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Kevin McClay, president of Silicon Valley SMTA Chapter, speaks with I-Connect007’s Judy Warner on the activities of the SMTA in the Valley, and the challenge of attracting young talent to join the manufacturing engineering industry. He also provides latest updates on his company, Captec Inc.
Judy Warner: Kevin, I understand that you are president of the SMTA chapter in the Silicon Valley area. Tell us a little a bit about the activity of SMTA in this area—the attendance, companies involved, and how you got into it.
Kevin McClay: I’ve been involved for more than 25 years and it's changed quite a bit. In fact, probably about 15 years ago it almost went to zero. Then corporate came in and picked some guys in the industry to kind of revitalize it and it's been going okay since then, but it was almost dead 15 years ago.
We try to get topics of interest to the circuit board assembler industry here and hold three or four meetings a year in addition to a golf tournament. A good meeting will have about 30–50 attend. Our golf tournament is a shotgun start with two foursomes on every hole. We struggle with that a little, but it's been successful. We haven't lost money yet, but we’ve come close (laughs).
Warner: It seems here in Silicon Valley that you are surrounded by CMs. What do you see as the draw and/or challenges to your local chapter?
McClay: The color of my hair (laughs). We're all getting older and we're trying to get younger people into the chapter and we're not that successful. We're surrounded by Google, Facebook, what was Yahoo, until yesterday, and Apple. Those are glamorous jobs for the young kids. To go into a contract assembler doesn’t have the glamour the other big names have. Those companies are mostly software and they don't really lend themselves to manufacturing. As you drive around, you'll see the signs on the top of the buildings where the younger groups are, and if you keep your eyes out, you will see these big white buses. Where I live in Pleasanton, there has to be one every 10 minutes that's coming into the valley. It's free for them and they have Wi-Fi.
Warner: They get commuted in?
McClay: Yes. Their clock starts when they get on that bus and when they get dropped off.
Warner: How nice.
McClay: Yeah. This is a different place. I just saw an article in our paper other day that unemployment on the peninsula is at 3.2%. We're at zero unemployment, here. So trying to get a young person to come to a contract assembler is a difficult task. Manufacturing engineering is a dying art. I was in manufacturing engineering before I ever went into sales, and it's very difficult to get somebody you can work with and argue intelligently with about advantages of a certain product because it's all price and delivery. They want to boil it down to price and delivery very quickly. Our SMTA chapter is challenged by that, to try to get good engineers. That’s what I see the charter as, an association for networking of manufacturing engineers in the electronics industry. It's a dying breed here.
Warner: It is, and by the way, just so you don't feel it's a unique problem to you, I hear this a lot in different sectors. It’s hard to attract young talent. It's definitely not as cool as Google! We're hearing this across the board and it's something we are going to have to address in this industry.
McClay: Our industry, in their defense, has matured a lot. Surface mount technology, other than getting smaller, doesn’t have that much new in it. We just get smaller and smaller dimensions but the pick and place machines are still pick and place machines. Cleaning and soldering are still doing the same things we were doing 20 years ago. When we switched over to lead free, there was a lot of hype, a lot of interest, and our attendance was up over that period because that was new. It's not new anymore and people are used to it.
Warner: What kind of companies do you see in attendance at your typical SMTA chapter meetings?
McClay: The smaller guys barely come out of their boxes. Probably a quarter of them are sales guys, like myself, and then we get some people from Flextronics, which has their headquarters right there. So just a smattering of different contract assembler people, as well as some consultants. But I'd say that we have probably 200 throughout the four meetings, and maybe 30–40 of them would be the same with a smattering of a whole bunch of different people.
Warner: What kind of topics do you typically cover in those?
McClay: Last time we did cleaning. It was a very good topic on no clean solder paste fluxes. The next one is on circuit reliability. The speakers haven't been defined yet. We're still working on that. That's always a struggle to get the speakers and the venue all coordinated. Rob Boguski does that for us, he is VP of Technical, and he does a very good job. He's actually going to be president next year as I term out at the end of the year.
Warner: How many people and what types of professionals are on your committee for SMTA?
McClay: John Hawley has been here with us for quite a while. He was with Barnes & Noble, or the Nook. Jasbir Bath has been with us; he is with Bath Consultancy. Rob Boguski is with Datest. Jim Donner, we call him our VP of Golf. He runs our golf tournament every year and he's a rep and used equipment broker. He has a good company here. Brian Carey is our treasurer and he has been with the chapter longer than me. He is from the finance industry. That's probably the core group.
We had a woman that came into the industry. She was a real spark plug, but she went back to real estate. She was a 20-something and it was real fun to work with a millennial.
Warner: Beyond SMTA, obviously your industry involvement is that you have a company called Captec and you rep electronic assembly technologies. I always say no one got in this industry on purpose, so what's your story and how did you end up on this side of the business?
McClay: I was a manufacturing engineer. I started off with Memorex, way back when. People may remember them. I went to another company that had me set up a circuit board assembly factory. I bought a factory full of equipment and after that was done, I was kind of bored. I enjoyed the sales process, so I called the guy that I bought the wave solder machine from and he says, "Well I'm looking for somebody, come work with me." I went to work and I’ve pretty much been on the sales side ever since then. That was ’82 or so.
Warner: You’ve been at this awhile. What type of equipment do you cover these days?
McClay: We focus on assembly and soldering equipment for the electronics industry, and then wire and cable equipment. There's really two different industries that I work with. Wire and cable assembly is one which somebody like yourself is probably not aware of. Say that there are probably 200 contractors somewhere in the Bay Area for circuit boards. There's probably 100 of the wire and cable people, and those circles only cross about 20%, who do both PCBs and cables. It's a whole different industry that I work with, and there is a little bit of offsetting when one's down and the other one is doing okay.
