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IPC. Asian flu subsiding, but keeps hold on US PWB and EMS companies
Asian flu subsiding, but keeps hold on US PWB and EMS companies
Keywords IPC, Printed circuit boards, Electronics industry, Asia
Nearly 62 percent of companies in the US and Canadian printed wiring board and electronics manufacturing services industries are experiencing pricing pressure due to the economic situation in Asia. That's according to an IPC survey, The Effects of the Asian Economic Crisis on the US PWB and EMS Industries. This report is the sixth, and final, in a series of studies performed by IPC on the impact of the Asian crisis.
The report is based on surveys administered by IPC in August to IPC members who manufacture PWBs or provide electronics manufacturing services in the US and Canada. Of the 542 surveyed, 84 responded, a 16 percent response rate. Responding were 56 PWB manufacturers, 25 EMS providers, and three that do both.
PWB companies have been significantly more affected by pricing pressures than EMS companies: 70 percent of PWB companies vs 43 percent of EMS companies report experiencing some degree of pricing pressure. Asia's impact has waned in both industries compared to the last study, conducted in January 1999, when 82 percent of PWB companies and 61 percent of EMS companies indicated pricing pressure (Figure 1).
Figure 1 Pricing pressure levels by company type (August 1999)
The number of PWB companies reporting severe pricing pressure have remained constant since January 1999 (16 percent), while those experiencing strong-to-severe pressure decreased slightly to 45 percent from 51 percent.
The impact on EMS companies decreased more significantly. A total of 14 percent of EMS companies reported strong pricing pressure, in the August 1999 survey compared to 38 percent in January 1999. No companies reported severe pressure; in January 1999, 16 percent indicated severe pressure.
In the PWB industry, mid-sized companies (annual sales between $10 million and $79.9 million) were most likely to be affected, with 76 percent experiencing some form of pricing pressure.
Participants who report they have not been impacted by the Asian crisis were asked to indicate the primary reason why. Key factors sheltering these groups were:
custom nature of their work - 31 percent;
technology level - 28 percent;
customer base - 24 percent;
emphasis on service - 14 percent.
PWB companies are still concerned about the expected impact of the Asian economic crisis, with 73 percent expecting 1999 earnings to be negatively affected. That's consistent with the percentage of companies that expected an impact in the January 1999 survey. EMS companies are slightly more confident, with 41 percent saying they expect a negative impact, down from 44 percent in the January 1999 study.
A total of 75 percent of large PWB companies (annual sales over $80 million) reported they expect 1999 earnings to be negatively affected by the crisis, higher than any other segment in that industry. Mid-size EMS companies were the most likely in their sector, with 50 percent expecting a negative impact.
Asked if the Asian crisis would make it more likely they would increase sourcing of PWBs from Asian suppliers, 47 percent of EMS companies indicated it would, up from 13 percent in January 1999. The percentage of PWB companies more likely to source chemicals from Asia decreased, from 28 percent in January 1999 to 19 percent in August 1999.
Respondents reported that the overall impact of the Asian economic crisis is expected to be low on both the PWB and EMS industry in 1999.
For more information on The Effects of the Asian Economic Crisis on the US PWB and EMS Industries survey, contact IPC market research director Carla Wehrspann. Tel: +1 (847) 790-5317; E-mail: firstname.lastname@example.org