Electronica 2008

Citation

Ling, J. (2009), "Electronica 2008", Circuit World, Vol. 35 No. 2. https://doi.org/10.1108/cw.2009.21735bac.001

Electronica 2008

Article Type: Conferences and exhibitions From: Circuit World, Volume 35, Issue 2

The European PCB industry – stormy, change, or fair?

We have a barometer on the wall of our home. It belonged to my grandfather, so it is quite old, but is invariably accurate and reliable, unlike the weather forecasts that one hears on the radio, which often bear little similarity to what is happening out of doors.

Taking a barometer reading of the European printed circuit board (PCB) industry in Munich at Electronica showed that the same dichotomy of information was evident. Whilst the press economic reporters predict that the end of the world is nigh, the more sanguine figures of the European PCB industry have a different slant on present circumstances.

Rolf Weichert is the Sales Director of FUBA Printed Circuits, a vertically integrated company nowadays which prides itself on technical sophistication. Their specialisation is in FR4/Rogers high frequency hybrids, heat sinks applications, high-layer counts, with plants in Gittelde and Dresden in Germany and also in Tunisia. Their barometric needle is now moving rapidly away from the automotive sector towards the medical, space and defence demands, with MIL specs being met next year. Herr Weichert was of the opinion that in the present depression, loyalty is the key, with the customer and supplier becoming more reliant upon each other, and not just in a purely commercial sense either. When it gets chilly, it is perhaps more difficult to cosy up to a supplier when they are on the either side of the world and are themselves feeling less of a draught.

Turkey is a country that has seen some radical changes; whereas it was once the preferred location for high-volume manufacture of consumer goods, wage increases and higher social costs incurred by their approach to becoming members of the European Union (EU) have altered the balance, and now it is a quality game. Cem Ergin is the Chief Executive Officer at Baski Devre in Istanbul, and his well-established company is a strong survivor through a combination of quality and service, plus the advantage of location. His experience is that the time zone in looking after his customers in Europe, which account for 40 per cent of turnover, works to his advantage, as does the English language, strangely enough.

Arieh Reichart at rigid-flex specialist Eltek in Israel hit upon one aspect of the downturn that is a worry. In a country famous for the proliferation of “start-up” companies (given the size of population), the recent drought of funding for such entrepreneurial activity bodes ill for the future. For the most part his company is currently busy, but he looks for that crystal ball for how the future lies. Eltek are ensconced in the medical sector for which little change is forecast.

Whilst automotive companies are now looking around for spare aerodromes upon which to park their surplus stock, companies such as Schröder Elektronik in Rohrbach, Germany are seeing a less than sunny outlook for their extremely sophisticated moulded assemblies complete with integrated circuitry. But the world is not going to swap the motor car for the bicycle so the movement of the needle here towards stormy is not a permanent worry. They are a diverse company who do not have all their eggs in one basket, or their customers in just one industry.

Terry Dowling is one of the experienced PCB industry men who help crew the Invotec Group, who have three factories in England. At Tamworth, Telford and Blackburn they are able to meet the demand for circuit boards in various formats – polyimides, hybrids, copper-invar-copper, carbon boards, with heat sinks and heat exchangers, and they are a company who are involved from the design stage onwards to product completion. Their ability to produce boards with fine features is key to their continued success, and although 75 per cent of production remains UK and Ireland orientated, 25 per cent goes to many other European countries. Of greater concern to Terry than the present economic crisis is the inability of the industry to attract the young people of today who will have to take over from the older generation whose retirement dates loom closer. If you chose to work in an industry where price pressures impact on wage levels, do not be too surprised that packing shelves in warehouses pays more. But the job satisfaction comes nowhere near.

Dominique Pellizzari heads up the CIRE Group of eight French companies, who have no more than 20 per cent reliance upon any one market sector. He explained that they are experiencing a steady market in the military, space and aircraft industry sectors, mainly due to French Government spending on equipment for the next few years, the influence of the Galileo Project, plus equipment for military intelligence. About 15 per cent of their market is automotive, but this has been affected by the post-ponement of various projects, and there is not much going on in the telecom sector either right now. However, the industrial sector is steady, although the lack of funding for small and medium enterprises SME’s could have an impact. The CIRE Group export 30 per cent of production; one of the strengths of a many-faceted company is their ability to serve the low end of the market – after all, there is little sense in sending a short run single-sided order all the way to Shenzhen if you can have it done in La Belle France. CIRE specialise is very complicated boards, medium to small series, and maintain a balanced market presence, with each one of their eight companies being a specialist in what they do, be that flex, high-density interconnect, or hybrids. Dominique joins others in his worry about finding the right people to see the PCB industry in Europe survive in any meaningful way. There are too many small/average size companies whose owners are shortly to retire, who have no heirs, no successors, and those that might survive drown under an ever-increasing cost of compliance with ill-considered environmental legislation.

