Epec: From Building Boards to Managing Supply Chains

Release Date: February 25, 2010

[February 25, 2010: New Bedford MA] EMS007 Editor Steve Gold recently had the opportunity to interview Epec Engineered Technologies Director of Operations, Kendall Paradise, a third-generation PCB person whose family has been building circuit boards since 1952. The interview offered insights not only into the evolution of a 58-year old small business from board builder to supply chain manager, but into the changing face of the North American PCB industry.

Read the entire interview below.

EMS007: Take us through your company history. Why did you change your company name to Epec Engineered Technologies this year?

KP: I actually am a third-generation PCB person; my grandfather started one of the companies in Connecticut that Epec acquired about eight years ago.

Epec has been around since 1952. So we've been making printed circuit boards out of New Bedford in Massachusetts for over 50 years. About 10 years ago, Epec was purchased by Ed McMahon, our CEO, and his partners. Since then, it has grown by acquisitions in the PCB industry.

We've done about twelve acquisitions in the last seven years, all over the country and in the different areas of the PCB world. That's really how we've grown.

We changed our name to Epec Engineered Technologies to reflect how, over the past three years, we've been involved in a lot more than just printed circuit boards. So, we wanted everybody to see that.

EMS007: Tell me more about the acquisitions. What did you look for when you were acquiring these companies?

KP: We acquired physically smaller printed circuit board companies-medium- to high-technology, high-mix, low-volume--the type of work that could easily be moved into our model. We typically found smaller regional companies, all pretty much between $3 and $5 million companies, usually second- or third-generation-owned companies where people there wanted to be involved in something bigger and didn't know how to do it on their own.

EMS007: Can you tell me about technology capabilities?

KP: We are pretty spread out in terms of the technology that we focus on, which is really the beauty of our model. With our supply chain, we supply anything from two to twenty layers. We're very high-mix, low-volume for the majority of our customers, but we do a lot of higher volume inventory programs for a select customer base.

This year, we are really working on our flex and rigid-flex quick-turn work in higher copper--about the 6-7ounce range--which is a great niche for us.

EMS007: Who is your typical customer and what end-markets do you serve?

KP: One of the things that have been really good for us, despite the tough economic conditions last year, is that we are spread out among a lot of industries. We do a lot of commercial work, and we do some automotive work. Some of our customers are in construction. And we do medical products, as well. So we are pretty diversified. We really focus on never getting too heavily involved in one market segment, because when something really bad happens, like what experienced last year, it could be painful. A lot of our competitors took big hits because they were very highly invested in automotive. So we're pretty spread out, much more commercial oriented. We are not in military or ITAR type contracts. We focus strictly on the commercial side.

Last year, the overall PCB market was down about 35% and, obviously, our business didn't do as well as we wanted. Yet, because we are still diversified, and we're offering different product lines, we performed above the market.

EMS007: Tell me a little bit about your flex circuit capabilities. What are your objectives there?

KP: We've been producing flex circuitry for about three years. When we started getting into the flex industry, we'd always done very standard, longer lead times, small volume orders. Now, we're focusing on smaller orders. One of our critical services is our engineering and design capabilities. So what we are focusing on this year is more quick-turn flex and rigid flex: high-mix, very low volume, with 5-, 7- and 10-day turns.

In 2010, we feel that our proven supply chain and engineering resources have opened up that quick-turn door for us. We've successfully worked with our core customers in the flex arena, being able to cut time out of the production process. We are excited about this new direction for 2010--the quick-turn side of flex, and new product development.

EMS007: Are you doing design work as well when engaging in new product development?

KP: We do, on a case-by-case basis. A customer will come to us and say, "Here's what I am trying to achieve. How do I get there?" and our engineering team, who's based here in New Bedford, will get on the phone or go see the customer and spend time looking at what their product is and what their specific needs are. Then we figure out how we can leverage our production capabilities to accomplish what it is that they are trying to do.

EMS007: Do you compete with board brokers and, if so, how are you differentiating your operation from them?

KP: We actually do. We shut down our domestic printed circuit board manufacturing facility about five years ago. Since then, we do a lot of things that replicate our old manufacturing capabilities. But for us, our model is so different. We have so many controls in our supply chain; and we have front-end engineering, value-added services and our own office and facilities in Asia. We have our own inspectors at the partner facilities that we use.

