855.SUNTRON � suntroncorp.com

1

Every manufacturer

should investigate

doing business

stateside. ZeeVee has

made it work and there

is no reason other firms

cannot realize the same

benefits.

- Vic Odryna, Co-founder and

CEO of ZeeVee

“

”

2

Z eeVee, Inc., a developer of high definition video

distribution products, recently moved its overseas

contract manufacturing operations to Massachusetts

from China, where it had been manufacturing since introducing its

first-generation products about five years ago.

During the initial product development phase, ZeeVee had

determined that U.S. manufacturers couldn’t adequately support their

business model. As the product line evolved, ZeeVee management

reassessed the decision after factoring in scale and total cost of

procurement. While generally satisfied with the relationship with its

Chinese manufacturer, a product shift from consumer to commercial

gave ZeeVee an opportunity to reconsider the best type of manufactur-

ing arrangements for its business. After extensive re-evaluation,

ZeeVee partnered with Suntron, a North America-based manufacturing

services provider whose capabilities matched those of Chinese

manufacturers, while also offering logistical, cost and manufacturing

benefits.

Eventually ZeeVee halted Chinese manufacturing and shifted

operations to Suntron, which has manufacturing facilities in

Massachusetts, just miles from ZeeVee’s headquarters. The jobs

created were a real boost to the local community, and the successful

switch has given the fast-growing company lower overall costs,

simpler logistics, and faster shipping time, as well as improved

communications, rapid prototyping, and better response-time on manu-

facturing issues.

ZvBox 160

ZvBox 180

Bringing It Home

Successful Partnership Shifts Manufacturing Back to the U.S.

3

Growing HD video developer joins the ranks of firms

manufacturing in China

ZeeVee was originally founded in 2006 to connect home entertainment, computer

and the Internet. As the company matured, its focus changed from the consumer

market to commercial HD video distribution within hotels, airports, restaurants,

bars, schools, hospitals, and other areas high quality video is shown.

Before too long, the shift from consumer to commercial products began to have

an impact on ZeeVee’s high volume manufacturing business. In China, product

builds were only performed every month or two, and the units produced were

enough to last for long periods of time. The large, batch-oriented nature of

production (required to keep costs low) limited ZeeVee’s agility, making it

difficult for them to implement a continuous quality improvement process or

introduce product variations.

According to Vic Odryna, co-founder and CEO of ZeeVee, the infrequent

manufacturing operations also meant the company had to tie up huge amounts of

cash each quarter before manufacturing even began, on products that would not

be brought to market for months. Then, the products might be on a ship for two

or more months, tying up cash for even longer. “It’s almost like a pre-payment

for the product – paying for products even before we have them in the building,”

he says. Other related issues included customer fallout due to damage incurred

during ocean transit, and the headaches of dealing with replacement costs and

insurance.

The situation led to shipping logistics issues. Planned orders could be shipped by

boat cost effectively, but large quick turnaround customer orders required use of

expensive air freight options, which really boosted costs.

Eventually, Odryna asked himself if it might be time to reassess the actual cost-

effectiveness of manufacturing in China. At the same time, ZeeVee also took a

hard look at what benefits might accrue from manufacturing close to their

headquarters in Littleton, Massachusetts. They were eager to gain product

flexibility, rapid prototyping, and design for manufacturability, which would help

them sustain their high growth rates and achieve continued customer satisfaction.

Odryna asked

himself if it might be

time to reassess the

actual

cost-effectiveness of

manufacturing in

China.

4

ZeeVee seeks U.S. manufacturing partner-

Suntron answers the call

Odryna assigned his operations manager the task of looking around for

possible manufacturing partners located near their design headquarters.

They eventually selected Suntron Corporation, an electronic manufac-

turing services provider headquartered in

Phoenix, Arizona, which provides

electronics manufacturing services and

solutions to support high reliability

products within the network and telecom-

munications and other markets.

During discussions, Suntron and ZeeVee

evaluated all the costs involved in the total

cost of procurement (TCP), instead of

simply unit manufacturing costs. Such

costs include the so-called soft costs, like

cash cycle times, true shipping costs, insurance, lack of flexibility,

turn-around time, fuel surcharges, custom broker fees, and travel/

support costs.

Suntron jumped at the opportunity to demonstrate that U.S. manufactur-

ing plants can be cost competitive. The state of-the-art 41,000 square

foot facility in Methuen, Massachusetts specializes in system design,

integration, new product introduction, direct fulfillment, product life

cycle management, supply chain management services, and embedded

computing solutions for OEMs and large end-users.

ZeeVee’s new product needs resulted in the need for 20

manufacturing positions. The positions were a good news

story that was a source of great excitement in the local

community, which had lost its share of manufacturing jobs.

According to Jon Saunders, Suntron’s Methuen plant

manager, “Much of the infrastructure needed for ZeeVee’s

products already existed at Suntron. The plant was already

functional, and the project was a great way for us to grow

our business.”

Bringing It Home

Successful Partnership Shifts Manufacturing Back to the U.S.

5

According to Saunders, ZeeVee benefited by the flexibility that Suntron offers over a Chinese manufacturer.

“We can customize our services to what the customer needs, while larger Chinese manufacturers often offer

cookie cutter approaches that don’t deal well with fluctuations outside the norm,” says Saunders. He adds,

“We are small enough to care about the project and offer flexible services, while large enough to make a

difference.”