Michael Nothdurft is the Director of Marketing and Communications at Schweizer Electronic AG (SEAG). SEAG saw this all coming about 18 months ago which led to their strategic move to consolidate all their production in Schramberg. This has led to their becoming a more efficient company with a faster operation, such that they now wish to become partners for the smaller companies, through concept to final engineering, and they will not be disadvantaged by disproportionate overheads. They are expanding their sales force in southern Europe, and following the reduced impact of automotive electronics on their order books have moved to industrial electronics instead. SEAG is now a leaner operation, is looking for a partner for an operation in Asia, and they are innovative to boot, with recent developments of radio frequency (RF) identification devices systems for medical devices meeting with exciting approval and commercial acceptance. They are greatly assisted by the German Government who operates a scheme under which 60 per cent of the cost of retaining staff on a part-time basis on a full-time wage is met by the government.

Varioprint AG in Heiden, Switzerland has an emphasis on projects, from design to production. Sascha Faust explained how they have positioned themselves over the traditional market sectors with some natural equilibrium, and have, as one should expect from a small country economy, a strong export sales base of 70 per cent, which includes specialist applications for their technology in the USA. Varioprint enjoy a long-term relationship with their customers, who comply most considerately to the 80/20 rule, giving them a core of customers who drive their technology along. Sascha showed how they have developed optical wave guides into PCBs, allowing fast data package transmission in the 10, 20 and 30 GB spectrums. Varioprint AG employ just 140 people, so one could hardly describe them as a large company, but they enjoy a big reputation, and can be counted in the premier league of technical excellence. Barometer reading? Pretty fair, by the sound of it.

Graphic PLC have got-off to a good start of their financial year, which starts in October, but the market is already showing signs of being depressed, and in 2009 it will drop even further, thought David Pike, MD. Contracts are being deferred, orders for aircraft are being cancelled, and there is some erratic pricing around, reflecting a degree of panic by companies anxious to cover fixed costs at least. Even Far East companies are now offering smaller batch sizes, and there is a lot of space capacity in Germany due to the dip in the automotive sector. All of this is further aggravated by demands for 90 days payment terms, mainly by American owned companies. Whilst the next two months look good for Graphic, what happens after that is in the lap of the gods.

Dr Laurent Bodin is the Industrial Director of Cimulec in Ennery, France, and he came straight to the point – the market will drop by 20 per cent next year. His group includes CST in Toulouse who serve the military and aerospace sector in which there is great uncertainty payment is getting worse, although the French Government are reported to be considering legislation which will make it illegal to pay later than 30 days. Now that might take a mountain of cash to trigger, but the idea would be popular.

In Italy payment remains a challenge. About 120 days is the norm, and an average is 130. It is considered impolite to chase debt before 90 days have passed. Marta Puggioni of Picasse Elettronica srl located in the evocatively named Taverna di Montecolombo said that business had been good until August but now there had been a diminishing of demand, and whilst her company has a good sector spread, the decline in the automotive industry was beginning to bite.

Another automotive industry supplier is EuroCir from Barcelona, who are heavily reliant upon a burgeoning car industry, and have concerns for 2009 for their Spanish operations, although their China factory is reported to be busy right now.

Hans Ch. Lang is the head of communications at AT&S, Austria, and was of the opinion that 2009 would see a shake-out of PCB production within Europe, which would allow larger companies a better market share, although with raw material costs in Europe being substantially higher than in the Far East, the portent for a robust recovery was not good. AT&S already have a re-structuring operation in place at Leoben, and see a global perspective from the point of their recent expansions in both India and China.

India and China also feature in the geographical spread of the much-changed RUWEL who are now a true global player. Given that 60 per cent of their business is in the automotive sector, they will be comforted by their diversity into masslam and their work on product development at Geldern. Frank Hoiboom, Marketing Director, commented that “quality is life assurance” but it may be a case of “sit and wait”, as forecasting is impossible, given that customers themselves have little clear idea of what precisely lies ahead.

The traditional bravado shown by the European PCB industry may be likened to a man who has water lapping his chin but will swear that his socks are indeed quite dry. The picture emerges of many companies who have seen it all coming, have taken the necessary steps, and are sufficiently, technically secure to weather a strong depression, rather than a recession. For those others who are less prepared and may be looking for lifeboats, they are labelled “mergers”.

John LingAssociate Editor, Circuit World