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INTERVIEW – Companies supporting the auto industry continue to invest in research and development to help their OEM customers contain costs during the current downturn, while positioning themselves to power ahead as the market recovers.
“We are focusing our research and development efforts in our strategic growth markets, namely new programming technology, and automated programming systems for the manufacturing environment,” said Fred Hume, President and CEO of Data I/O at the release of the company’s first quarter results for 2009.
The Redmond, Washington-based company Data I/O will soon be launching its FlashCORE III programmers, deliver the latest addition to its PS family of automated programming systems – the PS 388. The company has helped a large number of automotive suppliers to implement lean, quality manufacturing programming solutions over the years.
Data I/O offers complete, integrated manufacturing solutions in wireless, automotive, programming center, semiconductor, and industrial control market segments for OEM, ODM, EMS and semiconductor companies around the world.
“We continue to focus on extending the capabilities and support for our FlashCORE architecture, the ProLINE-RoadRunner, FLX, PS, and FlashPAK product lines. Our applications innovation strategy provides complete solutions to target customers’ business problems. These solutions generally have a larger software element and will be developed to address specific requirements.”
The ProLINE-RoadRunner XLF, launched in 2008, was designed to meet the automotive industry’s requirement for larger size applications. The RoadRunner is the world’s only programmer solution that plugs directly into the SMT machine on the assembly line to implement just-in-time, lean programming.
The ProLINE-RoadRunner XLF programs Flash memory and microcontroller devices using the company’s FlashCORE family programming technology. The Extra Large Format (XLF) RoadRunner supports device sizes up to 32mm square and tape widths of 32mm and 44mm. In addition, the Pro-LINE-RoadRunner XLF can be reconfigured to support small to medium sized devices in tape widths of 16mm and 24mm.
Automotive Industries recently spoke to a few of Data I/O’s sales representatives about their experience with Data I/O’s automotive business in the United States and Mexico. We caught up with Marshall Rich of Rich Sales, John Klyce of Base Eight, and Todd Gilmore and Ray Neal of Process Automation and Tool. The three representative companies are responsible for Data I/O sales in the majority of the Midwest, the Southern half of the United States and all of Mexico.
AI: What trends have you seen in the automotive industry lately?
Klyce: Government regulations and economic uncertainty have made customers wary of making long term decisions. These forces will also drive the consumer decisions based on lifestyle trends and changes.
Gilmore: I have seen large amounts of cost cutting activities and efforts to improve equipment utilization and trying to improve efficiencies.
Rich: Industry has been on a “wait and see” basis for the last eight months. Plants have decreased their work force to a minimum level. There are also a number of facilities that have shortened their workweek.
Neal: I have seen some outsourcing to Mexico for automotive electronics.
AI: How has the economic downturn affected your automotive customer base?
Klyce: The downturn has created a more cautious approach to spending. Among many of the companies there have been work furloughs and reductions in force. Most of the personnel and related programs must prove their worth to the company.
Gilmore: We’ve seen some manufacturing business shifting to Mexico, especially with suppliers to the US automotive companies, but foreign automotive electronics seem to be staying in the USA so far.
Rich: The remaining customers have a “wait and see” attitude. If the industry remains status quo, I believe there could be a number of plant closures and consolidations.
AI: Are there specific segments of the industry that have seemed to fair better than others during the downturn?
Klyce: The areas that are still being funded are telematics, power electronics, power train and sensor/transducer based products.
Gilmore: Small contract manufacturers are focusing on new product introduction and turnkey box builds.
Rich: Areas that remanufacture automotive parts are thriving due to the fact that consumers are choosing to repair rather than to buy new automobiles.
AI: Do you see any signs of a sustained recovery in the auto industry?
Klyce: Yes, but small signs. There are still project goals related to production contracts. Most of these are projected out to three to six month intervals at the earliest. I believe the recent government financial decisions have facilitated a tentative sense of resolution.
Gilmore: I am told Q1 or Q2 of 2010 may start to see a recovery. It is hard to say how much confidence I have in that prediction.
Rich: The industry will recover when the consumer confidence returns. There have been discussions about a slight increase due to retooling in next years’ market. However, the industry will likely continue to be depressed into the fourth quarter of 2009.
AI: How has the “green” movement affected customers in your area?
Klyce: I see this reflected in investment into “power electronics” which involves hybrid and electric cars.
Gilmore: I have seen three new product launches related to “green” technologies, but the green movement has only had a small impact at this time.
Rich: The move to lead-free solder has been prevalent in new auto production and manufacturing plants are trying to reduce waste stream.
Neal: The movement toward lead-free has been pretty painless in the last year or so but it has had the only noticeable impact so far.
AI: How has globalization affected your customer base?
Klyce: Globalization has made the design, engineering management and production “platforms” into freer agents within the corporate structure. I believe this has created more flexibility, but has also created more risk. This has driven decisions to make all the procedures more regimented and controlled. I believe the quality systems and communications improvements that were developed over the past 20 years have facilitated that.
Rich: If you take the current industry, there are fewer manufacturers than there were, which could lead to factory consolidations and closures.
Neal: Globalization is huge. The automotive industry is always looking for lower costs, but the cost of material is pretty much the same everywhere so the only thing left to reduce is labor. This bodes well for Mexico and China.
AI: How does Data I/O help automotive industry players?
Klyce: Control over the production process, globalized support, and the ability to support production needs. Data I/O also provides Good, economic, durable, and accurate device programming.
Gilmore: Road Runner is a good fit inthat it creates a leaner manufacturing process.
Rich: The utilization of Road Runner in production has significantly brought down the cost of programming as well as shortened the supply chain. This product I feel belongs in the “revolutionary” category versus “evolutionary.” Additionally, the programming speed of the PS Series has increased throughput and also shortened the supply chain.
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