Behind a growing Santa Clara, CA, board shop that is setting the bar for quick turns.
Even those who remember Data Circuit Systems, the Silicon Valley printed circuit board fabricator that was built up and sold to Merix in 2004, might not realize a similar arc is taking place today.
Founded in 1977, Advanced Printed Circuit Technology has been owned and managed since June 2008 by former Data Circuit executives Steve Robinson, Ed Barclay and Bill Boyle. The company, which operates a 100-employee, 35,000 sq. ft. facility in Santa Clara, now has sales in the $15 million range and has set a goal of reaching $25 million in annual revenues – on par with Data Circuit prior to its sale.
With Robinson running the factory as president, Barclay handling the back room as CFO, and Boyle out in front of customers as executive vice president of sales and marketing, APCT has already come a long way toward meeting that mark. The company has poured millions into its personnel and equipment, including the first Maskless Lithography imaging line. The owners convened in December for a roundtable with PCD&F Editor in Chief Mike Buetow to discuss their quickturn model, which now permits 24-hour turns on 20-plus layer boards.
Q. Given the success the management team has in building up (and selling Data Circuit), how do you find the energy to try to repeat that effort?
SR: After the success we experienced at Data Circuit Systems, we knew that we had a business model that customers found valuable and important. Finding the energy is very easy when you truly believe in your direction. This thought process has an amazing effect in developing a positive management team. We knew we had the experience; we knew we had the assets and manufacturing location, and we knew we had the talent in our personnel. Once those ingredients were in place, we were positive of a successful outcome.
BB: Data Circuit was hugely successful. We learned exactly what to do – and what not to do – with that model.
Q. Data Circuits was known for its extremely quick turns. Is APCT attempting to duplicate that model?
SR: APCT has already achieved an excellent reputation for the manufacturing and delivery of advanced technology product in one- to five-day cycle times. We took the model developed at Data Circuit Systems and enhanced it, ensuring APCT would be more efficient, with lead times and technology. The APCT facility is designed specifically for rapid response manufacturing; therefore, it is reflected in our capabilities and quality.
Q: Why is that the right model for APCT?
BB: When we manufacture product in 24 to 72 hours, it becomes a very valuable model to Silicon Valley companies. This is primarily proof of design product, and allows us to create many new customers. APCT has the capability of building boards faster than anyone in the country. The technology level is extremely high and may be the only model I believe will work in this country.
SR: I think the thing we learned from Data Circuit and transitioned here is to understand the customer’s need and satisfy that need. That need may be two panels of 24 layers in two days. Or it may be 500 panels of eight layers in three or four days. We do a lot of very large orders, but in very compressed cycle times. We are niche-focused in the quickturn segment for the reason we feel it is absolutely US-centric. But that quickturn segment is one to three days, not three to five days. There are now a handful of offshore suppliers that can support a five-day build.
We provide our customers with a solution. If we feel we can successfully build it, we build it. The culture is all customers are important. We find a tremendous amount of market share – we capture six to 12 new accounts per month – because [customers] don’t feel consistently supported by their current supply chain. We treat every order with the same level of service and commitment. That philosophy breeds immense customer loyalty. And I hear that a lot. Customers perceive such a high level of satisfaction from what we provide. We fail – everyone does – but it’s never out of a lack of effort or commitment to the program. We provide upfront support from sales to engineering to financing. The whole package is user-friendly.
BB: One thing that is unusual was a few months ago we received a large order from a medical company after building their “proof of design” volumes. Once tested they placed 12,000 pieces each of an eight- and 10-layer board with us. That normally would not happen in this country, primarily due to the pricing advantage from China.
Q. The decision to buy APCT came as the US PCB fabrication market was in a tailspin. Was there ever a point where you thought it might not have been a good decision?