So there's a lot more value-add in what we do, as well as the production. The big thing that separates us from a lot of the brokers on our level is that we actually have a number of different inventory programs that we currently use with our customers. We are stocking products in our facility and bringing everything back to our inspection group here, and we do consignment for these orders. Typically in the broker model, when you order 500 pieces, you'll get 500 pieces. But we offer a lot of flexibility for our customers.

EMS007: So you are not manufacturing in New Bedford?

KP: No, we don't manufacture anything in New Bedford. Epec has purchased three different printed circuit board companies over the last seven years, including the one in New Bedford that is our headquarters.

About five years ago, we made the decision that manufacturing PCBs in the U.S. is a very hard thing to do profitably. You are limited with the actual factory that you have and it is virtually impossible to manufacture and service a lot of markets well. Everyone tries to be a quick-turn to support customers, but it is extremely difficult to do 2-, 4- or 6-layer work when you are doing 8, 10 or 12 layers because you have different set of skills and a different set of equipment. So, what we decided to do is to put together a supply chain that will allow us to support our customers' needs without being forced to sell a particular facility or a specific set of capabilities--and it's been hugely beneficial for us.

About two years ago, we launched a new internal ERP system, very similar to our newly launched Web site. And our goal is to make new production as seamless for our customers as possible. Everything that comes in to us from our partner facilities in Asia and in the U.S. comes in pre-inspected by Epec employees and inspectors, using our paperwork and shipped in our boxes. Everything that we send out here is a product from Epec. We've got U. S. based quality manager who spends half of his time at the customers' facilities and half in our facilities, improving production capabilities, getting UL listings and all those other certifications that we need.

EMS007: How does your flexible circuit quick-turn operation work? Does it go to Asia?

KP: It does. We have both domestic and Asian sources that we use for all of the product lines that we work with. But our goal is to use our Asian operations: The more products and the larger the supply chain that's in Asia, the better economics and the more solutions that we can offer to our customers. We are currently doing about 90% of our flex and rigid-flex business out of Asia.

EMS007: Take me through your new product introduction process, from start to finish.

KP: We are starting to see a lot more Web-generated customers coming in. We work through an outside-inside sales model where you'd have a dedicated inside sales/customer service person to talk to. This person gauges what your needs are, what you are trying to do and sees if there's something that he can help you with. Most of our customer service people have 10 years of PCB experience and have worked in other areas of production.

At that point, depending on what your needs are, we'll have conference calls. We might also set up visits to your site by the appropriate technical resources; be it from the circuit board side, or any of our custom-engineered product sides. What we're really trying to figure out is exactly what your need is and what your ramp schedule is. Then we'll put your product in the prototype stage and allow you to test it out, make sure it works. Once you decide what changes you need to make, we start to coordinate ramping up your production.

EMS007: What do you want people to understand, that perhaps they don't already understand, about Epec?

KP: I think a lot of people know who we are and where we've come from. What we'd really like for people to understand is that we are expanding our technology base in our printed circuit board side of the business, as well as developing these product lines that we've brought out in the last two years. It's really about what we are doing going forward.

EMS007: I am sure like most companies you have plans for growth. Where do you see yourself this time next year?

KP: Our main focus is to continue in the PCB arena. This year, our goal is to really develop our quick-turn flex and rigid-flex PCB. We are also looking into building more thermal products-the aluminum back-type, layered products--in addition to the heavy copper.

Also we will develop our business model: A lot of value-added engineering, working on the ground level with engineers who are customers and really helping them develop products. It's much more technical than the typical 2-, 4- or 6-layer PCBs.

Our growth in the PCB side in 2010 is really more custom products. In addition to that, we are really focusing a lot on our engineered product lines, specifically membrane switches and the custom battery packs business. We will use the same approach as with PCBs: We will build the prototype product, after that there is an approval process, and then initiate the prototype process. There are a lot of technical resources that are involved in getting these things designed and moving them into production. These are the areas outside of the PCBs that we are really focusing on right now.

You call Epec, you are assigned an inside sales person, you have an outside sales contact, and you are going to deal with those two people everyday--whatever the product is, whatever the issue is, you have one point of contact. Our goal is really a virtual one-stop shopping center. We are developing relationships with our customers so that we really understand what their needs are, because it is important that you know who you are working with.