In just a short time, Suntron and ZeeVee got the manufacturing operations up and running. The return to U.S

manufacturing has greatly increased ZeeVee’s ability to serve its customers quickly. Suntron is working to

ensure that products hit the shipping dock virtually on the same day as they are ordered; the company offers

direct order fulfillment capabilities, which also improves delivery times. Domestic manufacturing results in

an increased flexibility that facilitates the product configuration changes ZeeVee was looking for.

The cash cycle issue is greatly reduced because U.S. firms like Suntron do not require up-front payments

for inventory. In addition, the communications benefits are enormous. Rather than waiting 12 hours or over-

night and halting production until the factory is open to get an answer to any issues and questions, ZeeVee

can immediately resolve issues and keep the line rolling.

The firm is growing rapidly, more than doubling every year, and initially ZeeVee had a concern that

working with a local manufacturing partner

might be an impediment to growth. Their fears

were assuaged because Suntron has a number of

other facilities for scalability, including a manu-

facturing facility in Mexico. Knowing that

Suntron offered other solutions should ZeeVee

require other options due to expansion gave them

a high comfort level. “As we grow, we are

comfortable knowing we have a partner who can

work with us to handle an increased volume.”

Suntron expects that as ZeeVee’s business

continues to grow and they introduce new

products, they will be growing along with them,

expanding to 30-35 employees. “Their success is

going to be our success,” says Saunders.

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ZeeVee has also met its goals of improving product design and devel-

opment. With their China manufacturing partner, all development work

required hopping on a plane for a 16-hour flight and losing a week to

complete prototyping discussions. Now, ZeeVee can get much earlier

and more detailed feedback on design prototypes, fostering productive

discussions on designing for manufacturability, an in depth analysis

that Suntron provides, which will reduce costs to build products. A

picture is indeed worth a thousand words, so getting together and

showing how things are supposed to work is essential.

“In any product development life cycle, opportunities come up to

settle issues, make corrections, and continue improving the time to

market. With Suntron, we can test parameters and correlations in the

morning, drive to the plant and test it on different equipment and get

our answers by the afternoon,” says Odryna. “When you are

working with partners halfway across the world, this level of collab-

oration is just not possible, and that makes a difference when time to

market is critical.”

Suntron’s Saunders gives a great deal of credit to ZeeVee for taking

the time to quantify what manufacturing in China actually means to

their business. He applauds the overall business savvy it takes to

look at total costs, saying, “We have been building electronic

devices and printed circuit board assemblies for 30 years, and for the

last 15 years we have been told that only niche, low-volume high

price products can be manufactured in the U.S. cost effectively. We

knew differently, and our success with ZeeVee proves that we can

manufacture cost effectively in the U.S.”

ZeeVee in turn has high regard for Suntron’s investment in U.S.

manufacturing, noting that it was Suntron’s own investment in

manufacturing that paved the way for ZeeVee to come back to the

U.S.

We can customize our

services to what the

customer needs, while

larger Chinese

manufacturers often

offer cookie cutter

approaches that don’t

deal well with

fluctuations outside the

norm. “We are small

enough to care about

the project and offer

flexible services, while

large enough to make a

difference.”

-Jon Saunders, Suntron

Methuen Plant Manager

Bringing It Home

Successful Partnership Shifts Manufacturing Back to the U.S.

7

Is U.S. manufacturing the wave of the future?

According to Saunders, although labor costs in China are increasing,

manufacturing there still makes sense for very high volume items and

those that require a great deal of hand work. For example, cell phones

and disposable electronics are likely to continue being manufactured

offshore, due to the nature of the product. However, in his view, firms

should take a closer look at manufacturing products in the U.S. He also

believes that products requiring a combination of automated equipment

and skilled labor can be manufactured very competitively in the U.S.,

because machines have become more automated and higher machine

efficiency allows for greater throughput.

Odryna notes that as the technology evolves, it can be challenging to

work with people on the other side of the world, or waiting nearly two

months for cargo to arrive by boat. With onshore development, ZeeVee

can reduce shipping costs and rush charges, more easily develop new

products, and balance SKUs. The bottom line is that ZeeVee can be more

competitive.

As jobs continue to be a hot-button issue in the US, there have been a

growing number of stories reporting on a shift of manufacturing back to

the US due, in part, to rising costs in China, along with concern about

intellectual property and patent laws, and a desire to support the U.S.

economy. After several months of working with Suntron, ZeeVee said

the question other companies should ask is, Why not use a domestic

manufacturer? Says Odryna, “Every manufacturer should investigate

doing business stateside. ZeeVee has made it work and there is no reason

other firms cannot realize the same benefits.”

Ed Wheeler, Suntron’s president and CEO puts it this way. “I firmly

believe this success can be replicated by other businesses who take the

time to evaluate the total costs of off-shore manufacturing. If your

overseas manufacturing isn’t working as well as you hoped it would, try

working with a U.S. manufacturer like Suntron. Even if things are going

well, Suntron has demonstrated that it can improve cost, quality and other

logistics that will allow you to work better as a company.”

“When you are working

with partners halfway

across the world, this

level of collaboration is

just not possible, and

that makes a difference

when time to market is

critical.”

-Vic Odryna Co-founder and CEO

of ZeeVee

8

I firmly believe this success can be

replicated by other

businesses who take the time to

evaluate the total costs of

off-shore manufacturing. If your

overseas manufacturing isn’t

working as well as you hoped it

would, try working with a U.S.

manufacturer like Suntron. Even if

things are going well,

Suntron has demonstrated that it can

improve cost, quality and other

logistics that will allow you to work

better as a company.

-Ed Wheeler, Suntron’s President and CEO

Bringing It Home

Successful Partnership Shifts Manufacturing Back to the U.S.

“

”

www.suntroncorp.com1-855-SUNTRON