MC Assembly® – Movers and Shakers Interview with Jake Kulp
By Lavanya Rammohan, Research Analyst, Electronics
Mr. Kulp joined MC Assembly in 2006 and has over 33 years of electronics experience. He is responsible for leading and guiding the company’s strategic directives as well as new business development and marketing efforts. Prior to joining MC Assembly, Mr. Kulp served as Vice President of Sales and Marketing for another mid tier EMS provider. Mr. Kulp has leadership experience in a sheet metal fabrication and stamping turn-around environment and he spent over 21 years in the electronics systems and interconnect marketplace with AMP Incorporated. He holds a Bachelor of Science degree in Business Administration and Marketing from Bloomsburg State University.
MC Assembly is a leading mid tier electronics manufacturing service provider with state of the art production facilities in the United States and Mexico. The company offers a wide range of manufacturing, test and engineering support services across a broad market spectrum. Service offerings include front-end concurrent design (DFX) services; plated through-hole and surface mount printed circuit board assemblies, complex sub-assemblies, complete box builds and warranty / repair services. Our technology focus is high end signal, power, high frequency RF and fiber optics platforms, with about 50% of our revenue coming from box builds.
MC Assembly’s market place focus is centered on the industrial, medical, aerospace, defense, and the high-end telecom industries.
Lavanya Rammohan: Can you provide a brief introduction about MC Assembly and the products/services it offers?
Jake Kulp: MC Assembly is a leading mid tier electronics manufacturing service provider with state of the art production facilities in the United States and Mexico. We offer a wide range of manufacturing, test and engineering support services across a broad market spectrum. Our service offerings include front-end concurrent design (DFX) services; plated through-hole and surface mount printed circuit board assemblies, complex sub-assemblies, complete box builds and warranty / repair services.
Our market place focus is centered on the industrial, medical, aerospace / defense, and networking / telecom industries.
Lavanya Rammohan: How do you see the electronics manufacturing services (EMS) provider market evolving in the next 5-10 years, especially since the recovery and on track growth potential?
Jake Kulp: I see continued growth in various low cost regions in the world with a move to stabilize various positions within the United States. I see continued consolidation in the industry, such as the one we just saw announced between Benchmark Electronics and Pemstar. The EMS community is becoming better judges of their business opportunities in this global market, by taking the time to manage their risk assessments (materials and terms) and determining geographical decisions that are much more sustainable over the long term, with regards to where components are purchased as well as where end products are manufactured.
Lavanya Rammohan: What are the key challenges facing the EMS market? What is MC Assembly doing to face these issues?
Jake Kulp: I see the primary challenge for our industry being the continued globalization of business models and how we address that. There still seems to be a fair amount of overcapacity, especially in slower growth areas of the globe. The biggest long-term challenge facing the industry is the slim profit margin that is available to us versus the risk that the industry is asked to underwrite. Now here is what MC Assembly is doing in the face of these issues. For the globalization of the business, we are producing more products in our low cost center and we are working very hard to remain competitive by procuring more raw materials in various low cost regions. We are expanding our manufacturing position in Mexico and accelerating materials acquisition positions in Mexico as well as Asia. With regards to the industry issues of overcapacity, we have a controlled growth strategy and we are focused on the execution of that plan. This strategy includes both existing and new customers and thus far MC Assembly has not had to worry about underutilization as many others in the EMS industry have.
Lavanya Rammohan: Does this include overcapacity in terms of inventory as well?
Jake Kulp: It could. By my thinking, the materials issues are managed more during the up-front risk assessment actions. We are very careful to assess the financial viability of potential partners and to structure agreements to arrive at a shared risk proposition when it comes to inventory positions. By agreeing to a materials strategy and who owns the material at the various stages of the process, we are managing that aspect of our business much better then in the past. My earlier response to the overcapacity question was mainly with respect to facilities and that there is still far too much manufacturing space in the globe still not being properly utilized, and it’s very costly. But you are absolutely right with your comment about the inventory positions as they can drain EMS working capital beyond their capacity to sustain or grow as well.
Lavanya Rammohan: What are the core strengths you think EMS providers will need to develop to compete in this market?
Jake Kulp: Good question! I think its focus on service, adding higher levels of value to the relationships, closer ties to our supply chain partners and in our case moving to higher levels of integration.
Lavanya Rammohan: When you said adding higher levels of value, you mean in terms of flexibility, innovation?
Jake Kulp: If I tied this question to the attributes that differentiate MC Assembly from our competition, our area of adding value is flexibility, more efficient management of our customers AVLs and BOMs, supporting logistics solutions such as direct fulfillment and moving into higher levels of integration for our customers.
