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The Inside Line
December 31, 1969 |Estimated reading time: 3 minutes
Cookson's China Strategy
Foxborough, Mass. — Many EMS suppliers and OEMs alike are setting up plants in China. SMT magazine interviewed Ray Sharpe, Cookson Electronics' president and CEO, about his company's interests there.
Cookson first ventured into China in 1984, when the company started working with a tin mine in Kunming, Yunnan Province, for Alpha Metals solder products. "We established that the market for domestic consumption would expand in the near future; however to support our long-term investment we needed an export strategy," said Sharpe. "At that time, markets were ripe for development in China, but working with a partner was the only option, as the government was focused on generating export revenues. So we used our global position to drive export revenues, which in turn gave us the hard currency to build the infrastructure to service the domestic market. This is our 15th year with this joint venture partner."
In 1994, Cookson entered into a joint venture in Dalian, China, to produce laminate materials. The local company had invested in the technology but could not run their plants. Cookson took them over and grew Polyclad Laminates. The investment in PWB materials for Asia continues with a new Enthone chemical facility opening shortly in ShenZhen. A new Alpha Metals soldering materials facility, also in ShenZhen, opened late last year.
The quality of the workforce is surprising—so entrepreneurial, educated, clever and hard working. The cost of labor is low, at 80 cents an hour with company-supplied uniforms and dorms. They have direct salespeople paid salary plus commission. Cookson controls the technology, but local Chinese manage their plants and the business.
"We have invested more than $50 million in China so far, building three new facilities, buying others, hiring staff, etc.," confided Sharpe. "We're profitable, but it took us a while. China is a growth market that requires a lot of patience."
Lead-free and VOC-free materials are facing increasing environmental and regulatory scrutiny in Chinese electronics production. There are many certifications and regulations that require assistance from local staff, lawyers and government agencies as well. After a 20-year history, Cookson has found a way to make it all work.
— Gail Flower
Global PCB Price Erosion Slowing
AMERSHAM, BUCKS, United Kingdom — The price erosion of PCBs, which reached as high as 10 percent per quarter in the second half of 2003, has slowed to less than 5 percent per quarter, according to the latest report from U.K. electronics industry specialists Purcon-iPro.
The latest edition of the Electronics Industry Tracker released by Purcon-iPro also shows that the level of price erosion has varied depending on technology. Single- and double-sided board prices fell by as much as 50 percent since 3Q 2001, while higher layer count boards fell by approximately 10 to 20 percent.
Explaining the latest market data, Martin Deas, director, said, "Demand in the market reduced dramatically during 2001, and while there was some recovery in the early part of 2002, this has not been sustained. Prices have continued to fall as producers have fought for survival. In the past three years, the PCB market has become truly global, with Chinese producers forecast to capture 18 percent of the market by 2004, overtaking European producers whose market share has fallen from 17 to 13 percent and is expected to fall further."
Commenting on the outlook for 2003, Deas added that it almost certainly will bring further demand recovery, but at a pace that will continue pressuring prices. "Expect prices to reduce, but at levels much lower than in 2001 and 2002," he explained.
He added that increasing demand, further inventory elimination and improved capacity use will be the factors dictating pricing and lead times in 2003.
Purcon-iPro Ltd. is part of the Purcon Consultants Group Ltd., which provides integrated strategic solutions for supply chain management ranging from specialist purchasing information to e-commerce and e-business strategy.
— Jenny Popp