Electronics is one industry that may be “reshoring” more quickly than others, and a growing number of contract manufacturers in the United States are arising to grasp the hands of American companies as they’re clambering to re-domesticate.
MacroFab is among companies that is giving U.S. companies ready alternatives for producing stuff that it just doesn’t make sense to fabricate in China anymore. It operates the largest digital platform for electronics manufacturing, from prototype to high-scale production, with a network of more than 70 factories across North America.
The Houston-based startup has reached eight-figure annual revenues in seven years of business, with expectations of doubling sales next year and plans to go public in a couple of years, CEO Misha Govshteyn told Chief Executive. He’s got some advice for the many U.S. manufacturing chiefs who are pondering reshoring and nearshoring these days.
“Things have changed pretty dramatically post-pandemic,” he said, as the $560-billion global electronics-manufacturing business rationalizes and relocates production in the largest shifts yet. “China used to be the default for manufacturing electronics, but the answer now is, ‘Anywhere but China.’ Companies aren’t ripping factories out of there necessarily, but they’re looking for resiliency. And a lot of times they’re not even considering China now.”
MacroFab and its software work with manufacturers to turn their product and component designs, such as circuit-board layouts, into prototypes, render price quotes for various volumes, and link these companies with factories in the United States, Canada and Mexico. Govshteyn previously co-founded and built security-industry startup Alert Logic into a $140-million-plus company before its acquisition in 2013.
MacroFab’s focus is on industrial products ranging from “control panels for stoplights, IoT devices, medical devices, factory-automation products and aerospace and defense products,” Govshteyn said. “And if a customer is coming out of Asia and needs to find factory capacity in North America, this is often the easiest and best way to find it,” he said.
Here’s some advice from Govshteyn based on MacroFab’s role in the burgeoning manufacturing-reshoring and -nearshoring trend:
• Look no further than Mexico. In both B2B and consumer-facing markets, “Customers are still looking for the lowest possible prices, and the only way to satisfy that in North America is to use Mexico,” Govshteyn said. “You don’t have to wait for the boat. Moving final assembly to North America, especially if the product is very automated, is a no-brainer.”
• What are the Europeans seeing? More manufacturers in Europe are considering establishing North American production and weaning themselves away from Chinese factories, Govshteyn said. “They need a second option, and there’s a pronounced changes in sentiment about North America,” he said.
• Be wary of Taiwan. The island is, of course, a favorite source for microchip-based products, but Govshteyn said that increasing worries about an invasion of Taiwan by China are driving more global manufacturers to add options to their chip-supply chains by setting up an operation in North America.
“Even some companies that literally grew up in Taiwan and only have sales offices in the U.S. are looking at us saying, ‘If we don’t put 10% to 20% of our manufacturing in North America, our customers are going to look for other options,” said Govshteyn, who added that some customers are looking to set up escrow agreements with Taiwanese manufacturers to harbor product designs in the case of an invasion.