Silicon Valley Contract Manufacturer Grows to Meet Demand

By Sharon Simonson

Another contract manufacturing-services company is expanding in Silicon Valley, offering the latest bit of evidence of a re-shoring trend that began in the current recovery.

San Jose real estate The RegistryBestronics, a San Jose company since 1986, is nearly tripling the size of its manufacturing space, including an expansion into clean-room assembly capacity and specialized test facilities. The company hired technical workers over the last year in anticipation of its move to larger digs at 2090 Fortune Drive in San Jose’s International Business Park and expects to continue to grow jobs in the next 18 months.

“We are vastly expanding the capabilities that we have in terms of supporting our customer base,” said Bestronics President Nat Mani (pictured). “We were about 25,000 square feet and now we are about 72,000.”

The company moved to its new location about a week ago, he said, from its former San Jose site on Ringwood Avenue, which is nearby. The largest beneficiaries will be customers, who will have another source of manufacturing capacity, Mani said. The operation also relies almost exclusively on local suppliers. “Our supply chain is here in the San Francisco Bay Area mostly,” he said. “We also will be buying additional capital equipment, some of it in the United States.”

After years of manufacturing job losses in Silicon Valley, there is anecdotal and some research-backed evidence to show that select, specialized manufacturing and jobs are coming back to the region. Work2future, a local administrative arm of the federal Workforce Investment Act of 1998 funded primarily by the U.S. Department of Labor, commissioned a study of the sector a year ago. The research identified close to 10,000 jobs at contract-manufacturing companies and product-design services firms—a close relative—in Santa Clara, Alameda and San Mateo counties. It also concluded that employment was growing.

The overall contract manufacturing services market is as large as $1 trillion worldwide, Mani estimated.

Silicon Valley contract manufacturing companies, which include household brand names such as San Jose-based Sanmina Corp., make final products, specialized parts and components and even prototypes on behalf of information technology, medical device and electronics manufacturers, according to the work2future report.

In August, Toronto-based SMTC Corp., another contract manufacturer, announced that it, too, had expanded, at 2302 Trade Zone Blvd. in San Jose, an address that is a stone’s throw from the new Bestronics location. Thanks to a 2011 acquisition and its own organic growth, SMTC moved from 20,000 square feet to 65,000 square feet. Claude Germain, SMTC president and co-chief executive, said at the time that San Jose was the largest North American market for the kind of manufacturing SMTC provides.

While SMTC and Bestronics are not head-to-head competitors, Mani said, they are part of the same business ecosystem. “In the late 1980s and early 1990s, the valley was the hub of a lot of manufacturers, and for all of the right reasons, they moved operations overseas,” Mani said. “But manufacturing is not a one-time, one-solution-fits-all-of-the-time industry.”

His customers today are not high-volume product makers such as cellphone or personal-computer companies, Mani said. Rather, they often make complex, precision machinery in quantities numbering in the hundreds of thousands of units or less. “The San Jose International Business Park had a lot of manufacturing companies before the downturn hit, and there is good infrastructure there,” Mani said. “Those were the factors that drove us to the location.”

Bestronics ships manufactured products to end customers on behalf of clients. It also ships parts back to original equipment manufacturers that then integrate them into a larger or higher-level assembly, he said. Sometimes its customers need a “quick turn” in the manufacturing process, making a U.S. supplier a better fit. In addition, with the production of more complex machinery and instrumentation, companies want to have their own engineering talent closer to the actual manufacturing process.

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