Avigilon is one of the fastest-growing electronics companies in North America.
The company makes surveillance cameras, some of which top the high-definition charts, and back that hardware up with a sophisticated software offering to manage file sizes and data. (Here is an interview we conducted during the Drive for Innovation at Avigilon's downtown Vancouver, B.C., headquarters).
So you'd think that that fast growth and profitability would be fueled by a savvy manufacturing strategy that leveraged offshore labor and machinery to keep overhead low.
You'd be wrong.
Turns out Avigilon's manufacturing is almost entirely on-shored, and its CEO, longtime manufacturing maven Alexander Fernandes, prides his company on that.
Avigilon CEO Alex Fernandes says, "There's
no cost advantage to going offshore." He should know.
"There's no cost advantage to going offshore," Fernandes says bluntly.
Here's his rationale for on-shoring manufacturing:
- Better quality control
- Quicker and lower-cost prototyping
- Faster time-to-customer delivery
- Nimbler retooling of assembly lines
- Better control of IP ("How do you factor your BOM three years down the road when your design is stolen and being incorporated into other products?" he asks.)
Fernandes says the lure of offshoring is to access low-cost labor, but the rise of the machines -- robotics in particular -- is shrinking labor costs as a percentage of overall manufacturing costs. For Avigilon, labor is just 3 percent of its manufacturing costs, he said.
Fernandes notes that his company does source some subassemblies from China, specifically the clam-shell-like plastic enclosures for the company's surveillance cameras. Labor costs are a factor in that particular process.
Since the company's founding in 2004, it has relentlessly introduced and expanded robotics in its manufacturing assembly lines. Most of the robotics is used in the assembly of printed-circuit boards, and machine vision technology checks each board for soldering and placement defects, far more accurately and productively than the human eye.
But Fernandes is careful to note that his objective is not to eliminate humans entirely from the manufacturing process.
As the company ramped manufacturing, certain capacitors and connectors still were placed by hand.
As our volumes went up, we added various pieces of equipment, including two stages of automated imaging inspection at mid line and at the end. We also added a selective soldering machine to replace hand placements of those odd components. It eliminated five jobs and does the work of 20 people. It's a $600,000 machine that pays for itself quickly. [But] those five people were redeployed to other jobs. We're more efficient. We can run a factory with 80 instead of 300.
Located just outside Vancouver proper, Avigilon's manufacturing line gets a weekly visit from the company's engineers who work with the folks on the line to optimize their processes and take back insights from the floor to the design shop.
Product technology is an evolution. Things are never static. You'll find that certain components become obsolete or you'll find tolerance issues where engineers need to make design changes. When you outsource, things can be less stagnant. It's a closed loop.