Featured

In contract electronics industry, mixed technology assembly products also fall into the category called non-traditional electronics by contract manufacturing industry insiders. Some non-traditional electronics industries using mixed technologies in their prototypes programs, and launching new products on a regular basis, include the aerospace and avionics industry, industrial electronics and robotics, medical devices, transportation, and military and defense industries, to name a few.

Whether its electronics sub-assemblies or full systems integration box build programs (including large and complex final systems assemblies) mixed technology assembly programs are defined by incorporating both surface mount technology (SMT) and through-hole technology (THT) components in their production process.

The US Pacific Northwest region has a long history for mixed technology capabilities and this has been driven considerably by US government spending, particularly for military and defense programs. More on this later.

Additionally, continuing innovation in electronics industry materials science, fabrication, and evolving integration and production process technologies have been extending this drive in the US Pacific Northwest amidst the growing demand for higher numbers of opportunities for mixed technology finished goods for the US military, as well as other industries.

Add to this, expanding envelopes for embedded computing and automation (including artificial intelligence), increasing options (and demand) for sensors and smart devices enabling Internet of Things (IoT) connectivity, nanotechnology and patent innovation driving smaller components packaging and smaller product footprints (against increasing functionality)… its easy to see growing demand for combining SMT and THT technologies in a variety of mixed technology assembly products across numerous industry markets and sectors.

Fourth Industrial Revolution and Pentagon put US Pacific Northwest on map

The Pentagon is, by far, the biggest spender of US tax receipts. A lot of DoD programs rely on mixed technologies for their product design and production assembly requirements. Think: the various US armed forces and military vehicles for missions taking place on land, in air, on/in water and in space, combined with accompanying weapons systems, equipment and supplies.

Below, the top 10 US states receiving defense contract dollars (fiscal year 2020), according to the U.S. Department of Defense, Office of Local Defense Community Cooperation.

Findings from the report are drawn from a wide range of sources, including USAspending.gov, managed by the U.S. Department of the Treasury and the DoD’s Defense Manpower Data Center.

Texas	$71.2 Billion
Virginia	$44.8 Billion
California	$44.4 Billion
Connecticut	$22.8 Billion
Maryland	$22.4 Billion
Florida	$21.0 Billion
Arizona	$17.9 Billion
Massachusetts	$17.4 Billion
Pennsylvania	$14.8 Billion
Missouri	$13.3 Billion

 

The Fourth Industrial Revolution (Industry 4.0) is the continuing transformation of traditional manufacturing and industrial practices incorporating the latest in smart technology. Industry 4.0 is playing out in both the public and private sectors and Industry 4.0 specific technology was estimated to be $116.1 billion in 2021 and is forecasted to be nearly $337.1 billion by 2028, according to Visual Capitalist’s Omri Wallach.

There is little reason to believe a decline of US military budgets targeting Industry 4.0 and related technologies is on the horizon anytime soon.

Some US states have already captured large portions of DoD spend while other states remain busy putting in place policies, infrastructure and measures aimed at attracting, creating and expanding physical and technical mixed technology bench strength, while also honing their mixed technology narrative.

In the US Pacific Northwest, Washington and Oregon currently capture a small portion of DoD spend, with Oregon’s piece of the pie considerably smaller than Washington State’s.

US Pacific Northwest: Washington and Oregon

Washington’s share of total US defense spending for fiscal year 2020 was 2.5 percent, equating to $7.6 billion of total defense contract spending in the US.

The largest defense contractor in the state of Washington is Boeing, taking in $3.8 billion. By contrast, the number two-ranked defense contractor in Washington for fiscal year 2020 was Vigor Industrial, which attracted $244.6 million. Boeing, by far, has the lion’s share of DoD business in Washington state.

For a Pacific Northwest comparison, the state of Oregon’s share of total US defense spending for fiscal year 2020 was just 0.3 percent, equating to $1 billion of total US defense contract spending. Here, Vigor leads the pack, also by a wide gap.

Top five defense contractors in Oregon in 2020 include:

Vigor Industrial	$323.7 Million
EPIC Aviation	$59.4 Million
FLIR Systems	$49.1 Million
Kiewit	$38.8 Million
J.E. McAmis	$28.6 Million

And, while the list of firms above includes some construction and related engineering services in their portfolio suite offerings it remains noteworthy – representing spend pouring in, and infrastructure development, committed to Oregon.

