Looking forward to 2006 and beyond

As we look towards 2006, now would seem a good time to look at what may come up for the industry during the next year and beyond. I have asked some leading players in the electronics field to crystal ball gaze and predict what they see as the problems and the future. This is a selection of some of their views.

The rising power of the notebook computer, the increasing acceptance of RFID (radio frequency identification), more support for wafer development and a boost to Australian home-grown manufacturing are well up on the forecasts and wish lists of companies.

China is a word much on the lips of many. It may be seen by some as the bogeyman in the wings but to others it offers equally exciting challenges. While perceived as a market bigger than the Pacific Rim countries put together, quality of product is still a major concern although at the current rate of progress it will not be long before the country equals anything else the world can offer.

"For us," says the general manager of Richardson Electronics, Shane Pritchard, "better quality and political stability are now making China acceptable as a supplier."

He says one way to keep competitive is to design in Australia, send to China for manufacture and send devices back to Australia. Here they can be sold for more profitability.

He says that although new engineering solutions are adding value to components, RoHS has put technology at the crossroads. The need to remain competitive has resulted in a growing trend (almost an avalanche) towards offshore manufacturing.

"We are constantly having to work on strategies to change costs."

Shane believes that Australia is holding its own when it comes to technology.

"We are a player in the global market and we do have the number of people to sustain our own economy," he says.

However, future developments will rely on the engineers and technicians to carry it out.

"There is no training in RF and one of the reasons is the high cost of test equipment. We are desperately short of people to develop the next generation of technology," is his view.

Shane believes there should be more government recognition of the problem. It should take a long hard look at its resource strategy and create what he describes as 'human capital'.

Another company in agreement with Shane on the importance of engineers and technicians is Emona Instruments and in particular the technical director, Alfred Breznik.

He thinks we have the engineers but they are not making anything. To counter this he proposes that universities should produce practical people by ensuring that more of the degree course is spent on actually making something.

"Engineering courses need to generate a lot of creative thought if we are to stay ahead and produce the right numbers of engineers and technicians for the future." One of the ways the universities could stimulate this interest, he suggests, is for them to concentrate more on deciding a project, designing it and building a prototype. This, he believes, would help to kick-start start-up companies that could see the return of worthwhile and widespread manufacturing.

So what about the effects of Asia, and China in particular, when it comes to competitiveness and not losing the technical advantage?

Alfred says that companies are afraid of losing their intellectual property to the Chinese but the way to protect against this is to make devices that are difficult to reverse engineer. However, it is only by having the engineers and technicians available that will make this possible.

"At the moment, the greatest threat is China's specialising in niche markets. We can combat large production runs by being creative. That's where our strength lies," says Alfred.

On the question of help, he thinks that government agencies such as Austrade do provide a positive service although more could always be done for the smaller, start-up organisations.

"Austrade did a spectacular job in finding us a US representative," he says as an example of what can be achieved.

He does not think that the threats to his industry are clear enough to be well identified. He admits that as more and more goes onto one chip, there will eventually be a need for fewer technicians but he does feel that those who are left will have to know more. Instruments, for example, are becoming much more sophisticated with higher operating speeds and greater functionality and will therefore require greater skills to service.

Looking ahead he sees instruments with deeper memories and faster capture rates.

"More in the box at about the same cost" is how he summarises the next few years.

And with Bluetooth becoming more widely adopted, the next generation of devices and instruments will take wireless to a whole new level.

"Because connectors are the most expensive part of a PC, hardwiring is the future to improve reliability and contain or reduce costs." This view by Allan Tomlinson, of Kontron Australia, reveals how passionate he is about embedded devices and how he sees them dominating the computer world of the future.

Embedded components are easily upgradeable and scalable and an earlier lack of commonality where boards were not interchangeable has been largely overcome. Computer on module (COM) has developed into a device that is easy and cheap to handle.

When used on the factory floor to control a machine, a technician is not needed to replace a faulty unit. All the operator does is plug in a back-up and if an upgrade is needed it can be done on the spot.

These devices, says Allan, are portable and can be carried in a car or taken to and from an office.

"As the price comes down, they will be attractive," he says, "because it is the future."Modules will get smaller again, he predicts, sounding the death knell for Compact PCI which will fade away not only because of its high-priced connectors but also because they will not be able to carry the current demanded by them.

