Marketing Group Digest – Summer 2015

Summer 2015 Marketing Group Digest

Electronic Systems Integration

Gary Ponto, CPMR
GP Marketing
Kirkland, Wash.

Lower tech costs fuel ‘race to bottom’ pricing

It seems that every conversation I have with an integrator or distributor ends up getting around to the topic of “the race to bottom” regarding product pricing. There is no doubt that technology costs are falling and product pricing is as well, with many off-shore competitors entering the U.S. at really low pricing to penetrate the markets. Import products are pushing pricing and margins down in some electronic industries faster than others, but it is coming, and fast, into many markets. So I ask you, does a brand name still matter to your customer as a consumer? Does a brand name warrant a higher price?

I will step up and answer my own question by stating that I believe it is support, not brand, that is now taking over integrators’ and distributors’ preferences for a product or product line. The two together are very powerful. Technology is moving so fast that our customers need more support than ever before, and I believe cutbacks in this area by manufacturers are a shortcoming for long-term growth.

IP products are becoming more of the norm for AV and security installations. These products are bringing new integrators into these markets. They are network and datacom providers, and they tend to work at lower product price margins than the traditional AV and security integrators. They also offer service contracts to retain customers and provide a larger array of services to building managers.

Technology: Is this going to change our markets, customers and/or rep firms? Are you ready?

Instrumentation, Automation & Controls

Tom Diercksmeier, CPMR
A. G. Technologies, LLC
Scottsdale, Ariz.

Use of Intelligent bus architectures is growing

Intelligent bus architectures are making their way more into the industrial control arena. PROFIBUS and ethernet IP are the two major standards. With these architectures, sensors and control elements can be integrated into a single network. There is software that makes it very easy for end users to convert their systems over to these networks.

Many industries, such as electric utilities, mining and water/waste water processing, are expanding their control systems via the ethernet-based and PROFIBUS I/O products. With the ever-increasing price of gold and silver, many mines are still requesting capital funds for plant upgrades and expansion. Even titanium processing plants are upgrading their facilities in anticipation of future increased prices. Ethernet, PROFIBUS and wireless I/O are very cost effective methods of adding to existing legacy control networks.

Throughout many plants, especially in the food and beverage industry, there is an increase in the number of parameters that are being measured. In food and beverage, the usage of individual ingredients is being monitored very precisely to maintain their individual recipes, to ensure the accuracy of the batch for the recipe and to eliminate waste of materials.

Sensor calibration hardware sales are still on the increase. There are two reasons for this: ensuring accuracy of the measurements in the field and increased agency regulations. Documenting calibrators are leading the way in calibrator sales. These types of calibrators store the measured values automatically which eliminates the human error aspect of measurement. They can also upload their data to the control system.

The market for sensors and instrumentation is increasing due to the lower cost of sensors. As companies try to increase efficiencies of their production lines, the more monitoring they are doing, thus driving increased sensor and instrumentation usage.

If there are any questions, please contact me at 602-329-2147 or send an email to

Materials, Assembly, Production & Supply

Troy Gunnin
Sun Rep
Tampa, Fla.

There’s good news in the auto industry recovery

Time flies! It’s an old cliché but very true. By the time you read this, half of 2015 is in the history books, and so far, the economy seems to be moving in a positive direction.

The auto industry has recovered nicely, albeit with a lot of controversy and recalls. I noted with interest an article about BMW’s facility in South Carolina. Last year the plant produced 364,000 vehicles, and some 70 percent were exported to 140 markets worldwide. Over the next few years, BMW plans to spend $1 billion to ramp up production to 450,000 vehicles and add 1,000 jobs. So U.S. jobs are being created to fuel an export market. What a concept!

In looking to improve efficiency and quick turnaround in model manufacturing, Toyota plans to adopt a modular manufacturing strategy that will allow it to operate smaller and more flexible assembly lines. The company feels this move will cut costs and improve production. Over the past several months, the U.S. has been hampered by the employees’ work slowdown at west coast ports. It has had a pretty dramatic impact in some areas. On another automotive note relating to that, Honda has felt minimal effects from the west coast ports problem since more than 80 percent of the parts used in Honda’s North American-built vehicles are domestic. That’s a nice benefit of using “made in America.”

We have seen a lot of positives in our area. Housing, particularly apartment building, is very robust and with increasing prices fueling concern about another boom to bust. Industry seems strong as well with employment increasing. Since January 2010, employment in U.S. factories has risen by 900,000 to 12.3 million, recouping more than 30 percent of the jobs lost in the downturn. One note of interest is that there are more than 500,000 skilled manufacturing jobs unfilled. That will probably grow as Americans age out of the workforce.

By 2030, it is estimated that 20 percent of Americans will be 65 or older. That is impacting more than manufacturing. I just noted that some local municipalities are facing shortages as 25 percent or more of employees are facing retirement in the near future. What to do? This reality means that we must reach out to our youth today to encourage them to get an education appropriate to the vocation they desire. We should also stress the importance of flexibility so they realize that, in today’s volatile world, their vocations may change many times over the course of their working years.

RF/Microwave & Wireless

Mike Harris
JM Harris Sales, LLC
Apex, N.C.

New capabilities are bringing many improvements

With more advanced R/F and microwave devices, we continue to see more activity in the development of test equipment having PXI computer controls (PXI = PCI eXtensions for Instrumentation). These extended test capabilities are required to validate many new products. PXI-based systems that meet each new requirement can be customized with modules to meet newer tests along with offering the promise of simple upgrades as may be required. LabVIEW software (National Instruments) is most often used to integrate these “component -based” test sets.

Traditional military new design business has been off for some time as many systems seem to have been designed for the long haul. We still see an occasional requirement for upgrades within platforms as old as the B-52 and on many long-deployed naval vessels. Newer designs more often involve remote control and remote sensing platforms. These systems would include remotely-controlled combat vehicles as well. Unmanned aerial vehicles (UAVs) and unmanned underwater vehicles (UUVs) seem to be where most of the new design is, and it will be for a while.

In new business developments, Cree (in North Carolina) has spun out a new subsidiary. Cree’s business has mostly centered around the use of silicon carbide in production of LEDs used in lighting systems. Cree also owns a viable gallium-nitride-on-silicon-carbide-substrate business producing very high power and broadband RF products. The new company is named Wolfspeed, and it will concentrate on doing things at “higher voltages, higher temperatures and higher frequencies.” One of its first projects will be to develop electronic systems as replacements for hydraulic controls within high performance aircraft.

Also on the horizon is extended use of 3D printing in the fabrication of very dense semiconductors. Coventor, Inc., (also in North Carolina) now offers a fifth-generation software package designed to better understand the effects of multiple variables within a semiconductor before it goes to process. In addition, the use of improved test equipment (as above) will help to assure validation of these products’ performance as they are produced.

The automotive industry is becoming a large microwave product potential as many new systems required by various government agencies will use devices that range in frequencies at ultra-sound ranges up through 81 GHz and on into infrared and visible light. Look for adaptive cruise controls on newer automobiles and light duty trucks in the very near future.

With the above new capabilities in application, power, testing and performance, we look forward to many improvements in circuit board design and connection technologies.