Naprotek, a leading provider of high-reliability, quick-turn electronics manufacturing and Edgewater Capital Partners Portfolio Company, has expanded threefold in recent months. First, with the acquisition of SemiGen which enhances Naprotek’s capabilities to include advanced RF/microwave products, assembly, and test services. Andweeks later, Naprotek made headlines for its purchase of NexLogic Technologies, which provides electronics manufacturing services across select markets, including defense, medical, and test and instrumentation, and is uniquely positioned to support automated test equipment for semiconductor providers.
Larry Morrissey came to Naprotek with over 30 years of experience in supply chain, materials, and management at Fortune 500 and Fortune 100 companies. His history includes work with Oracle and other world-class companies including Cisco, Apple, General Electric, Pillar Data, and Hewlett Packard.
Today we sat down with Larry to discuss all things supply chain and operations, and to take a look into the future of Naprotek and its new subsidiaries.
Larry, congratulations on your new position! How has the transition to being GM of not one, but two contract manufacturers been? How do you manage to balance your time between two facilities, two teams, and two customer bases?
Thank you. The transition has certainly kept me busy. Fortunately, the two facilities are located very close to each other, so proximity makes the process a bit more straightforward.
As part of this portfolio strategy, Naprotek was the first company purchased by Edgewater CapitalPartners, so I had that history prior to the acquisition. The infrastructure, processes, support teams; everything was virtually in place, and it was our task to grow the company from that point. Effectively, we added another company to that existing infrastructure with its own internal practices, policies, governance, production, etc. We’re hyper-focused on unifying the two; taking best practices at each location and figuring out what works for the combined enterprise across sites. Naprotek was purpose-built to serve regulated markets and remains highly focused on NPI, quick-turn, and a high rate of change. Nexlogic has been developed to support higher volume production, with a focus on ATE, and medical / therapeutic products; circuit designs including large form-factor, densely populated boards, with sustaining demand over time. I am currently supporting both sites with unique processes and equipment sets to address these markets. Fortunately, there is customer commonality in many sectors, so the balancing has been a little easier than it might have been otherwise.
Naprotek has been expanding and growing, which makes your job a double-edged sword. More orders to fill means more materials needed to fill them. How has inflationary pressure (which has recently hit record levels in the manufacturing sector) along with supply chain delays and surging energy prices affected your ability to keep operations running smoothly?
At Naprotek, we’ve doubled our business over the past five years. With the acquisition of NexLogic, we do have customers being serviced by both sites. That helps us address common issues and resolve them as they come up. The impact of supply chain constraints and inflation is definitely real and difficult to deal with right now. The problem is it’s not just a single commodity group that’s been affected, it’s across the board. Components that we used to be able to buy very inexpensively and readily through distribution are now highly constrained. For very high-end components – processors, BGAs, FPGAs, and purpose-built IC’s, we see a severely constrained market. We utilize stocking distributors for many of our needs. In this economy and given the constraints and shortages, they may not have stock for extended periods. This creates issues at both sites when we have a partially assembled kit in the stockroom that we can’t release to manufacturing. Our demand tends to be somewhat linear throughout the year. We have a solid cadence of bookings month–to–month. Labor absorption becomes hard to balance with intermittent releases to production. It’s feast or famine; we get critical materials that allow releasing jobs to the floor in clusters. When that happens, we’re able to transform and ship to our customers on time. At the same time, we havekits waiting in the stockroom pending critical items.
We’ve taken a progressive approach to relieving the intermittency issue. If the critical items are not surface mount parts, we release the job. We then merge the supporting items in transit as we manufacture the product. This reduces the overall time in the transformation process internally and allows us to ship to our customers sooner.
We have seen some upward pressure relating to energy costs and other infrastructure costs of operations. Quite frankly those are secondary to the supply chain constraints. We’d be more able to take those in stride if they weren’t in addition to the already constrained supply chain that’s causing us to be periodically under-absorbed.
While supply chain pressures may ease through 2022, increased shipping costs and burdens to the logistics industry (ports stretched to their limits) continue to beimmediate and persistent issues. How is Naprotekadapting to these hurdles?
We are starting to see duplicate orders be taken out of the system. That relieves some of the front-end pressure ondemand. Available components will eventually be pushed to distribution. We do believe that there’s going to be easing of demand, as the duplicate demand is pulled back and OEMs are able to manufacture more product to satisfy real demand.
Regarding logistics, and shipping, we don’t rely on long–haul carriers for our shipments. We provide local delivery and utilize common carriers for out–of–area shipments. This isn’t a serious concern for us, but we do monitor increases in fuel costs as they are an element of our delivery service.
Naprotek has gone from one company to a portfolio of three companies relatively quickly. It seems there is a master plan at work. Can you shed some light on the strategy at hand?
We are a purpose-driven portfolio company with a definitive goal of providing a broad range of services to our customers. We’re always in an expansive mode and weare going to grow our capabilities through a combination of acquisition and organic growth. We have an extensive customer base, and their growing demands push us to evolve in support of their requirements.
We are providing production–quality prototyping to validate designs and concepts and taking it immediately into production. Naprotek is laser-focused on low to medium volume, very high mix, and high rate of change products. Given the complexity of our customers’ requirements, we must have a specialized workforce to accommodate their needs. This demands that we have the capability to continuously support increasing technical challenges. NexLogic provides added capacity and focus for large form-factor product in support of test & instrumentation and medical markets. With the acquisition, we also moved farther upstream in production, with four lines to support increasing demand. SemiGen, located in Londonderry, New Hampshire brings us RF product capability, including semiconductor products, services, and thin filmprocessing.
So, is this what really sets Naprotek apart from other tier 3 EMS providers? The ability to support your customers in a broader, more complex way through expanded services and capabilities?
There are a few key factors at play. One is a ferocious pursuit of quality at all levels. Naprotek’s reputation is based on quality and customer service and those two things are inextricably linked. We have a well-established reputation for providing very reliable products in ourmarkets.
NPI programs can often trend toward “proof of concept” only. Programs are time-sensitive, with engineers waiting for product. Providers often pursue time as the singulargoal with little emphasis on quality. Naprotek’s key differentiator is that we get working product back to the customer with a very high level of quality.
It’s a testament to our attention to detail and product quality. We often ship products that the designer could not get working in their own lab. Coupled with a persistentpursuit of customer service at every level, we are truly unique in what we do.
Thank you, Larry.
About Naprotek
Naprotek is an electronics technology solutions provider for high-reliability applications. Since 1995, Naprotek has delivered complex and custom solutions in the Defense, Space, Medical, and Semiconductor Capital Equipment markets and select applications in Test & Instrumentation and Advanced Technology. Capabilities include quick-turn printed circuit board assembly, prototyping, RF components, advanced microelectronics, system integration, and test services. Naprotek is committed to delivering customer value through engineering, supply chain management, and manufacturing support. To learn more visit www.naprotek.com.
