Shax Engineering: The Biggest Little Board Shop in the Bay Area
I recently had the chance to sit down for an interview with Isam Shakour, founder and president of Shax Engineering. This little San Jose, California company is a complete turnkey operation, providing PCB layout, fabrication, and assembly services. We discussed the company’s growth since its 1998 founding, and Shakour’s plans for Shax going into the future. Isam is also doing the important work of mentoring young people into our industry so we introduced him to a bright young inventor, Jonathan Zinski, who brought along his latest invention.
Barry Matties: Isam, please begin by telling me about Shax Engineering.
Isam Shakour: Shax Engineering is a designer and manufacturer of printed circuit boards. We’ve been designing printed circuit boards from concept, prototype to manufacturing since 1998. We started basically with the function and specification and began to generate block diagrams, components, and schematics. We also work with hardware descriptive language VHDL and Verilog. After our work is complete, the intellectual property is solely owned by our clients and customers.
We ran into a situation where some of our customers asked, "Do you know anybody that can do the layout for us?" So we added the layout capability, where we generate the output such as Gerber files and fabrication documentation and pass that on to the customers.
Later, our customers again came to us and asked, "But how can we manufacture this?" So we aligned ourselves with other manufacturers in the Bay Area and gave them the documentation, supervised the manufacturing and produced the boards. Eventually, customers said they wanted assembly. So we aligned ourselves with assembly providers. We provided these services from 1998 to 2003, and then we started to think about going into our own fabrication.
After 2001, we saw significant opportunity for integration with our services; at that time we were integrating through business alliances. In 2003–2004 we started planning to provide integration ourselves and 2005 started Shax Engineering’s assembly business. We bought the PCBA equipment, put it into place and went into full production by the end of 2006. It has worked extremely well for us. Our customers gave us the whole idea from start to finish, from the schematic to fabrication. So in 2012 we started PCB fabrication and completed the process. Since then we have been a company from concept to production.
Matties: Which markets do you serve primarily?
Shakour: Basically we serve the commercial market right now, but we also do some work for the military.
Matties: Is your company ITAR registered?
Shakour: We are not ITAR yet, but we expect to be by June. We are applying for ITAR because most of our manufacturer representatives and business partners are looking for ITAR capabilities. But most of the product we have done for different companies, especially the military, does not require ITAR. They have been basic circuits in the early stage of design.
Matties: How many people do you have in your fabrication facility?
Shakour: For fabrication, we have six per shift but can increase to eight, and in the Shax facilities we have 10-12 people.
Matties: I think you are the smallest shop in the Bay Area. How is it for a small fabricator in the Bay Area?
Shakour: We basically focus on prototype and NPI which need quick-turn capabilities. Many customers must stay local because they don't want a long wait or they don’t want to leave their engineers with nothing to work on. It’s a very high cost to maintain that manpower, so we try to provide what they require as quickly as possible. When we receive the PCB order, we aim for five days or less. Now, for assembly, we do high-mix complex boards; they are high-mix in terms of the surface mount technology as well as the through-holes. Those also need to be a quick-turn type of service.
Matties: In terms of the assembly, are you just loading the board or are you doing the box build as well?
Shakour: We don't do box build here; it’s just assembly at this time. We are trying to achieve the high-quality assembly that is required for high-technology, specifically for commercial and some prototypes for the Navy and so forth. That is where we are focusing right now.
We are assisting in design and building boards that incorporate brass and metal into the PCB. These types of boards are utilized in the RF and microwave industry. We are targeting this area since we see expansion in high frequency and LED light industry utilization.
Matties: Specializing in this sector really gives your sales team great focus to tailor their message to that industry. What sort of percentage will this segment represent in your business?
Shakour: Right now, PCB fabrication and assembly is the lion's share of our business. Design and layout is 10–15%. I would say fabrication is around 35–45%. Adding a new technology would change the percentages a little and generally it will increase the revenue of this company, because we are always seeking expandability and profitability.