BB: In all fairness, the purchase of APCT took place just prior to the tailspin that placed our entire industry in jeopardy. Our initial outlook as explained was very positive. As the slowdown deepened, like many other business owners we questioned our timing, but also understood that failure was not an option. We believed in our business model and understood the economic challenges that were associated with executing our plan. As things turned, our model was validated and APCT enjoyed significant growth during that 2008-09 time frame.
Q. Are you taking any different approaches to running a board shop this time around? If so, what’s changed?
SR: We have continued with our commitment to the culture and the visions that fostered the previous success we have enjoyed as individuals and as a company. We have refined those visions, and as a result, the company is outperforming our own aggressive goals. We continue to believe in the unwavering support to both our internal and external customers.
Q: How do you foment that culture?
BB: For sales, we look for passion and commitment. There are a lot of professionals out there, but not many with the passion to succeed. I can teach people how to sell; we can introduce you to customers, but I can’t teach passion. If you have that passion, you will be hugely successful at APCT.
SR: From an operations aspect, I think passion and culture go hand in hand. Our company doesn’t have a weekly plan; our plans change hourly. We term it, “How do you work with your hair on fire?” You have to be able to hear the truth and be brutally honest. You have to have a sense of urgency, not be a plodder. We want educated and calculated decisions to be made. We don’t emphasize experience, but it’s nice. But we find many experienced workers have habits we have to break – such as hesitancy and an unwillingness to make a decision. Our final decision [to hire] is always based on the person’s personality. Do they fit the team environment and do what the customer asks on that particular day?
EB: Those factors are very important. That sense of urgency is very important to us. Workers have to understand, whatever the customer needs, we are going to make that happen. The other important aspect is that they understand the concept of “team.” That is crucial to us. We support each other no matter what.
Q. You have invested considerably in equipment, including the new Maskless Lithography imaging line. What was the driver behind that decision? And on what basis are decisions on new or unproven technologies made?
SR: Yes, we have invested significant capital since acquiring APCT. Our commitment to provide leading-edge cycle times and technologies to customers continues to drive investments that include multiple AOI systems, multiple flying probe systems, vacuum lamination presses, ink jet legend printers and vast shop improvements. The Maskless Lithography Imaging System is the most recent investment, but is far from unproven. Our engineering team has worked side-by-side with the OEM to further develop this technology. The months of diligence have proven to be invaluable to both APCT and the Maskless engineering group. This testing has resulted in significant improvements supporting a major step in cycle time reduction and technology now available at APCT.
Q. The US supply base has been decimated over the past decade. What practices have you put in place to ensure access to a steady, reliable supply of spare parts and raw materials?
SR: While it is true that the US printed circuit industry has been decimated over the last decade, APCT insists on using the most advanced equipment and materials readily available. In fact, many of these suppliers are used throughout the country and around the world, therefore eliminating any questionable supply chain variances.
Q: How is the capex budget set? Do you have a set percentage of sales that you plow back into capex?
EB: We look at the critical areas that need improvement. It’s not based on a percentage of sales, but how we can change and improve our technology. As a history, the factory has some old equipment. In the last year, we’ve spent $1.2 million on capex. We made very sizeable changes in technology. In 2012 we will put in another $1 million in some key critical areas. It’s based on the market, what we have to perform to, and how we can make new products.
SR: We meet a lot to discuss customer trends and demand trends. Many recent meetings have been cycle-time driven. The technology was limited, and we continued to get feedback that OEMs were limited in their supply chain to the DDIs and TTMs that could provide medium technology. We fund most of capex out of cash flow. Process redundancy is another driver; downtime is not an option for short-cycle manufacturer. That’s been part of the three-year plan. Capital is customer-driven. We’ll probably always be in the 5 to 7% minimum range of revenue.
BB: I always want to understand what technology our customers are looking for next month and next year, and prepare for that. For example, we’re building stacked vias – we didn’t even dream of that a year ago, but it’s an up-and-comer and will drive revenue in the coming year.
Q: How important is it to your model to have the latest and greatest equipment?
