Darekon is an EMS with 21st Century Challenges

The Finnish EMS, Darekon, is an EMS with 21st Century challenges. To meet them, it is moving their PCB manufacturing and electronics assembly factory from Savonranta to the city center of Savonlinna. While on the surface this is the story of a small-to-medium-sized organization relocating a bunch of equipment 50km down the road, I think there are universal aspects of 21st century manufacturing at play, that many companies are feeling around the globe. To highlight these, Darekon provides an interesting case study.

Finding Talent for Darekon

A decade ago, in the southeast of Finland, the city of Savonranta was merged with the city of Savonlinna. Savonranta had a population of around 1,000 with a community that was either older and staying put, or younger and moving to Helsinki. The result, as far as technology companies were concerned, is that the ability to hire new staff had essentially bottomed out. Darekon had 40 staff working at their plant in Savonranta, but was unable to grow because they simply didn’t have the human resources to do so, and with the nearest pool of talent over an hour’s drive through the Finnish country side, recruiting that talent from out of town was probably difficult at best.

An ageing employment base and youth fleeing to the big cities. Sound familiar? If I had a PCB fab, I’d love to open it in the Texas panhandle, where the land is cheap, the taxes are cheap, and the business incentives are good… but I’d be hard pressed to find the right staff to work there.

The Electronics Supply Chain

In their Autumn 2019 Customer Magazine, Darekon says that “at the same time, logistics services to the area decreased.” If you have one or two customers for whom you’re making a few products, that require a small pick list of raw materials, this can be accommodated, at least for a little while.  Imagine a manufacturer of steel fencing. You don’t ideally want to have too much raw material on hand, but since the list of stock you need to maintain is “steel in eight sizes”, it’s not hard to keep enough sitting around to cover a delayed delivery here and there, or adjust to trucks that will only deliver three days a week instead of six. (This is of course a gross oversimplification of the fence manufacturing industry and I ask Anchor Post Fence Co. for forgiveness.)

That is not the electronics assembly business.

Efficient supply chain is the lifeblood of the EMS…

Even with a manufacturing agreements in place with your largest customers, for which you’ll keep the necessary components and PCB raw stock on hand to meet their needs, you can’t efficiently deliver prototypes to new customers or tool up for a major new order, if your supply chain is choked. Efficient supply chain is the lifeblood of the EMS, and if the pathways carrying parts to you and assembled product away from you become clogged, your company is going to have a heart attack. You need to be able to get 4 oz copper weight prepreg and that obscure Honeywell humidity sensor sourced, ordered and delivered before your current customer decides they can get it faster somewhere else, or a new customer decides they can find it cheaper. If the logistics provider that your parts distributor uses decides it’s not in their economic interest to service your city / municipality / country anymore, you’re absolutely stuck. There’s a reason why there aren’t any electronics assemblers in Alaska.

How The Move Helps Darekon

According to the report (linked above) Darekon published, the new facility is 2,000 square meters, just over 21,500 square feet. They don’t say what size facility they are moving from, but 21,000 feet is a great size. The facility Expert-EMS announced they were moving to in Tustin, CA is 26,000 square feet so while not a direct apples-to-apples comparison, you could imagine Darekon would now feature similar capability and opportunity to grow.

Darekon’s largest customer, EKE-Electronics, a designer of train automation systems, is located in Savonlinna as well, so this places the factory very close to a major customer. EKE-Electronics says that they experienced an increase in production volume of 50% last year, and expect that same growth to continue into next. They need to scale, and with Darekon as their manufacturing partner, this move will hopefully allow Darekon to scale with them.

Crucially, I think the greatest advantage that Darekon gains in this move, is that the facility is in the Elektronia Technology Center, right in the same plaza as “Elektroniikan 3k-tehdas”. The “3K Factory of Electronics” is an electronics testing and assembly facility run by the Southeast Finland University of Applied Sciences. They have equipment in house to perform a wide variety of product testing from x-ray inspection of BGA and QFN placements to vibration and drop cycles, to electromagnetic compatibility testing. Combine that with Elektronias mission to provide training courses for manufacturing staff and the association with bachelors and masters programs in engineering, and suddenly a rich pool of youth interested in the very thing you’re doing is right at your doorstep. According to this article on Evertiq, Darekon needs to hire 10 staff right away, and with the 3K factory in close proximity, you not only get a great opportunity to find interested staff, but trained and experienced staff.

Logistics improvements is harder to quantify, primarily because that information is mostly in Finnish. After doing some searching through DHL, though, there are three package drop off points, “Paketshops” in Savonlinna vs. zero in Savonranta. If there are paketshops, that means the DHL truck is rolling through town at least once a day. Further there are a number of other factories and manufacturers in Savonlinna: Andritz Savonlinna Works making equipment for the Pulp and Paper industry, UPM Savonlinna Plywood, Argus Spectrum International making wireless fire-life safety systems, and Savox making communications equipment, to name a few.  If there are multiple factories, that increases the demand for logistics providers to be involved in that area, making it easier to find shippers for everything from single 1kg boxes to big LTL shipments to even full containers.

Congratulations, Darekon, on your move!

(all images source: Darekon)