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In an earlier interview, VirTex CEO Brad Heath and I discussed his company’s activities, how they stay ahead of their competition and the new technologies and trends that are having a significant impact in the electronics assembly industry. In the second part of this interview, we are joined by Upinder Singh, Vice President and General Manager at VirTex MTI, who discusses the company’s military and aerospace business, and how they are addressing their customers’ requirements.
Stephen Las Marias: What is the percentage breakdown of VirTex’s aerospace/defense electronics business, automotive, medical electronics, and industrial electronics?
Brad Heath: Our major market segment is industrial, which is focused on several strategic divisions; our second largest segment is military; then automotive, communications and medical.
Las Marias: Can you please tell our readers what two primary challenges the aerospace and defense industries present to an Electronics Manufacturing Service provider (EMS) and what does VirTex do differently to address these challenges?
Upinder Singh: This depends on the customer-related technologies. The most significant challenge is the design and QFNs, BGAs and micro BGAs. Our customers, the original equipment manufacturers (OEMs) require this level of talent in-house to make continuous improvements, product advancements, and design changes, while in parallel, they are fighting an aggressive timeline. This is one of our differentiators, how we enable our OEM customers to transition from existing technologies to new innovations, ensuring design for manufacture and commercialization throughout their production lifecycle, at speed.
VirTex addresses these challenges by introducing a top-of-the-line supply chain. We have developed an award-winning supply chain software solution that is tried and tested that we have been utilizing for several years. Our software solution provides complete transparency, traceability and visibility over our supply chain to bring parts, some often on an expedited schedule as per our customers’ needs, together at the same time, to meet even the most progressive production schedules. Our team of industry experts helps our customers, we guide them through the design process, into new product introduction (NPI), while we help them to build a supply chain that propels their time to market to maximize their time in the market.
Las Marias: The aerospace/defense electronics industry is typical of a high-mix/low-volume production model. How does VirTex manage the variety of high-reliability work in assembly lines geared for only a few line changes?
Singh: The level changeover required and scalability depends on the customer. At VirTex we utilize our in-house software solution to customize an execution program. This allows us to minimize set-up times and changeover times with commonality of different families. VirTex has been working with technology customers for over 20 years and through experience, we have an extensive portfolio to draw from in terms of standardizing the execution and trying to minimize the effect on the lead-time for our customers.
Las Marias: Do you see the rigid-flex PCB segment growing in terms of adoption in the military/aerospace electronics field?
Singh: For VirTex, about 95% of work is rigid. Less than 5% would be rigid flex. Flex, by itself, has a component of rigid attached to it. That’s not to say that there are no applications out there that are using strictly flex. But, at VirTex, we are witnessing a trend towards FR-4 rigid PCBs, versus non-rigid or flex components. The application of flex itself as a flex material is more of a specific application need; you cannot make the whole FR-4 flex, such as a control board or landing gear board, or a communication control board strictly on flex material; you simply cannot do this at present. So flex is application specific. Hence, VirTex is utilizing rigid and rigid-flex FR-4 boards for our day-today operations.
Las Marias: Given the long period for developing wins in aerospace/defense electronics contracting, how does VirTex balance that strategic business development effort in aerospace/defense with more immediate opportunities in non-military markets you serve, like medical and industrial electronics?
Singh: The simple answer to this is, that’s the beauty of our execution. You are absolutely right that some of the defense and aerospace applications have a longer development cycle than other high reliability markets. The conversion cycle for automotive and industrial applications is getting shorter and shorter, as these markets drive efficiencies through the supply chain to maximize their time in the market and yield. VirTex serves all major electronic market segments, as we have significant bandwidth and experience to execute customer requirements across a diverse portfolio.
One of your earlier questions is what OEMs look for in their EMS partner. The perfect EMS partner is the one who is flexible enough to quickly adapt to the market trends and customer requirements. That’s what VirTex takes pride in. We are dynamic and responsive and that’s what differentiates VirTex from most of the other EMS providers.
If you look at the larger Tier-1 or Tier-2 EMS companies, you can understand why they must have rigid production boundaries. VirTex, on the other hand, can adjust its strategies and move with a customer or industry requirements for growth.
Las Marias: What is the greatest challenge with ITAR?
Singh: Once you have put the controls in place, in terms of assessment, training, IT control, back up, controlling the data and licensing, it operates smoothly. If a company is going through the process for the first time, my advice would be to do your due diligence and put in place processes, controls, and licenses. I personally wouldn’t call the process challenging, it just puts a requirement onto the applicant to focus and strategize. If something is worth doing, which ITAR absolutely is, it is worth doing right.
Las Marias: Developing trust with OEM customers has never been easy for EMS companies. Typically, OEMs don’t fully trust EMS providers with their complete product roadmaps for fear portions of the roadmap or strategy might be shared with competing OEMs that the EMS provider also serves. How do you see the EMS industry moving past this?
Singh: There’s a saying that the proof is in the pudding. At VirTex, we have been servicing the needs of our OEM customers for over 30 years. If you look at our customer base, we have customers who started with us in the early 80’s or early 90’s and as they have grown, we have grown with them. Relationships and partnerships are a two-way street. At VirTex we want our customers to grow and we want to be the driving force behind them to sustain their competitive advantage. The longevity of our customer base and the relationships we have, allow us to confidently state that we are our customers trusted technology partner.
Las Marias: Counterfeit components are a growing problem in aerospace/defense electronics supply chains. What are some of the things VirTex is doing to help mitigate the risk of receiving or installing a counterfeit part?
Heath: We avoid non-franchise distribution and if we do have to go outside the normal franchise channels, there has to be traceability and a chain of custody. We involve both the customer and an independent testing lab to make sure that the components are genuine.
Las Marias: What demands are your mil/aero customers placing on you?
Singh: All customers need a perfect product, on time, every time. That is a requirement, not a demand or a challenge. Challenges exist with lead times and aggressive time-to-market, a new design, a change in design, or a product upgrade. The lead times are shorter, so we need to perfectly execute operations and the supply chain, as speed to market matters.
Las Marias: What are the top criteria OEMs should consider when evaluating an EMS partner?
Singh: Firstly, like in any relationship, look at the history. For example, how long has the organization been serving in this type of environment, what is their reputation for quality, on-time delivery? What certification do they hold to validate their quality standards or credentials? What metrics and key performance indicators (KPIs) do they use to measure success and what do their customers say within their quarterly business reviews (QBRs)?
Secondly, VirTex has a high-reliability customer base. The application of our customer’s products can be life critical, therefore we anticipate their requirements to meet and exceed their expectations. We understand the nature of their environment, so we nurture an internal culture to ensure demands are met. So, history and culture to ensure that demand is met, combined with experience, certification, financial stability and technical knowhow is how we at VirTex have become our customers manufacturing partner of choice.
This article was originally published in the April 2017 issue of SMT Magazine.