Express Manufacturing Grows by Making Products for Others
For nearly 20 years, C.P. Chin has been content with the obscurity of his Express Manufacturing Inc., shunning the publicity relished by many in the hype-driven technology sector, including many of his customers.
Without the benefit of marketing, sales or public relations departments, family-owned EMI has quietly grown to become one of Santa Ana’s largest employers, not to mention one of the larger contract electronics manufacturers in the country.
With nearly 1,000 employees in Orange County, 113,500 square feet of space and $50 million in projected annual revenue for this year, EMI is coming out of its shell. The company, which last year started offering turnkey services like its larger competitors, has purchased a facility in China scheduled to open later this year and is broadening its line of services.
Its plan: luring new customers from outside California and becoming the Swiss Army Knife of manufacturing services.
“We were actually planning to do this long ago,” said Chin, the company’s president and one of four brothers who own the business.
EMI, like other contract manufacturers, has benefited from an increasing reluctance among technology companies to invest the billions of dollars required to build and upgrade production lines.
Instead, companies such as Nortel Networks Corp. and Hewlett-Packard Co. are turning to outside manufacturers to handle the production and design process, freeing themselves to concentrate on product design, engineering and marketing. EMI’s customers include Fountain Valley-based Kingston Technology Co., Schlumberger Ltd. and Xerox Corp.
According to market research firm Technology Forecast Inc., the contract manufacturing industry has been growing about 20% per year in the past half-decade and is expected to hit $178 billion in sales worldwide by 2001, up from $140 billion this year.
The shift has been a windfall for EMI, which grew from sales of $35 million in 1998 to this year’s projected $50 million. Trade publication Electronic Business ranked EMI No. 83 based on 1998 annual sales in its most recent list of the largest U.S. contract manufacturers.
EMI customers include some well-known local names. Along with Kingston, the company also does work for rival memory maker Viking Components Inc. of Rancho Santa Margarita. Tustin-based PairGain Technologies Inc., a unit of Minneapolis-based ADC Telecommunications Inc., has turned to EMI for assembly work. So have Irvine-based Internet server maker Lantronix Inc. and PC maker Gateway Inc.
About half of EMI’s business comes from computer products makers, which use the company to assemble things such as PCs, laptops, servers and modems. Another 20% comes from makers of telecommunications gear such as high-speed switches and Internet access devices. The rest of EMI’s business comes from other markets, including industrial and medical devices.
More Services to Come
Chin and his brothers are beefing up EMI’s capabilities, allowing it to take on a bigger portion of the manufacturing process and draw in customers outside of its Southern California base.
In May, the company added a 30,000-square-foot production and material storage facility near its headquarters and is hiring engineers as well as distribution and materials management staff. Much of the new facility will support EMI’s “box-build” operation, which produces custom products for individual customers.
New service offerings include everything from helping to design prototypes to procuring raw materials,tasks that require the materials management division and other new units. Despite the technical challenges of new operations, Chin said his company’s biggest hurdle will be managing the sheer size of EMI’s workforce, which he said he expects to continue growing.
EMI’s expanded services also involve a new plant in mainland China, where Chin hopes to take advantage of an eager labor force and strengthening economic ties with the U.S. The facility,in Dongguan, a city in southeast China known for its economic activity,will employ up to 200 people and is expected to be up and running later this year.
The Chinese expansion, Chin said, will make it easier to compete with contract manufacturers that already have Asian operations. Those include industry leaders Solectron Corp. of Milpitas, SCI Systems Inc. of Huntsville, Ala., and Toronto’s Celestica Inc.
Back to Their Roots
To a degree, EMI’s move into China harkens to the Chin family’s past.
The Chins emigrated from Hong Kong in the 1970s, and C.P. Chin, who planned to be a tailor when he first came to Orange County, soon took a job with now-defunct Irvine computer maker AST Research Inc. as an assembly line worker.
With $30,000 in savings and sweat equity from virtually the entire family, the Chins established EMI in their condominium garage, with AST as their first customer. C.P. Chin and his brothers,Jacky Chin, Tony Chin, and C.M. Chin, the company’s vice president,each own a quarter of the company. Other family members have roles in the operation.
Wai Szeto, Kingston’s vice president for business development, said his company turned to EMI when the Chin family promised a 24-hour turnaround for assembly work, which was almost unheard of at the time.
“The management provides very good service,all the Chin brothers and sisters,” he said. “They’re a lot like Kingston in that they’re focused on relationships.”
The family eschewed outside funding until last year, when EMI set out on its expansion and took in a $5 million investment. But EMI is looking for another $10 million or so for expansion and for possible acquisitions, C.P. Chin said. Though Chin hopes to grow the company from within, most of EMI’s largest competitors have been sweeping up other manufacturers in a wave of consolidation.
With demand booming for traditional computer equipment and a new generation of networking and telecommunications devices, Chin expects solid growth for several years out.
“I’m fairly certain we’ll be able to meet our goals,” he said.