SR: Our success has always been based on the people. A lot of manufacturers have all the toys, but can’t get out of their own way because they don’t have the right people. The direct imaging line is about cycle time and getting product to the floor. If you don’t have the right people driving that opportunity, you can be very inefficient and erratic.
EB: The other part is we believe in being leading edge, but not bleeding edge. The Maskless product is very much a technology that a lot of players have stood back from. We’ve done a lot of research on this, and it’s been in test for eight or nine months.
SR: We recently launched into production. The quickest turn we previously produced was three days for 20-plus layers. We were able to produce two orders above 18 layers in two days this week. We cut 10 hours in cycle-time out of imaging.
Q. Pricing and margin is at the top of everyone’s minds. Have you noticed any change in approach among customers insofar as ensuring you are sufficiently profitable to remain their long-term supplier, or is price still the prevailing factor?
BB: Pricing has always been and will remain an important topic. While margins continue to be very tight, our approach remains the same: Utilize the best equipment and people, along with highly controlled process parameters, which will reduce scrap and provide a cost-effective solution.
Q. California tends to be on the leading edge of environmental-related manufacturing restrictions. Do you find this a deterrent to doing business, or in this emerging era of traceability and extended liability, is this beginning to be a competitive advantage?
SR: There is no question that the state of California and specifically Santa Clara County requires each company to do their part in controlling any negative influence on our environment. APCT is committed to being a good neighbor and doing its part to support these environmental requirements. In addition, Silicon Valley is where much of today’s technology is developed, and we insist on being on the forefront of these technological breakthroughs.
Q. What makes APCT more capable or unique among its regional competition?
BB: We offer 24-hour turns on NPI, and our “ramp to volume” builds in three to five days, and we support low-cost volume requirements in three to five weeks, all from one contact, one call, one transaction. This capability allows our customers to take full advantage of the global market and capabilities with tremendous ease and without the cost of developing multiple suppliers.
EB: We bring a lot of experience from our frontline platers to our shippers. Our average tenure for hourly personal is seven to 10 years. That’s rare, I think. Our management and supervisor leadership is probably high teens or 20s.
SR: I think we’re a little spoiled at APCT because of our experience and our core people. We’ve met a lot of people who were supposedly gurus who, when they left, we knew they couldn’t work in our plating department, let alone in a management position.
Q: How fast can you turn a quote?
BB: Generally, if a customer requires, they can hold on the phone for a quote.
SR: We have made multiple shipments where the customer hasn’t even had time to process the purchase order.
Q: What level of access do your factory workers have to their customers?
BB: We encourage it. We have some DfM engineers on the phone all day, every day, with customers. Sometimes they are on the phone with the EMS customer’s customers. We love early involvement. On any delivery of less than 72 hours, we have a home contact number, so we don’t have to put a product on hold.
SR: CAM engineers, floor engineers, floor managers, leads … we have to have engineering and designer contacts. We have to have answers and get product moving. We don’t reference our quickturn business by days. We do it in hours.
Q. What are the five-year goals for the company? What internal metrics do you use to determine you are on the right track?
BB: APCT continues to strive for a minimum growth of 15% year-over-year and has successfully surpassed that goal each year. The company has a very detailed dashboard that gives management all the tools necessary to make the proper decisions in supporting our continued growth.
Q: Do you subscribe to the notion that America has lost its printed circuit board engineering edge?
BB: I personally do not.
SR: I think it depends on where you’re at. There’s no question there’s been attrition of good, smart people in our industry. But for us, in Silicon Valley, we’re a little sheltered, because this is a very active, technology-driving, state-of-the-art area. There are still a lot of really smart, really creative engineers in the CM, OEM and PCB manufacturing area in our region.
BB: I think we have the luxury of dealing with some of the finest designers and engineers in the country because we are located in the Silicon Valley. They come to us because they know what they want the board to do and don’t know how to achieve that. We help and support them with their decision-making.