Modest improvement in N. America

Citation

(1999), "Modest improvement in N. America", Circuit World, Vol. 25 No. 4. https://doi.org/10.1108/cw.1999.21725dab.039

Modest improvement in N. America

USA

Modest improvement in N. America

Keywords: Printed circuit boards, Electronic industry, Book-to-bill, USA

N. American printed circuit boards and electronic equipment both enjoyed modest growth this spring. Figure 7 shows the monthly and 12-month rolling average $ bookings for the sum of computer and office, communications, measurement and control and military electronics. The April monthly bookings were well ahead of the 12-month average as electronic equipment grew 9.9 percent on a 3/12 and 9.5 percent on an annual (12/12) basis.

Figure 7

Figure 8 shows that PCB order growth has caught electronic equipment (after a 10-month imbalance) and that PCBs can be expected to grow more to follow the recent equipment upturn. When the equipment portion of Figure 8 is "dissected" into its four components (Figure 9) it can be seen that the recent equipment upturn is due to improvements in communication, military and measurement and control orders. The apparent slowing of growth in computers may be a false sign as the 1998 data may be suspect (too high due to the possible inclusion of software with the hardware orders).

Figure 8

Figure 9

Figure 10 details the April data from the IPC statistical program showing a slight slowing of rigid PCB orders on a monthly basis (one-month book/bill dropped to 0.94). However, based upon the recent electronic equipment order increase PCB orders can be expected to improve further in coming months.

Figure 10

Figure 11 shows the current annual (12/12) and 3-month (3/12) growth rates for many key measurements of the health of the N. American electronics industry. Values greater than 100 indicate growth.

Figure 11

Although the N. American PCB manufacturers were generally flat in 1998 the Contract Assemblers showed good growth (Figure 12) due to the substantial OEM outsourcing (see Technology Forecasters' comments below). John Tuck's Manufacturing Market Insider newsletter follows this market well. See his site http://www.mfgmkt.com

Figure 12

Figure 13 lists my best estimates of the current annual sales of the top N. American PCB manufacturers. Since most of these companies are not publicly traded, accurate financial data are not always available. These are my estimates and I apologize if I missed someone.

Figure 13

Figure 14 shows the current quarter vs the same quarter last year's sales and net income for the "public" N. American PCB manufacturers. Other than the predominantly contract assembler Sanmina, overall profits are slim. The global PCB industry overcapacity and concurrent price declines have taken their toll. Hopefully the recent pick-up in electronic equipment orders will result in better PCB profits.

Figure 14

End markets

The May 17, 1999 issue of Computer Reseller News contains a useful set of articles on electronic equipment end markets. This article references an Internet Website: http://www.crn.com/sections/special/supplement/842/842mlindex.asp

I am not sure how long this Internet site (Special Report -1999 Market Leaders) will remain active but it is worth visiting. Figure 12 shows typical data found in the Computer Reseller News article (in this case "Networking hardware"). The referenced website supports this article.

Printed circuit boards

Parlex purchased the assets and business of Hadco's Dynaflex operation to form Parlex Dynaflex Corporation, a wholly-owned subsidiary of Parlex Corporation. The purchase price was $2.5 million, which may be increased, based on adjustments contemplated within the next quarter.

Photocircuits de Mexico, S.A. de C.V., Monterrey, Mexico has an 800,000SF facility under construction in the Stiva Industrial Park with completion targeted for mid-summer 1999. Photocircuits de Mexico will be equipped with fabrication and electrical test equipment to perform the final product manufacturing and testing processes. Targeted staffing in Monterrey is 300 when the plant is fully operational. Planned throughput is about 200,000 square feet of printed circuits per week.

Per Dr Hayao Nakahara, Japanese PCB manufacturer Kyosha opened a single-sided PCB plant in Tijuana, Mexico in April. It is the second Asian printed wiring board manufacturing plant in Mexico after Saehan Electronics built a single-sided board manufacturing plant in Tijuana two years ago. Kyosha Mexico's plant is currently equipped with two completely automated manufacturing lines with a capacity 100,000 to 150,000 sq. meters of 1-sided PCBs per month depending on panel size. Mexico is the world's largest producer of color TV sets with an annual production of about 28 to 30 million sets. Its color TV sets alone use about 6 to 7 million sq. meters of SSBs each year and more than 95 percent of them are imported from the Far East. Other audio/visual products use additional 2 to 3 million sq. meters of SSBs per year. In 2001, however, when digital TV begins to find its way to market, many SSBs used for TV will be replaced by double-sided and in some cases by multilayer boards. Therefore, there is a provision for Kyosha to move up to a double-sided board manufacturing capability.

Methode Electronics said it plans to exit its printed circuit operations and is seeking to divest its board manufacturing facilities in California and New Jersey.

Praegitzer is shutting down its Huntsville, Alabama facility. It had previously purchased this PCB fab from Intergraph.

Assembly

Per Technology Forecasters (www.techforecasters.com) divestments of manufacturing facilities by original equipment manufacturers (OEMs) to Electronics Contract Manufacturers are increasing steadily, outstripping construction of new factories (Table VII).

Table VIICM expansion 1996-1998 worldwide

	Acquisitions	Newconstruction
1996	31	20
1997	37	20
1998	42	20

Reasons why contract manufacturers buy OEM facilities are to:

• •

  establish operations in critical geographical regions necessary to meet revenue goals;

• •

  provide design, logistical support, and other services to OEM customers;

• •

  ally with strategically important OEM customers through take-over of operations.

Viasystems acquired PAGG Corporation of Milford, Massachusetts. PAGG operates multiple surface mount production lines for printed circuit board and backplane assembly and has full box-build capabilities.

Solectron will acquire Trimble's manufacturing assets in Sunnyvale, California, and assume full manufacturing responsibility for all of its GPS and related RF technology products.

ACT Manufacturing and CMC Industries have signed a definitive merger agreement. Revenues of the combined companies for the last 12 months are approximately $582 million -making it the seventh largest publicly traded electronics contract manufacturer.

Walt CusterMorton Electronic Materialswcuster@mindspring.com