:
The report has a strong focus on new mechanical assembly techniques and materials, with new innovations in 3D printing being a key feature. However, one area of manufacturing is notable by its absence : electronics. This is made more obvious by the fact that many of the characteristics ascribed by The Economist to their Third Industrial Revolution are already common currency when it comes to developing and manufacturing electronic products.
Rapid prototyping is now an invaluable part of the modern product development lifecycle. The ability to quickly and cheaply produce a design prototype allows developers to iteratively refine a product design, eliminating design flaws and ensuring that the product meets end user requirements.
While rapid prototyping using 3D printers is still regarded as a novel part of the mechanical design process, the equivalent activity for electronic product design is already well established. For printed circuit board (PCB) manufacturers which provide a rapid prototyping service, designers can simply upload a new set of design files to their website and then wait for the prototypes to be delivered to their door. This is not a service which is reserved for large customers - it's available to anyone with a credit card and an Internet connection.
Henry Ford's famous rule for industrialists is that they should aim to Make the best quality of goods possible at the lowest cost possible, paying the highest wages possible. Unfortunately, the third part of the rule has become deeply unfashionable in the rush to relocate manufacturing to countries with the minimum possible labour costs. To counteract this, one of the most important characteristics of the Third Industrial Revolution described in The Economist report is the move to eliminate low paid, unskilled labour through the use of automated manufacturing.
The task of automating the assembly of complex mechanical systems is still a major challenge, and The Economist points out that the capital investment involved means that this is still only worthwhile for mass market manufacturers such as carmakers. However, for the electronics industry this is no longer the case.
Virtually all electronics manufacturing is now highly automated, with no significant human intervention required. PCB assembly is carried out by pick and place machines which are too fast for the human eye to track, solder reflow temperatures are automatically monitored to ensure the best possible joint integrity and the final result is checked using advanced machine vision techniques. The major costs associated with such a production process come from the capital investment in the equipment, reducing the impact of any labour cost savings achieved by moving production offshore.
One of the major reasons that the assembly of electronic components can be automated in this manner is the degree to which the process has been standardised. This standardisation means that the production line can easily be reconfigured to produce any number of different products. This flexibility allows contract manufacturers to supply a wide range of smaller companies who would not otherwise be able to afford the cost of manufacturing their own products.
When it comes to the value of the manufacturing process itself, there is a dichotomy in The Economist's vision of the Third Industrial Revolution. In some cases, the manufacturing process can add significant value to a product through the use of advanced proprietary manufacturing techniques. The example given in the report is that of producing jet engine turbine blades at Rolls Royce. In contrast, the trend highlighted by collaborative manufacturing and 3D printing is one of the commoditisation of the production process.
In the electronics industry the production process is already heavily commoditised - helped by the high degree of standardisation. This means that the ability to add value to a product through the manufacturing process is severely limited. Under these circumstances, the only way in which extra value can be added to an electronic product is through its design. This usually involves much more than just the choice and arrangement of the components on the PCB.
Most modern electronic products will contain at least one programmable device. These will typically be either programmable microcontrollers, field programmable gate arrays or even a combination of the two. When these devices are soldered onto the PCB they have no inherent functionality, and the resulting assembly has little value beyond the cost of its constituent parts. It is the act of programming these devices that transforms the product into a functional system, and it is in this programming that the added value and product differentiation lies.
One of the key drivers highlighted by The Economist for relocating manufacturing back onshore comes from increasing concerns over intellectual property (IP) protection. This is a particular concern for complex electronic products where all the added value of the product is wrapped up in the programming files for the product's programmable devices.
If such a product is being produced by a third party contract manufacturer, they will obviously need some way of programming the onboard devices with the required functionality. This means that there will always be the prospect of a rogue employee intercepting the programming data and then passing it on to grey market manufacturers who wish to produce cheap clones of the product. Such IP theft is always a possibility, but the risk can be minimised by using contract manufacturers with a shared legal jurisdiction that supports strong IP rights.
In summary, we're making a product that was developed on a shoestring budget thanks to cheap rapid prototyping services. We have chosen to produce it in the U.K. because it uses a standardised, automated manufacturing process which is available from a number of British contract manufacturers and which does not rely on the use of cheap unskilled labour. Furthermore, manufacturing in the U.K. provides the best way of safeguarding our valuable IP which adds the real value to our product.
All of these things are characteristics of The Economist's Third Industrial Revolution. Whether we can claim to be part of it is another matter - but we don't need a catchy slogan to justify being Made in Britain.