Eighty eight (88) percent of the funds spent by US defense contracts in Oregon was sourced on supplies and equipment (43 percent), and services (45 percent). By comparison, the amount of contract funds US defense spent in Washington State on supplies and equipment was 63 percent, and 27 percent for services, respectively.

By contrast, the percent distribution for all US defense contract funds spent on supplies and equipment for all states in 2020 was 54 percent for aircraft, ships, weapons, and parts.

The percent distribution for all US defense contract funds spent on services for all states in 2020 was 34 percent.

The remaining balance of contract funds spent by US defense for all states went to research and development (7 percent) and construction (5 percent).

Compared to Oregon, Washington State’s bigger piece of the military budget pie can be tied to topographic features and physical geography appealing to the US military war machine during World War II, with her ports in Tacoma, Bremerton, Seattle, and Vancouver ideal for warship manufacturing and aiding in heavy bombers development (both manufacturing sectors heavily support mixed technology assemblies), thus creating a mixed technology manufacturing ecosystem that continues thriving today.

Over the years, Boeing has continued to be a large employer in the state of Washington, and still commands a reasonable amount of US defense spend in Washington for military avionics and aerospace projects, particularly for drones, unmanned aerial vehicles (UAV) and unmanned aerial systems (UAS) companies.

Boeing performs a lot of this work in-house but also partners with defense primes (contract electronics manufacturers) targeting non-traditional electronics defense programs.

Electronics OEM companies producing drones, UAVs, or UASs and, sourcing services from contract electronics manufacturers services (CEM/EMS) in the US Pacific Northwest, or anywhere, can request our helpful 30-page EMS sourcing handbook, here. The handbook includes suggestions for total landed costs and pricing and RFQ best practices, as well as some primary cost buckets for drone, UAV, UAS outsource manufacturing programs and touches on many business pain points that transcend the drone and and dives deeply into other non-traditional electronics industries such as industrial electronics, automotive electronics, medical electronics, instrumentation, agrosystems, to name a few.

SEE ALSO
Internal EMS factory costs vs OEM pricing quotes

Meanwhile, some electronics OEM equipment manufacturers with a presence in Washington and producing mixed technology products include Blue Origin, Honeywell Aerospace, Orion Industries, SpaceX and Boeing, among many others, contributing to the State’s large ecosystem comprised of electronics OEM-branded firms, vendors and suppliers serving non-traditional electronics industries and producing mixed technology assembly products.

Based on Venture Outsource research, the number of DoD contracts awarded to contractors (defense primes, CEM, EMS firms) in the state of Washington in 2020 is 62,015 with contractual total value for the state of Washington for 2020 approximately equal to $7 billion. (Read: Difference between OEM, CM, CEM, ECM, EMS, ODM, JDM, design house contract electronic firms)

Enter Oregon

Today, Oregon receives less military spending from the Pentagon than nearly every other state. Yet, about $1.7 billion in military spend Oregon does get is not negligible and Oregon appears committed to growing this figure supported by state, regional, and local Oregon government initiatives, as well as private companies and organizations.

Some organizations committed to helping Oregon support new technology and manufacturing initiatives include:

• Columbia River Gorge Tech Alliance
• Oregon Manufacturing Enterprise (OMEP)
• Strategic Economic Development Corporation (SEDCOR), regional group
• Pacific Northwest Defense Coalition (PNDC)
• Oregon Nanoscience and Microtechnologies Institute (ONAMI)
• Oregon State University’s Materials Synthesis and Characterization Facility
• Center for Electron Microscopy & Nanofabrication at Portland State University
• Materials Sciences Institute at University of Oregon

 

Noting the above, ONAMI is focused more on integrated electronics. So, too are Oregon State University’s Materials Synthesis and Characterization Facility, the Center for Electron Microscopy & Nanofabrication at Portland State University and, the Materials Sciences Institute at University of Oregon.

Oregon manufacturing industry is welcoming Industry 4.0 with outstretched arms, supporting technologies to help grow microelectronics ecosystems – getting more data into smaller packages – as Oregon strives to become a hub where products promoting systems-on-a-chip (SoC) technology are designed for specific market applications tied to the Fourth Industrial Revolution with IoT devices and connected systems.

