Silicon Valley Manufacturing Roundtable meets Manufacture: San Jose
Take a second-generation San Jose tool manufacturer. Add in a tech-entrepreneur-turned-whiskey-distiller. Throw in a medical-equipment maker. Include a Stanford lecturer.
That’s the recipe for last month’s installment of the Silicon Valley Manufacturing Roundtable, a (roughly) quarterly event that brings together the region’s manufacturing leaders for wide-ranging conversations about issues affecting the industry.
On July 26, nearly 100 people from across the region turned out for the event, hosted by the Office of Economic Development and held at San Jose’s Prospect: Silicon Valley incubator and innovation lab.
The consensus: Local manufacturing continues to evolve and thrive as successful companies respond to market opportunities and trends.
The event featured a wide range of content, including a keynote presentation on the reshoring of value-add manufacturing and a panel of growing and diverse local manufacturers.
But it kicked off with a milestone of sorts, as Manufacture: San Jose introduced itself to attendees. The nonprofit—led by former TechShop general manager Michael Erickson—is an offshoot of SF Made, an eight-year-old San Francisco nonprofit that grew out of local manufacturers banding together to support each other during the Great Recession. Manufacture: San Jose will focus on driving resources and visibility to the City’s more than 1,200 manufacturers and providing free services to small-to-medium sized businesses.
After the introduction, Sandeep Duggal, CEO of Milpitas-based Extron Inc. and Founder of Last Mile Manufacturing, provided a look at the past, present and future of global supply chains. He discussed how cost-cutting led to a wave of technology offshoring in the 1990s and early 2000s—only to lead to unintended consequences. According to Duggal, many of these companies got carried away with this practice, and in many notable cases helped to spur foreign rivals. “The reality of IP leakage took a while to set in,” he said.
The Stanford lecturer reckons that businesses are beginning to fully grasp the hidden costs of offshoring. “People now understand the economics of outsourcing and what it means to travel and manage long supply chains or managing a flood event in the other side of the world,” said Duggal. As global wages rise and labor becomes a smaller component of total manufacturing cost—thanks to automation and increased productivity—manufacturing is beginning to “re-shore” back to the United States. Much of this re-shored production takes a hybrid form: lower-value (and often labor intensive) components are assembled overseas, while higher value (and more capital-intensive) manufacturing may take place domestically.
Duggal remains optimistic on manufacturing in the Valley. “The manufacturing labor force in Silicon Valley is incredibly productive, allowing for labor to be a relatively small factor of production,” he said. “[Extron’s] business model is to add as little labor as possible.”
Following the keynote, a panel titled “Build It Local” highlighted the broad range of manufacturing in the Valley through the stories of three local manufacturing entrepreneurs and business owners. The panel included Virag Saksena, co-founder of 10th Street Distillery, San Jose’s soon-to-be-launched craft whiskey manufacturer; Noreen King, founder and CEO of Evolve Manufacturing, a contract manufacturer of medical and industrial technology products; and Brad
Mountz, president and CEO of Mountz Inc., a precision torque and calibration tool business that his father founded 1965.
In his or her own way, each panelist told stories that illustrated their commitment to community, employees, customers, and their products. Mountz shared the company’s decision to form an Employee Stock Option Program (ESOP) to ensure that his employees had access to retirement opportunities. He dismissed the notion that going above and beyond for employees is not good for business. “The past five years that we have been rated a top workplace in the Bay Area have been the most profitable in the company’s history,” he said. Mountz Inc.’s “put employees first” model may seem radical to many, but according to Mountz, happy employees stay longer, are more productive, and take better care of customers.
Noreen King’s story provides additional proof. She arrived in Silicon Valley from Ireland as a young engineer, and was working for a highly demanding company in the semiconductor industry. Wanting to have more time and flexibility to raise a family, she decided to start her own manufacturing business, launching Evolve Manufacturing in 1999. Soon after she was up and running, the semiconductor industry took an enormous hit that led to massive industry layoffs and claw-backs in investment. Faced with declining business, King offered employees the option of working three days per week to prevent layoffs. Nearly everyone stayed. Decades later, many of her original employees are still with her, and the company has grown by leaps and bounds.
Virag Saksena’s journey into manufacturing was certainly atypical. As a child in India, he loved to build things, but he studied software engineering as a pragmatic pathway into the technology sector. After coming to Silicon Valley, he worked at Oracle for several years until he left the company to launch a startup that Oracle would later purchase. Instead of going back into software, he decided that he wanted to move away from digital goods and produce a physical product that he could share with others. Realizing that fine whiskey was not only high-value, but almost recession-proof, he co-founded 10th Street Distillery, which is currently bottling its first batches of single-malt whiskey at a facility in San Jose. “There is so much gratification in making things,” he said. “We wanted to make something that we would be proud of and that the San Jose community could embrace.”
San Jose’s Office of Economic Development appreciates all who participated in the Summer 2018 Manufacturing Roundtable. If you would like to be notified of future events, please contact Donovan Lazaro at email@example.com.