Vol. 10, No. 9

September 2000

Last Word FROM JOHN TUCK

The Other Shortage

Component shortages continue to plague the industry, but they are not the only scarce resource in this period of outsourcing plenty. The supply of labor, particularly in professional and technical fields, can also pose a major challenge. And this condition may well outlast the component shortages that have received so much attention this year.

Of course, labor availability depends on where you are in the world and whom you're trying hire. But in high-tech manufacturing centers such as the Bay Area in California and Eastern Massachusetts, the problem can be acute. Labor "is definitely an issue with everybody around here," says Mark Hashem, director of operations for Plexus NPI Plus -New England . When there 'snot enough people to support the business, providers are left with a dilemma. "The question is whom do you want to support. So you start being more selective than maybe you want to be," says Hashem.

Not only can tight labor affect the ability to support customers, it can also influence where programs are placed. Take the Bay Area. "I think that OEMs should be cautious about placing new programs in the Bay Area because of the tighter labor market affecting engineering, program managers and technicians," says Robert Freid, president of Contract Manufacturing Consultants.

For some time, the Bay Area has been a notoriously difficult place to find technical professionals such as test engineers. CMs often compete with OEMs to hire these prized people. Program managers have also been a scarce commodity there. Since program management is a skill acquired from working in a CM, program managers cannot be found within OEMs or other industries. So CMs in the Bay Area have been known to raid each other for program managers. Scarcity also crops up on the direct labor side. Freid reports that debug technicians are highly sought after.

One could argue that the EMS industry is a victim of its own success. The industry's high growth rate creates a continuing demand for certain skills. Satisfying that demand becomes more difficult in the tight labor market of today's U.S. economy.

Indeed, the dearth of U.S. labor with EMS skills may well persist longer than the component shortages do. Suppliers can add capacity to produce more components, but one cannot put up an academy to instantly mint engineers or a training facility to turn out experienced program managers. Granted, employees from OEM divestitures will alleviate the problem somewhat. But CMs still need to support organic growth, which shows no signs of letting up.

Is it time to panic? No. The EMS industry is resourceful: It has been through tight labor markets before. Only now the stakes are higher. So look for EMS management teams to become more creative in their handling of the labor issue.

Labor can no longer be taken for granted. And it will play a greater role in decisions about new plant sites, program placement, employee training, and even customer screening.