This is noteworthy based on the growing demand for microelectronics with everything from nanoscale and chip-level components to the sub-systems and larger systems integration assemblies incorporating these technologies already evident downstream in Oregon and based on Venture Outsource research and experience helping manufacturers plan and execute global, regional and local priorities.

As a result, to date, we are seeing an increasing number of OEM manufacturers based outside the Oregon/US Northwest Pacific region (including overseas) with growing interest in contract electronics providers with facilities based in Oregon, and the US Pacific Northwest region, for sourcing contract electronics program requirements, especially for mixed technology assembly programs.

Some of the programs we see in more than just a few of the many OEM technology programs sourcing from the US Pacific Northwest as part of their extended contract manufacturing supply chain, include complex and highly configurable printed circuit board assemblies (PCBA) and products systems requiring planning and sourcing materials and components from a wide variety of technologies and often times lots of custom cabling and wire harness assemblies work.

 

Electronics OEM equipment manufacturers familiar with sourcing from the US Pacific Northwest include industrial equipment manufacturers, semiconductor capital equipment manufacturing companies, motorized equipment brand owners for test and measurement incorporating a broad range of point-to-point wiring checks, plus other product programs requiring critical assembly skills and demanding quality requirements.

Oregon’s climb up the value add manufacturing supply chain ladder

Oregon technology manufacturing industry, and state leaders, will need to coordinate across four target areas if Oregon wants to be successful:

• Regional industry and international organizations
• Oregon government (state and local)
• Oregon private sector
• Oregon universities and technology centers, research centers

As Oregon electronics manufacturing gains traction, it will be wise to heed some words of caution about industry consortiums (partnerships) from Rob Enderle, principle analyst with Enderle Group, emphasizing focus on what a consortium has accomplished, not what a consortium promises to do.

Enderle writes, “Consortium members should be relatively equal in size and power and its best if they are not competitors.” Otherwise, a situation can develop where a consortium member with the largest checkbook controls the influence and steer consortium interests, and greater industry standards, for the benefit of that company’s business agenda and even stifle competition against smaller, competing consortium members. Read more of Enderle’s pragmatic reasoning about consortiums and partnerships here.

Meanwhile, Oregon’s private sector must continue to focus on collaborating with universities and research centers aligned with Oregon’s new technology initiatives and Oregon must allocate more investment for startups.

Oregon businesses should also host specially designed training programs and research programs for private and public sector professionals and students.

On the above note, Venture Outsource offers a series of manufacturing certification programs specifically for electronics OEM professionals working inside OEM companies, aligned with sourcing contract electronics services across various technology sectors and EMS program types and incorporating EMS industry benchmarking cost competitiveness of fees paid to contract manufacturing vendors . (View our next online EMS sourcing seminar here)

Attendees completing Venture Outsource EMS manufacturing costing seminars and interactive lab training modules become certified in auditing EMS manufacturing program costs.

Meanwhile, Oregon has already developed a small and evolving hub for mixed technology assembly services, especially for drone, UAV, UAS manufacturing and industrial electronics, and this continues to evolve.

Defense programs build technical fundamentals for US Pacific Northwest

According to a 2019 report by the U.S. Department of Defense, Office of Local Defense Community Cooperation, ‘Defense Spending by State’, more than three-quarters of the value of Pentagon prime contracts awarded within the United States go to firms in just 15 states.

Some of the breadth of the US Pacific Northwest’s technical capabilities is already witnessed in drone, UAV, UAS programs sourced from the region. (Suggested reading on VentureOutsource.com: Connector issues in drone wire harness systems and Quality concerns in drone EMS manufacturing programs)

Many of these drone and related programs have higher functioning electronics with smaller footprints designed to get more data into smaller packages. The general US Pacific Northwest region is already skilled in this area, with capable suppliers in a regional ecosystem, which can only further help Oregon when competing with the state of Washington.

The states of Oregon and Washington are home to a high number of defense primes and specialty contract EMS manufacturers serving aviation space and defense (AS&D) markets, the industrial equipment industry, test and measurement industry, and other non-traditional industries requiring extended manufacturing supply chain services.

