MFG Podcast Ep4 with East/West Manufacturing President and CEO Andy Salo
MFG Austin: Andy Salo of East/West Manufacturing on contract manufacturing, growth and the importance of customer and employee relationships
By Jennifer Jones
April 18, 2021
You both [customers and contract manufacturers] have to come into it as a partnership and realize that both of you have to go above and beyond for the other person. We understand that we are essentially the manufacturing arm for that OEM and are doing our best to make sure that things are designed for manufacturing that we are doing things on time etc.
Andy Salo is the President and CEO of East/West Manufacturing, a full-service contract manufacturer focused on high-end PCBS? Custom cables and electro-mechanical assemblies.
In this episode of MFG Austin, Salo shares his thoughts on manufacturing, growth and the importance of customer and employee relationships.
What made you buy a manufacturing company?(0:36)
I got asked that question from other contract manufacturers (CM) when I purchased the business because they were like, ‘What were you thinking? Like this is a hard business.’ But I’ve been on the customer side of a CM before and thought I could add some value there and know what the customer needed and leverage my go-to-market experience as well. That’s turned out pretty well so far.
What makes it a hard business?(1:14)
It’s one of those weird things: it is and it isn’t. If you just do what you say you’re gonna do, you do it on time and do it with quality, then you’re going to be ahead of like 95 percent of the other people out there. But the technology and the know-how that goes into doing it is certainly difficult and that takes a lot of experience and that’s why I’m fortunate that the people here just have literally decades of experience in doing really difficult engineering builds in prototypes of boards.
You work with large OEMs and build high-end custom boards. How are you different from other CMs?(2:06)
I think one of the things that makes us unique is the fact that I bought this business. It was about four years ago and I bought it from two gentlemen who ran it for the previous 13 years. The company really grew up in the kind of prototype NPI (new product introduction) type of space. When you do that you see hundreds and hundreds of different types of board layouts, different components used, new technologies being used, and so that prototype and difficult type of thing to build becomes part of the DNA. We’ve carried that DNA in the company forward and that helps even today as we’re working on larger production projects with large OEM customers like Audi or 3m or somebody else. The fact that we’ve seen a lot of things, we can bring that to the table when they’re trying to do a difficult project and we need to help them be successful with it.
How much is culture a point of emphasis?(4:39)
Culture eats strategy for lunch. I believe that is very true. I could probably spend a whole day talking just about culture, but a lot of it is just: do people know their value? Do employees know how they’re contributing and feel valuable? I think part of the way you enable that to happen is I’m a big believer in servant leadership. I always say that you don’t work for me, I work for you and we all work for sales. So, we’re kind of all in this together. It’s really my job to just make your job easier. Even the people that were here when I got here had already been here 5, 10 sometimes 15 years, and we’ve just extended that. I think people stay where they’re happy and that’s really a testament to what the company had done before I got here and what we’ve continued to do.
What is it that you like about the electronic space?(6:45)
I have a computer science background. We all see electronics all the time and everything: our phones, the computers that we’re using right now. Being in contract manufacturing you get to see so many different industries apply technology in new innovative ways that you have never dreamed of.
I’ll give you an example: we have a customer in the concrete/cement business. They have a lot of chemical things that they do for that, but they also have electronics. We build devices that go on fleets of commercial concrete trucks/cement mixers. If you were just pouring a slab for your house, then you’d have a concrete truck or two roll up. Well, if you’re pouring a skyscraper or a new building (we’re actually building in Round Rock right now) you have a fleet of trucks that roll up and you need to measure consistency - what’s called a slump factor of that concrete. Normally you would do that manually and it’d be a laborious process. We build technology that goes on those trucks, measures that device, beams it up to the cloud into their network operations center, and there they have visibility of hundreds, if not thousands, of commercial vehicles across the United States at any one time. I had never known that would be a thing before we were building for them so it’s just innovative things you get to be a part of all the time.
