Look again at PCBs' journey East
18 August 2008
Interesting report this week from ‘electronics.ca’ (Predicting a threat to PCB industry ), which suggests that there will be a virtual elimination of PCB manufacture in North America and Europe. Only the aerospace and defence industries would be left sourcing indigenous PCBs.
The trouble with reports of this nature is not they are, in broad terms, necessarily wrong, it is more that there is often a layer of detail below such reports that gets lost, and when this is lost the picture becomes incomplete.
A parallel is the EMS side of the industry that was predicted to consolidate to such an extent that there would be only a handful of companies left, and that they would have operations only in low-cost geographies. The Tier 2 sized companies would become extinct and a few small local contract manufacturers would survive to serve indigenous and specialist industries like defence, medical and automotive.
This model has never really happened. The top two EMS companies are huge and much bigger than the pack behind them, but the pack does not fit the model of having a big head, no middle and a long tail. Instead it is a fairly steady taper down from top to bottom with plenty of Tier 2 companies occupying the middle ground. When Tier 2 companies have been consumed by the Top Tier EMS providers all that seems to happen is that an enterprising Tier 3 expands to fill the gap. And while it is true that most Tier 1 and 2 companies have some or most of their manufacturing capacity in the Far East, most also have operations close to their end markets around the world.
I suspect the same is going to prove true of the PCB industry. Although it is one step further along the road of being regarded as a ‘commodity product’, PCBs are not uniform. A recent survey I did in the UK and Ireland for our printed magazine (Electronics Manufacture & Test) yielded no less than 60 companies who were actively involved in manufacturing PCBs within this geographical market, and I am sure that model is replicated throughout all countries that are involved in electronics manufacturing. I have added to this web site an introductory comment from Intellect (Where next for the UK PCB sector?), which briefly sums up the challenges facing the UK industry. Incidentally, according to a similar survey I did of EMS companies in the UK recently, there now numbers a fairly steady 240, which does not indicate an industry in terminal decline!
Given the strength of the PCB industry that already exists within China and Taiwan, I am sure that the Electronics.ca report will, like the EMS model, prove to be broadly true and yet there is a strength within many countries that makes it too broad to be truly representative. Complex boards, new technology and limited batch sizes all demand a PCB supplier that is close at hand. So while the volume business is likely to migrate in the same way as the electronics assembly business has, there will remain localised areas of expertise that will cut across all sectors of industry, not just defence and aerospace.
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