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Stencil Printer Manufacturers Eye a New Round of Growth
December 31, 1969 |Estimated reading time: 6 minutes
In addition to manufacturers, vendors offering complete SMT lines are jockeying to increase their market shares.
By Keith Robinson
Photo courtesy of EKRA America.
In January 2000, SMT equipment manufacturers discovered that their customers were gone, and 2001 is shaping up to be an even tougher year. Last year, although several assemblers experienced robust growth, resulting in lead times longer than usual both for equipment and components, that partial growth did not carry over to 2001 and many manufacturers were left scrambling for strategies to tackle the latest downturn.
Importance of Monitoring TrendsTo be sure, there were some warning signs that the printer equipment market was going to experience tough times in 2001 together with other markets in the industry. Nevertheless, at the end of the fourth quarter in 2000, several red flags were left unnoticed. They included a decline in demand for semiconductors while some passive components had shortages, and sales of surface mount equipment sales began to drop off as well.
The current slowdown has made clear that it is important to monitor market trends more closely when the economy is experiencing robust growth. Obviously, closer attention must be paid to the red flags that fly during strong economic times if only because they may signal tougher months ahead.
Conversely, there are signs that point to some relief in the fourth quarter of 2001 and to solid growth in 2002. One of the positives is that the number of layoffs reported is starting to decrease compared to the first and second quarters of 2001. Another is an upward projection of demand for computers for the fourth quarter. Once the economy picks up, how will surface mount equipment manufacturers be affected and how will the competitive landscape in the stencil printer market appear? (A research group at Frost & Sullivan is evaluating these trends.)
The Single Vendor OptionIn 2000, total revenues for the stencil printer market surpassed $450 million. A negative growth rate is projected in 2001. The two players among the many in this market DEK and MPM have been increasing their market shares aggressively over the past two years. However, a trend is in effect that can either enhance or reduce their market positions.
Photo courtesy of Surface Mount Techniques.
An increasing number of assemblers prefer to purchase their equipment from a single vendor as opposed to mix-and-matching SMT lines. This permits them to negotiate for lower prices as well as gain more compatibility in equipment when it comes from one vendor. The single-seller concept, in fact, has added to the success of the larger equipment suppliers who have marketed their products successfully as a "complete" solution. Moreover, they are looking toward this concept to enhance their presence in the stencil printer equipment market.Pick-and-place companies can impact the printer equipment market significantly because of their high market position for placement equipment. Assemblers view placement equipment as a more important purchase than that for stencil printers and this will give the major companies an advantage.
With increased competition from the larger placement equipment companies, were does it leave DEK and MPM? It is expected that they will continue to have a strong market position if only because their sister companies also have positions of strength in the markets they participate in. For example, DEK is part of the Dover group, as is Universal with its popular gantry product line. Other companies falling under the Dover umbrella also have been very successful in their respective industries. Similarly, MPM is a stencil printer equipment manufacturer that is part of the vital Cookson Electronics group. Thus, the equipment manufacturers to feel the pinch most likely will be those that do not provide a complete solution or a broad product portfolio.
Photo courtesy of DEK Printing Machines LTD.
Other StrategiesThere are several strategies a printer manufacturer can implement to maintain and increase its current client base. Strategic alliances with other equipment suppliers that compliment a product line will help maintain and gain new customers. Another strategy that can help is merging and acquiring. For example, a printer manufacturer might consider acquiring an equipment supplier that rounds out its product portfolio to provide a complete surface mount solution. Another strategy is to provide other products, such as solder paste or components. The Cookson Group not only has a strong presence in the stencil printer, soldering and cleaning equipment markets, its Alpha Metals unit enjoys an important position in the solder paste business. This has helped MPM maintain a vital presence in stencil printing equipment.
As more placement equipment manufacturers increase their presence in the market, it is expected that prices will continue declining for stencil printers. This is because sssemblers are becoming more price conscious, spurred especially by the economic slowdown. Accordingly, it appears that now is a good time for the printing equipment manufacturer to work more closely with its clients.
In other industries, the battle cry has been "Help us save money now and we will help you." If a printer manufacturer can work more closely with customers and help them save money they most likely can count on loyalty once market conditions improve and the competitive level increases. During challenging times, customer service is noticed and remembered more.
Trend Toward LeasingThe contract manufacturing (CM) industry was the largest customer segment for stencil printers in 2000. With the slowing conditions, several CM providers have had idle lines and experienced sharp declines in their stock prices. Some even have laid off a significant portion of their workforces. However, CMs still require the latest in equipment to land new accounts or to maintain existing accounts. The CM industry is moving toward leased equipment because it permits more frequent equipment upgrades. Leased equipment also increases the number of used stencil printers in the marketplace, which can have a negative impact on new sales. Manufacturers will have to incorporate used equipment strategies to tackle the challenges that are posed. For example, some printer equipment manufacturers sell more advanced, fully automatic used printers to low- and medium-volume assemblers at the same price as a semiautomatic machine. While this has helped increase some sales for used equipment, it can be a major challenge for printer manufacturers who do not offer fully automatic equipment and rather focus heavily on the semiautomatic machine market.
Systems Incorporating Newer TechnologyThe three technologies in stencil printing equipment are manual, semiautomatic and fully automatic. Low-volume assemblers typically used manual machines in which a stencil printing expert who could repeat results regularly would be employed. Because this method is labor-intensive, time consuming and requires high expertise, its use in the industry has been decreasing. And although medium-volume assemblers generally use semiautomatic equipment, the most profitable (to the supplier) is the fully automatic stencil printer market. Naturally, the high-volume assemblers (and some medium-volume CMs) use the fully automatic units, which is the market the major players primarily participate in. This segment also is seeing more machine vision technology incorporated in its designs to evaluate solder paste faults associated with stencil printers.
Although 2001 is expected to be a tough year overall, the outlook for stencil printer equipment is very bright. Manufacturers with a strategic plan to overcome the current economic slump and to increase market share in 2002 will be the winners in this important market. The competitive landscape also is expected to be altered by the major placement equipment manufacturers as more assemblers choose vendors that provide a complete SMT solution.
KEITH ROBINSON, industry analyst, may be contacted at Frost & Sullivan, 7750 IH 10 W Suite 910, San Antonio, TX 70229; (210) 247-2402; Fax: (210) 348-1003; E-mail: krobinson@frost.com