How do you approach customer relationships?(8:59)
You both have to come into it as a partnership and realize that both of you have to go above and beyond for the other person. We understand that we are essentially the manufacturing arm for that OEM and are doing our best to make sure that things are designed for manufacturing that we are doing things on time etc. Then when there’s issues, if there’s an issue in manufacturing or something’s not working in tests, you need a collaborative environment where you can work with that customer and make sure you solve the problem really quickly. We know the critical piece that we are. We’re the last piece before it gets out the door. People have spent months, if not years, developing a new product and then they say okay we need it tomorrow. So you know you’re on the hook to just get it out there really quickly.
What are some of your challenges now?(10:10)
I think the biggest is growing and making sure you have enough capacity. That’s the primary reason why we’re building our new facility in Round Rock. We’re in a little less than 10,000 square feet right now in our current facility. We’re building a 43,000 square foot state-of-the-art facility adding SMT capacity (surface mount technology) and just growing the business. We just literally need more space. We’re busting at the seams. I would say that’s the biggest challenge right now as far as like internal and customer challenge.
But there’s quite a few environmental challenges as well economic, environment, supply chain all kinds of things right now going on in the industry.
Let’s talk about supply chain: global disruption, ship in the Suez Canal(11:06)
I was just literally watching those memes on Twitter now of all these guys coming up with unique ways to move that ship out of the way. It’s kind of crazy but it is emblematic of the issues that are happening right now because some of them are on that shipping side. Just the shipping freight-literally you can’t get to it. Certain docks in the United States are backed up for weeks. You have the whole shipping issue but then you also have component availability ICs (the integrated circuits,) the things don’t exist or you can’t find them anywhere on the planet or the manufacturers are backed up. They’re giving you 52-week lead times or 28-week lead times. It makes it very difficult to build anything if you don’t have the raw materials to do so.
When you have customers but not the parts to make the product(12:25)
You know it’s actually fairly common. There’s always a certain component that’s going obsolete, so they have to go to the next generation. There’s shortages: a couple years ago, memory became non-existent. All the phone manufacturers gobbled up all the memory in the world. There’s always something you’re wrestling. Right now, we’re still in the middle of COVID, and with all the supply chain issues and the US and China arguing back and forth, there’s so many factors that just make things difficult.
COVID: What’s your prediction?(13:08)
I’m pretty bullish on where things are right now. Several of my employees were able to get vaccinated. I got my first Pfizer shot earlier this week. As you know with Austin starting next week, they’re kind of opening it up pretty widely. I’m pretty confident that in the next six to eight weeks most people are going to be able to get vaccinated that want to get vaccinated. I’m really hoping for a semi-back-to-normal summer.
ARMA is ready to do tours and get back into those facilities(13:58)
One of the things I really enjoyed after I bought this company was the fact that ARMA was there. I was able to join right away and do those types of things that you mentioned: the facility tours and going to the different events. There’s so much you learn from going and seeing somebody else and how they do something. You can always learn something. I’ve been to places where I like the way they do certain dashboards with large screen TVs and a rotating display. But you just go, ‘Oh that’s a great way to do that.’ The fact that the ARMA community is so strong and tight knit makes that really easy to do. Just to give you a little bit of kudos: you do a fantastic job at shepherding all those folks and making that happen.
What’s your vision for East/West for the next five years?(15:02)
We’ve grown a ton. We’ve already more than doubled in employees and revenue. I would expect that to easily quadruple in the next year or two. We’re just starting there.
We’ll move into the new facility and expand quite a bit there, but I see us expanding regionally within the United States potentially into Mexico and not just do PCBA like we are doing now where we center things around PCBA but we also do cables, electromechanical, backend, all kinds of things. But maybe expand to do things like plastics, metals, etc. or require somebody to do that. That’s where I see us going because you really want to be as much of a one-stop shop for customers as you can. The more things you can take off their plate the better, and that’s where we’re heading.