Lavanya Rammohan: Talking on same line, there has been a lot of interest and discussion between EMS and ODM mixing business models. How important do you think design capabilities are for EMS providers or will it just be a complementing factor for them?
Jake Kulp: It has always been my belief that OEMs should spend less and less of their fixed cost in trying to excel in manufacturing and spend more of their time and money on engineering, sales and marketing. Since the ODM’s are looking more and more like the EMS companies, it seems pretty safe to group us all together. The most common EMS engineering offerings of design for manufacturing, design for test and design for supply chain remain important, but, I am not convinced we will see an enormous amount of revenue being generated by pure play engineering service providers. As compared to the revenue generated by building a product, it feels like engineering revenue will remain a much smaller percentage of the overall revenue for some time to come. Selling engineering services is more transactional in nature then repeatable manufacturing orders. You need to have a continuous stream of engineering opportunities from which to bid and service, I do not believe in the majority of business transactions that engineering services is a major differentiator anymore. Everyone seems to have some level of engineering services. I believe that the OEMs should fight to keep their intellectual engineering property, and their final design expertise.
Lavanya Rammohan: What do you consider are your key business differentiators and how have they given you an edge over your competition?
Jake Kulp: First and foremost, the way we service our customer base. MC Assembly is well known for our customer focus and this permeates throughout our entire organization. We tend to take care of our customers and they stay with us for a very long period of time. If we loose a customer- it seems to be for reasons beyond our current control, such as migrating closer to their end customer base and wanting a manufacturing presence in an area of the world we may not currently have brick and motor in. The next is our RF capability. We have a very strong RF capability both from a technician as well as for test, which is very unique to find in mid tier EMS providers. MC Assembly is a scalable EMS provider. We like to say that we have tier 1 manufacturing capabilities with a mid tier customer focus.
Lavanya Rammohan: MC Assembly does not have manufacturing sites in low cost Asian or Eastern European regions. So what has provided the company the edge over EMS providers who do have low cost manufacturing sites in these regions?
Jake Kulp: Well the first thing is that we are not spending our time pursuing customers who have defined their outsourcing requirements as Asian manufacturing. The second thing is that we are procuring a larger portion of fabricated products- such as bare boards, cable assemblies, sheet metal, and plastics from lower cost regions where you can really get an advantage of labor savings. All of these decisions are weighed against the total cost of acquisition and in some cases, even though the price may be a little higher, it still makes sense to procure these same products in the US. Lower prices can quickly dissolve when faced with the added risks and logistics costs when conducting business in Asia.
Lavanya Rammohan: What have been some of the key initiatives the company has undertaken this year?
Jake Kulp: We have been aggressively re-branding and re-marketing our company. There has been a lot of time and money spent on restarting the demand creation efforts as well. Internally we have ratcheted up our Lean Manufacturing initiatives this past year. We are also moving to customer or technology specific manufacturing cells in our plants and already see the operational benefits of such moves. From our NPI and business offices, we have instituted a much more defined and repeatable focus on the front-end of the new customer introduction process, including the always-interesting discussions of terms and conditions.
Lavanya Rammohan: What are some of the growth strategies that your company has implemented to foray into untapped markets and expanded client base?
Jake Kulp: This may not sound very exiting because while we continue to upgrade our capital equipment and investments for better manufacturing and test tools, I believe it is simply back to the basics of selling our services and managing the business relationships. Another way to say this is that we are focusing on blocking and tackling of business management. Specifically, we are re-motivating and investing in the existing reps we have throughout the country, bringing on new reps to fill in gaps we might have geographically and maintaining a very strong, upfront investment of time to qualify each potential customer for “fit”. We are not trying to pound square pegs into round holes.
Lavanya Rammohan: What kind of growth platform do you envisage for MC Assembly over the coming years? Is MC Assembly planning to penetrate new markets both geographically or vertical industries?
Jake Kulp: No, as far as the geographical expansion is concerned, we are going to remain very heavily focused domestically and in Mexico with our current manufacturing footprint. We are going to be maniacally focused on the industries I laid out to you earlier and we are going to go through the necessary changes to be certain that we are able to support a higher level of value such as direct fulfillment, logistics support, higher levels of integration, and more complex box builds for the customers we are serving.
For the growth platform question, MC Assembly, even through the significant downturn the industry experienced back in 2000-2001, has never had a down year. In the last ten years we have maintained steady year over year revenue growth. It is our desire to continue in a steady growth mode as opposed to the meteoric kind of rises and falls the EMS business has experienced in the past. That plan will be executed by our ability to keep and grow the existing customer base we have and methodically and carefully bring in new, targeted customers each year
Thank you very much for your time!
This article originally appeared here.