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Outlook for 2015 and Beyond: A Supply Chain Perspective
December 31, 2014 |Estimated reading time: 1 minute
In “The Terminator” movie series, an artificial intelligence network known as Skynet wipes out most of mankind. It nearly succeeds in wiping out all mankind, but from the ashes emerges the Resistance. The Resistance is made up of survivors who, despite their weakened condition, have the will to survive and fight for existence.
This more or less describes the PCB fabrication industry over the past 15 years, except instead of Arnold Schwarzenegger and Skynet, we are trying to survive in the face of relentless competition from China and other emerging markets.
On our side, instead of someone cool like John Connor, our industry is unfortunately dominated by folks nearing or in their 60s, but at least they have the fight in them of Arthur Spooner, Jerry Stiller’s character on “King of Queens.” When you think about it, though, China isn’t Skynet. Rather, what caused this drastic change was actually the free market system. In a free market, the prices for goods and services are set freely between sellers and consumers based on levels of supply and demand. As Chinese manufacturers ramped up capacity from 2000-2002, they offered prices far below what domestic manufacturers could charge, resulting in a decimation of the North American PCB fabrication industry.
Events from 2000-2002 (the Downswing)
From a population of more than 700 PCB fabricators in 2000, we now number less than 300. More importantly, the North American PCB fabrication capacity has shrunk by closer to 70 to 80%, depending on whose estimates you go by. For certain technologies, the reduction in production capacity is even more drastic.Read the full article here.Editor's Note: This article originally appeared in the December 2014 issue of SMT Magazine.