Contract Manufacturing in Silicon Valley

1. Contract Manufacturing • in Silicon Valley • Josh Williams, BW Research • April 6, 2012

2. What is Contract Manufacturing and • why are we focused on it?

3. Contract Manufacturers (CM) are those firms that produce and assemble products under contract for other companies. This includes CEMS (Contract Electronics Manufacturing Services) firms.

4. For Emerging Green & Technology • Employers have the ability to turn an idea into a product quickly & effectively was a key reason to be located in Silicon Valley

5. Top 10 Global CM Firms • Have at least one location in or near • Silicon Valley.

6. Manufacturing Employment in the US is Recovering!? • Due to lower relative transportation & material costs as well as higher quality control

7. "It's a jobless recovery in some sense, but we have jobs out there, so it's the skills discussion," • said Andrew Liveris, CEO of Dow Chemical, January 2012

8. What do Silicon Valley’s Contract Manufacturing employers look like, and what are their workforce needs?

9. Silicon Valley Contract Manufacturing Profile

10. Silicon Valley Contract Manufacturing Employment Growth * Caution growth expectations generated from a small sample size

11. Contract Manufacturers for this study typically fall somewhere on the spectrum between; Actively engaged in New Product Introductions (NPI), and the product development process while focusing on more emerging technologies vs. Focused on specific niches within manufacturing and assembly processwhile focusing on larger more established clients.

12. Silicon Valley’s CM employers repeated several key themes for staying and growing in the region: • Proximity to customers including Original Equipment Manufacturers (OEMs) in the SV. • Pace of innovation &new product development in Silicon Valley • Access to Talent including access to outside expertise in emerging technologies

13. What are the occupational opportunities found in Silicon Valley’s Contract Manufacturing Workforce?

14. Key Occupations in Silicon Valley’s Contract Manufacturing Workforce Key Occupational Category #1 Production Positions = Applied engineers, related technicians (quality control, operations and maintenance), assemblers and machine operators Key Occupational Category #2 Design Positions = Designers, Drafters and CAD technicians Key Occupational Category #3 Project Management and Sales Positions = Project managers, sales representatives and administrators

15. Workforce Development Issues Specific to Contract Manufacturing 1. Large retirement challenge not an issue for most employers. 2. Soft-skill training particularly written and spoken communication skills and contextual training would be valuable for employers

16. Similarities with Workforce Development in CM & Emerging Green 1. Employers are considerably more focused on industry experience and on the job training than degrees or educational programs. 2. Similar occupational profile, in production, design and customer service/sales. 3. Employers feel a strong connection to the region’s technology and emerging industries, renewable energy, energy efficiency, defense & aerospace, information technology & security.

17. What are the workforce & economic development strategiesthat should be considered based on the research findings?

18. Workforce Development Conclusions & Recommendations

19. Recommendations I • Expand foundational training in applied engineering, machining and product design • Silicon Valley produces a broad array of engineers, but employers continually talked about the need for engineers and technicians who had experience working with different machines and design applications.

20. Recommendations II • Introduce students & job-seekers to related internships and entry-level opportunities in CM and aligned industries • Work experience is a key requirement for students and job-seekers interested in working in contract manufacturing. Any program to increase work experience in contract manufacturing or related industries would be valuable .

21. Economic Development Conclusions & Recommendations

22. Recommendations III • Create networking opportunities with small, emerging businesses • CM employers largely believe their growth opportunities lie with smaller or emerging businesses and yet most existing industry associations and networking events typically represent the larger and more established employers.

23. Recommendations IV • Coordinate industry specific events that highlight the region’s contract manufacturing • Contract manufacturers tend to see themselves connected to a few key industries and focus their new business efforts within industry associations. Industry associations within Silicon Valley should be made aware of the strength of CM in the region, particularly in global NPI’s.

24. Recommendations V • Connect contract manufacturers with incubators, entrepreneur groups and other start-up supports • A considerable segment of contract manufacturing employers prefer to focus on cutting edge technologies and innovative NPI’s, while many entrepreneurs are not able to find qualified and reliable component and prototype manufacturers.

25. Methodology

26. Methodology I • Our Silicon Valley contract manufacturing profile was developed through several data collection methodologies; • Completea secondary data analysis of Silicon Valley’s specialized suppliers and support services.

27. Methodology II • b. Develop a database of known SV contract manufacturers and product design service firms • c. Complete 16 executive interviews with Silicon Valley Contract Manufacturers including both small and large firms as well established and emerging firms.

28. Contract Manufacturing • in Silicon Valley • Josh Williams, BW Research • April 6, 2012