Warner: What type of lines are you trying to cover as a whole?
McClay: We cover from the time the bare board comes in, through the printers, through the conveyors, to the pick and place, the ovens, and to the waves. Then I also have a good portion of test. I'm in the test world, as well, with flying probe and functional testers. It gets me all the way out up until the board goes out the door. I do mostly capital equipment. I did some cleaning supplies, but now I'm just mostly in equipment, which is a different mindset. I tried to do things like solder paste over the years, but it’s very difficult to make money in that.
Warner: You mentioned you think there's about 200 CMs and EMS companies here in Silicon Valley?
McClay: Yeah, very small companies; there’s not many large ones. Maybe a large one would be 10 lines. Back in 2000, we had 2000 lines worth, and now it's down to maybe 300– 400. It's almost a 10x production reduction in manufacturing capacity in Silicon Valley. As you probably recall, in 2001 NAFTA went into effect and China opened up.
Warner: The perfect storm. Donald Trump is going to change all that, right? (laughs)
McClay: Yeah, I don’t think I can bring myself to vote for him.
Warner: Well, we won't go down that road! (laughs) Obviously, there's been this decimation of the industry across the board. I'm sure you’ve seen that very up close and personal here in the valley. So what kind of challenges do you see for EMS companies and selling capital equipment into those companies these days? What are the pain points for them?
McClay: What's motivating the purchases of equipment, now, is the smaller technologies, .01 to .05s. If you have 10-year old equipment, it’s not cutting it any more. That's kind of pushing some smaller guys to replace some of the older equipment because 0201s are here and 0105s are coming. I already see it, and that's not easy to do and to print. So that's kind of driving the technology right now. The smaller guys who are not dealing with a high tech company aren’t seeing that. Medical devices are not really going there yet. The other thing that's kind of happened for manufacturing in Silicon Valley is Tesla Motors is up the street. You will drive by it today, but they have 7000–8000 people that they've hired there in the last five years. They hire from around the country. So that's kind of a magnet.
Apple also has good engineers. I've worked a lot with them. It's kind of fun to have good manufacturing engineers to work with. They are not all from the manufacturing world, but most of them have some kind of masters in mechanical and they're smart. They learn very quickly.
Warner: Elon Musk added a lot of buzz between SpaceX down in my area and Tesla up here. It's really drawn in a lot of really great talent and is driving innovation. Because there's a demand for these products and commercial space, and these cars are doing well.
McClay: Yeah, you'll see them all over the place today. The mean time between Tesla sightings is down to about a minute and a half around here.
Warner: I want one, don't you? (laughs)
McClay: Last week I was driving on 237, and I passed one that I could tell was from the manufacturer and the guy was looking down at his phone, texting while he was driving, not bothering to look up. So he was on autopilot; it's here.
Warner: You see driverless cars driving around the streets of Silicon Valley?
McClay: Yep. That was my first one, actually. The guy was definitely not paying attention.
Warner: EMS wise, most of these companies are smaller because production is offshore, so we need more miniaturization, we need the reliability, we need tools and we need personnel to do that. Do you see this as a challenge from a capital expenditure standpoint, of them having available capital to put this equipment in?
McClay: Yeah, probably half of them pay cash, then the other half will lease. We do have one of my officers, Brian Carey, who's from the leasing world. He's our treasurer at SMTA and he focuses on our industry, so he is familiar with the vendors and does pretty well in financing in our industry. Like I said, only about half of them will finance, most of them will try to pay cash. They sleep better at night. It's a mindset of an individual, but there's capital available. If we need it, we have some friends in the industry who can help us out.
Warner: Great, is that part of your job actually? To match them up with capital people?
McClay: I always tell them if you have a relationship with your bank, you'll probably get a better deal from your bank. But if you have to go outside of your bank, it all depends on how good your finances are. The better your finances, the lower the rate. That's just the game they play. The more risk the more return, but it's available.
Warner: Thank you so much for telling me about SMTA and your perspective here in Silicon Valley. Is there anything I neglected to ask you about that's of interest to SMTA or in EMS capital equipment?
McClay: No, just the challenge of getting younger people in here is something we are really trying to focus on. It's a rough one, as you know.
Warner: It is rough. I see it across the board. Do you have any genius ideas along these lines?
McClay: I try to go out and handpick these people and work with them. There’s a couple guys right now that I'm kind of recruiting to see if I can get them in. I think I'll be successful with at least one of them.
Warner: I think mentoring is a good solution, right?
McClay: Yeah, we all have our eyes out for younger folks and we try to draw them in. They don't understand the networking advantages yet. Really the best thing about volunteering for an organization like SMTA is the friends that you make. They are all similar industries but you would never get to know each other like you do when you work together on something like SMTA. We have some good friendships that developed over the years. That's probably the best thing about it. Getting the millennials to understand that is not easy.
Warner: You mean the kids that are running down the street playing Pokémon Go are having trouble networking?
Warner: Kevin, thank you so much for your time. It's been a joy to meet with you and to learn more about you, SMTA, and Captec. Hopefully we will, like you said, get these millennials in and teach them how it's done and then they will turn around and teach us amazing things I'm sure.
McClay: When we did have the young one, I did ask her to set up a meeting and within five minutes we all had emails saying, “What's the best time for you guys?”
Warner: I know. They send out invites with some genius app we’ve never heard of! They are so equipped and so capable. I'm eager to see some of these people come on as well. Best of luck to you with SMTA and also Captec.
McClay: Thank you.