Matties: What sort of revenue gains are you looking to make?
Shakour: We are seeking revenue beyond $5 million.
Matties: The keyword here is profitability, right? How do you grow and stay profitable in this?
Shakour: We have the capability and ability to improve our output in such a way that we can reduce our cost while expanding and increasing our sales. Also, there are two types of growth: horizontal line and the vertical line. Right now, I’ll just be very conservative and say that expanding organically would take a lot of time. So it would probably be through acquisition. That's the fastest way and a possibility for us.
Matties: When you look at manufacturing in America, what are your thoughts?
Shakour: I always and still believe in this country; has the best manufacturing capability in the world. I don't believe that any single country right now can produce any product in the world where 100% resource and material is from the same country as the United States. This country is full of natural resources. That's my belief, and I think that this industry is alive and well. Furthermore, this country has very well-trained manpower, which does not exist everywhere, and we have a lot of people coming from some of the best schools in the world.
Matties: I hear what you are saying, but I see it a little differently. Many young people don't want manufacturing jobs in America, because those jobs don't pay well and/or the infrastructure for manufacturing isn't necessarily there. We are far from the top in just high school level education, and the cost of college education is through the roof, so we're seeing more alternative paths to education. Don't you think that plays a big factor, contrary to what you're saying?
Shakour: The concept of manufacturing has changed. It does not mean that you have people sitting on an assembly line, assembling by hand. Even those workers are becoming computer-literate people that know how to manage a number of manufacturing lines by using robotics technology. That's a concept that we have to adhere to in America. But I believe our manpower has a very high level of education, which is available right now. They can run assembly lines efficiently with very few people, and do it better than you can find outside of the U.S. That kind of efficiency is what we need in order to reduce production costs. I believe this can happen here, that the United States still has the ability to lead production better than any other country in the world.
If you look at the production in this country years ago, most of the jobs in the north were textile. They moved from the north to the south, to south of the border and then to Asia. With that being said, if we cannot renew ourselves, jobs are not going to stay here. We have the research institutions, we have the capability, and we have the right amount of people who are very well-trained, specifically here in California. We can retrain our employees in order to give them another chance to produce different things. The country is strong. The idea out there is that jobs are not available here and somebody is going to steal my job. Nobody is stealing our job, but again, we have to renew ourselves and do this continually.
Matties: Today we are here at your facility with Jonathan Zinski, a young man who is designing a circuit, and you are mentoring this young man and really helping him out.
Shakour: I remember myself when I was young. I grew up in Sudan, a place where there was no technology, and I was fascinated by electronics. But at the time there were many big brands of radios—Grundig, Philips, RCA—and they ran on batteries. My grandfather had a big radio, so I broke it open and it looked like a little honeycomb. I loved it all, and to understand all of this I had to travel to borrow books about electronics from the Local British Council Library of American Center in Khartoum.
I remember the first time I came to the thermionic valve and the germanium transistor, and for me at that time it was something amazing. I was around 16 years old. Now you find somebody like Jonathan here, he wants to build his circuitry himself and he wants to excel in electronics. It reminds me of my days when I was trying to get these things working and understand how the transistor and thermostatic valve worked. So I try to help as much as I can.
Matties: I think that's the right attitude that we have to embrace. Because when I look at our industry, I don't see a lot of young people coming into it. It's going to take people like you to mentor young people like Jonathan into the industry and show them the possibilities and the future that can be here.
Shakour: When you find somebody interested in electronics, like Jonathan, these are the young people who will advance this technology and keep this country leading in medicine and technology. By their new inventions we will still dominate in the areas of electronics and other industries. This new class generation will fuel companies and industries for the generation to come.
Matties: I agree. Thanks so much for your time today.
Shakour: Thank you very much and I'm sure your magazine and publications have continued to greatly deepen the knowledge about electronics and manufacturing. I wish you all luck.