Allan forecasts ATCA (advanced telecomm architecture) as the Compact PCI's successor. This is the fastest growing technology, he claims.

China's success or otherwise will depend on price as he sees it. However, quality and therefore reliability are still issues and few manufacturers outside China are at present prepared to put their reputations on the line with some Chinese components.

"Everyone thinks hardware should be cheap," he says, "but we need to pay for the correct technology and the highest reliability. In this country we have the best thinkers and the best ideas but we give them away to foreigners in the rest of the world." He feels sad and rather disappointed that there is no longer a viable manufacturing industry in Australia. He believes there are opportunities. For example, although we have the world's biggest tantalum deposits, we don't make tantalum capacitors.

"Innovation and support are what we need. There is no value added in the electronics industry. What incentives are there to Australian-owned companies? What tax relief is there? What grants are there for such things as wafer development?"

These are the issues he feels most strongly should be addressed because only by dealing with them can we face the likes of China and Taiwan and perhaps even India.

"Does Australia want to be a second cousin to Asia? Where is our technology? Where is our manufacturing?" he asks.

As a country we are spending more than ever before on education from kindergarten to universities, yet, talking to industry people, it appears that someone out there is not singing the praises loudly enough of science, technology and engineering as 'cool' subjects for school leavers to study.

This topic was high on the list of concerns when I spoke to Darren McLeod, general manager of Hy-Q International.

"The government can and must help with training to make sure we have people ready for the next generation. We need to keep up with the Asians who always seem to be highly qualified, so maybe science should be looked at for this and the next era," he says.

Having said that, he says it is important to everyone that we have enough engineers and designers to keep up with world trends and developments.

"Education will make sure we move forward and Australia does not get left behind," he says.

He wonders whether there is a 'geek' tag that seems to keep young people away from technology.

He is positive and confident about the current and future state of the industry. However, he feels that we must export and we should always be looking for opportunities to do so. As manufacturers of high specification crystals, he sees only expansion for the future where they will particularly go into the automotive area where microprocessors are being increasingly used.

These devices, he says, are getting smaller and more comprehensive, resulting in reliability being a major factor. The frequency control 3.2 mm crystals currently available were unheard of five years ago, so quickly is the market moving.

Although he is mindful of China's products, he is not fearful of its growing strength despite an increase in quality that has "improved out of sight".

"They can make large quantities and be competitive. But in dealing with this nation, we are aware that the child could soon take over from the parent."

Education keeps coming up as an issue that will not lie down. As one of our readers points out:

"Young people have been told for years that a university education is the road to wealth and status but in reality university is not for everyone."

He stresses that life-long learning is important and that can just as easily begin with and continue with a trade.

"Apprenticeships are an important part of trade training and business support for them is being encouraged," he says.

As a project manager for technologically-based equipment with the Department of Defence, he sees the systems approach as the current and future path of electronics. Interconnectivity and operability will be well served by 'open systems' based on open standards and open sources.

While saying that industry needs to embrace the virtue and value of recycling for all equipment, he believes that local design and manufacturing are important to Australia's identity as a clever country. This can be achieved through a technical underpinning for research and development by industry and academia.

"Local mass production may be a thing of the past for some industries but flexible or niche production can be a national strength," he says.

Wireless interconnectivity he sees as the 'big help' for the future. However, this won't work unless there are open standards for future and backward compatibility.

He sees an opportunity for Australia to be a leader in micro-merchandising and micro-payment technologies that are currently being connected via the internet and other data networks.

He returned to the 'geek' label as raised by Darren McLeod but he took the idea a stage further by saying:

"Not everyone wants to be a 'geek' or a 'nerd' and fewer still like the labels attached to themselves. Yet the people and companies that embrace understanding and use electronic technology will be the industrial heroes of the coming decade or two. Governments would be wise to give such people and industries a leg up."

So, as we enter the seventh year of the new century, there is confidence, a realistic awareness of the challenges to come and a recognition that education is of paramount importance. That people are still thought of as being at the heart of the technology is a realisation of the need for brain power over a power supply.

Competitiveness will always be uppermost in a country with such a small native market and exports will always be butter on the bread.

The electronics industry, it seems, is confident that the bread will remain fresh.

Mike Smyth