RELATED
Request custom list of EMS providers in Washington matching your EMS program needs
Request custom list of EMS providers in Oregon matching your EMS program needs

 

One reason for this is defense primes like Boeing, Vigor, EPIC, and FLIR are located in the Pacific Northwest and nearly every defense prime also sub-contracts with suitable contract EMS manufacturers, large and small.

In looking at EMS manufacturers in the Pacific Northwest, many services providers differentiate themselves from the vast, gray sea of EMS providers, simply due to the technical and assembly nature found in many non-traditional electronics programs, and the US Pacific Northwest is home to many, many programs with top-drawer EMS program requirements.

To emphasize this point, contract EMS manufacturing providers with factories located in the Pacific Northwest, and skilled in prototype and new product launch and NPI services, have created sub-divisions and separate companies specific to these front-end services to meet the growing need for mixed technology assembly prototype and new product launch programs. For tips on industrial electronics new product cost strategy and NPI launch, read the Venture Outsource article here.

 

Why defense sector example for this article?

In a 1997 NATO Research Fellowship paper titled, Military technologies and commercial applications: Public policies in NATO countries, by Giulio Perani at CeSPI – Centro Studi di Politica Internazionale in Rome, Italy and submitted in final report form to NATO, Perani writes:

Since the 1950s, both public opinion and policy makers in Western countries (but mainly in the United States) were impressed by the massive impact on everyday life of civilian applications of military technologies, developed during the last years of the World War II. In this context, the relations between civilian and military technologies were considered as totally influenced by the so called “spin-off effect”, that is to say a sort of “mechanical” spill over of knowledge from the more advanced military field to the intrinsically less advanced commercial fields.

There is a long history of technologies that were originally developed for the U.S. Department of Defense that later transitioned with strong adoption by civilian an commercial sectors.

Some examples of these technologies include combustion turbine engines originally created at the Defense Advanced Research Projects Agency (DARPA) that are used today in some wind farms, magnetic resonance technology for studying atomic nuclei in the ’40s was further developed into magnetic resonance imaging (MRI) for medical diagnostics, GPS developed for military identification of targets and tracking plane trajectories and mapping is now available on our smartphones, and walkie-talkies that were first developed for use by military infantry before later being used by tank and artillery crews on the battlefield and today visible throughout civilian populations, to name a few.

Given many electronics programs for the defense industry require mixed assembly technologies assembly with deep (and often leading edge technical requirements), and the US DoD spends a lot of money each year, let’s look below at some of the counties located in the states of Washington and Oregon where this DoD money is being spent, particularly where DoD spend reflects federal agencies’ use of contracts with suppliers for purchasing products and services.

State of Washington top counties for DoD spending – fiscal year 2020

King	$4.5 bilion
Kitsap	$802 million
Pierce	$726.8 million
Snohomish	$434.6 million
Klickitat	$293 million
Spokane	$246.1 million
Whatcom	$141.3 million
Clark	$135.3 million
Island	$101.9 million
Yakima	$69.9 million

State of Oregon top counties for DoD spending – fiscal year 2020

Multnomah	$378 million
Clackamas	$227.7 million
Marion	$86.9 million
Klamath	$85 million
Washington	$68.3 million
Clatsop	$38.1 million
Linn	$20.5 million
Hood River	$19.3 million
Yamhill	$17.9 million
Lane	$17 million

For a broader West coast perspective, let’s look at California DoD spend.

California top counties for DoD spending – fiscal year 2020

San Diego	$13.5 billion
Los Angeles	$9.9 billion
Orange	$4.5 billion
Santa Clara	$3.7 billion
Sacramento	$3.6 billion
Kern	$1.9 billion
Ventura	$1.2 billion
Alameda	$870 million
Santa Barbara	$703 million
Monterey	$622.5 million

There is plenty of opportunity for Oregon to grow.

From our perspective, given Oregon’s growing reputation for complex mixed technology assembly service capabilities, combined with Oregon’s current efforts and evolving plans for a more robust electronics manufacturing technical ecosystem, the economic future for mixed technology assembly industry in Oregon will be Oregon’s to lose.

Venture Outsource helps electronic manufacturing organizations plan and execute global, regional and local priorities. Read about our consulting services or call (888) 860-1193 to learn more.

Comments are closed.