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“How technology improves is by breaking,” says Mike Andrade, president of Celestica’s diversified markets division, seen at headquarters in Toronto where products are tested for reliability. (Jennifer Roberts for The Globe and Mail)
“How technology improves is by breaking,” says Mike Andrade, president of Celestica’s diversified markets division, seen at headquarters in Toronto where products are tested for reliability. (Jennifer Roberts for The Globe and Mail)

Breakthrough

At Celestica, new products grow from trial and ‘tons of errors’ Add to ...

You won’t find Celestica Inc.’s name on any of the hundreds of products it makes. The company generates few of its own patents. And many of the electronic components it cranks out are so universal that production is moving offshore.

And yet the Toronto-based company is at the centre of high-tech innovation in Canada.

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Born in 1996 out of the remnants of IBM Canada Ltd. and bought by Onex Corp., the contract electronics manufacturer is climbing its way up the technology value chain by helping non-electronics companies integrate advanced circuitry into conventional products.

“When cheaper and smaller memory, processing and communications hardware becomes ubiquitous it can make dumb things smart – from pumps to planes,” explained Mike Andrade, president of the company’s diversified markets division. “The model that has been used in consumer electronics is going to be used in all these other industries.”

Mr. Andrade looks to Apple Inc. for inspiration – a company whose innovative touch is in taking readily available technology, such as touchscreens and GPS, and using them to create entirely new products.

Celestica, for example, is working with a California-based medical devices company to create tiny electronic sensors that, attached to the skin, can monitor how much and how often patients take medicine. The small, wafer-thin patch then transmits the data to a smartphone.

The California company dreamed up the idea. Celestica is designing, engineering and testing the device in its Toronto labs. “The innovation comes from a circuit board that does something that previously was mechanical, taking advantage of miniaturized computing,” Mr. Andrade said.

Celestica is applying a similar innovation model to help aerospace, defence and automotive customers create new products, such as in-flight entertainment and guidance systems, power control devices and cameras.

The company generates some of its own intellectual property, typically related to the manufacturing process, such as the making of circuit boards. More typically, the intellectual property belongs to their customers.

Celestica does work for Honeywell Inc., Raytheon Co., Boeing Co. and Airbus SAS.

Companies in many manufacturing industries are typically risk averse – concerned that failure can lead to plane crashes and other catastrophic mishaps. And that has a tendency to stifle innovation.

That’s precisely what the computing industry can teach other sectors, according to Mr. Andrade, a former IBM engineer.

“How technology improves is by breaking,” he said bluntly as he pointed through a window into the company’s tear-down lab, where engineers are busy reverse-engineering chips and testing their reliability.

“The medical and aerospace industries tend to use tried-and-true technology. But the problem is that it crystallizes technology, and it never changes.”

In the computing business, on the other hand, technology is constantly changing by identifying failure.

“Tons of errors go into technology, but each time there is an error, you improve it,” he pointed out.

Celestica, which has 30,000 employees at 20 sites in a dozen countries, has turned IBM Canada’s former mainframe computer plant into what Mr. Andrade calls a “knowledge lab.” Half of the space is now devoted to manufacturing, with the rest used for engineering, testing, training, design and repair, as well as office space.

Celestica is busily reinventing itself as pieces of its traditional business become commodities and production moves offshore. That means the 900,000-square-foot plant is constantly being reconfigured as new items go into production, while others cease or get moved offshore. Every month, it launches 140 new products, constantly changing its vocation.

“Ninety per cent of what we do at the plant wasn’t here two years ago,” Mr. Andrade said.

Until 2011, Celestica had never made a solar panel. A 60,000-square-foot expanse is now used for making and testing solar panels, for Sharp of Japan and others.

Change has become a constant for Celestica. Until last year, it made components for BlackBerry smartphones, but the business was shifted to cheaper Asian suppliers, taking with it roughly a fifth of Celestica’s revenue. In 1996, Celestica produced exclusively for IBM. Nortel Networks – now defunct – was its first outside customer.

The company has watched how technology has propelled the rise – and decline – of all these companies, from up close. And through it all, it’s learned a thing or two about innovation.

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