The UK's PCB industry can survive and prosper in 2003

Circuit World

ISSN: 0305-6120

Article publication date: 1 December 2003




Haken, B. (2003), "The UK's PCB industry can survive and prosper in 2003", Circuit World, Vol. 29 No. 4.



Emerald Group Publishing Limited

Copyright © 2003, MCB UP Limited

The UK's PCB industry can survive and prosper in 2003

The UK’s PCB industry can survive and prosper in 2003

Brian HakenHaken Associates, UK

AbstractThis paper looks at the future prospects for the UK’s PCB industry by asking whether this industry can survive the increasing pressure from the Asian companies, in particular those from the very low-cost areas such as China. It is concluded that this is possible, provided that the companies are prepared to take a strategic look at how they conduct their business, and take appropriate steps to ensure that their competitive edge is maintained.

Keywords: Manufacturing, Electronics industry, Competitiveness


As we entered 2003, I decided to take a strategic look at the future prospects for the UK’s PCB industry by posing the question: “Can the UK’s PCB industry survive the onslaught from Asian companies, in particular those from the very low-cost areas like China?”

After having lengthy discussions with the leading professionals from the UK’s PCB companies, I have come to the conclusion that the answer is yes, it can survive and prosper, but it will only be achieved at a cost. Companies must be prepared to take a long hard strategic look at how they conduct their business and, in particular, at their cost structures.

It is imperative that the current PCB companies acknowledge the changes that have taken place, and are continuing to take place, in the global market, and pay attention to the way global business is conducted. Most importantly, they need to ask why the OEMs and EMS companies are buying their PCBs from Asia. The answer is simple – “cost”. If the electronic equipment companies are to compete in the very competitive global market, they must reduce their overall costs. Over the last few years, this has been addressed by the OEM and EMS companies in the UK by moving their high-volume electronic assembly and component purchases off shore, mainly to China. Why? Because at this moment, China is one of the lowest global cost centres.

With so much business being transferred to a potentially volatile area like China (led by the USA) the major worry is, what would happen if their costs rise (as they inevitably will) and/or if their economy and home market grows? Where will it leave the western world? I suggest that the Chinese will satisfy their home market needs before those outside. With many western high-volume PCB manufacturing facilities having closed down, would we be able to produce enough boards to satisfy our own PCB needs? Both the European and American electronics industries could be left “up the river with out a paddle”, i.e. in a very dangerous position. Is it necessary or wise to put so many of our strategic eggs in one basket?

During interviews with senior personnel in the UK PCB industry, I raised strategic questions regarding the market, manufacturing technology, production volumes, customer industry sectors, and that were considered the biggest problems to be faced in 2003.

The general consensus of opinion regarding the market for PCBs in the UK (comparing 2002 with 2001) was flat to down, however, the monetary value had also greatly reduced due to the tremendous downward price pressure from buyers and Asian competition. The PCB market predictions for 2003 were flat to 5 per cent growth, with continued downward pressure on price. The pundits suggest that the electronic equipment market will rise between 4 and 7 per cent in 2003, but only time will tell if their predictions have any value. The degree to which the market affects individual companies is greatly influenced by two main issues: business strategy and the sector of the electronics industry they supply.

For example, Rex Rozario of Graphic Electronics, which concentrates mainly on supplying leading edge technology, higher layer count boards to the Defence, Aerospace and Telecommunication industries, stated that overall pricing in the UK was down by 45 per cent and turnover by 40 per cent. However, his company managed to achieve a reasonable profit during 2002. To reduce manufacturing costs and align manufacturing capabilities to the needs of their customers, Graphic has a continuous capital investment programme in place. Its ability to supply time critical complex competitive leading edge technology boards is its key to survival. Rex indicated that Graphic has a promising, secure future with the continuing concentration on innovation and technology. He is predicting a small increase in turnover and profits during 2003. The company is very proud of achieving the overall Business Challenge 2002 award.


To help overcome the threat from offshore PCB suppliers, many UK companies have set up partnerships in China and other Asian countries to supply the high-volume needs of their customers. This form of partnership allows the UK companies to be globally competitive by offering a full, guaranteed quality PCB service to their customers i.e. from prototypes to volume production. Several companies have taken this path, for example.

Circast Electronics, which supplies a broad sector customer base including Aerospace and Defence. Andrew Hall said that his company had seen an 18 per cent drop in the market in 2002 from 2001. He predicted a small increase of 2-3 per cent in UK produced PCBs in 2003, but a larger increase in offshore sourced product. Circast’s production in the UK is mainly focussed on high layer count boards with special materials and in fast lead times with volume production being supplied from their partners in Asia.

Andrew stated that the costs associated with business and manufacturing are constantly under review and larger panel sizes are being introduced to gain improved production yields. With prices for PCBs having reached an all-time low, partnerships and customer-focus are the essential elements for the future of the company.

Eurotech, supplies the industrial, automotive and telecommunications (now greatly reduced) sectors of the electronics industry. Kelvin Leigh stated that, although the 2002 market was very flat, Eurotech remained profitable. Kelvin predicted a small market increase in 2003, mainly due to increased imports from his Asian partners and UK company failures. UK production is concentrated on double sided and six-layer 125-micron technology multilayer PCBs. Eurotech’s Asian partners supply the high-volume needs of his customers. Eurotech has also taken on further Asian partners to supply high labour content items such as cable forms etc., and this has proved to be a fruitful business.

Kelvin stated that his company was focussing on reducing costs in all departments, in particular on the activities associated with improving efficiency. A continuous capital investment programme in equipment that reduces labour content would help address this focus. He felt that the new waste regulations would place an additional cost burden on the PCB industry.

Artetch Circuits supplies boards to a broad spectrum of the OEM and EMS industries. Richard Wood-Roe stated that the turnover was down by 20 per cent for 2003 from 2002 due to the entirely reduced customer demand and the global price erosion of PCBs. The positive side for Artetch was that they did not lose any customers during this period. He predicted no growth in 2003 and that the market would remain flat. The only growth will be in the workload and not in the sales turnover. UK production concentrates on fast turn around double sided and four-, six- and eight-layer boards on a 50-50 basis. Apart from companies mentioned earlier, Richard has partnerships with Asian companies to supply his high-volume needs. He stated that, for a UK company to be successful, it must offer customers a total solution, from prototypes to high-volume production with guaranteed quality and back up. The ability to produce sufficient profits to invest in new technologies and capital equipment is absolutely essential for the survival. Richard suggested that the partnerships between UK and Asian PCB companies would result in reduced market share for the PCB agents and brokers, which he states, can only be positive for the UK PCB companies.

Circatex is one of the largest remaining UK PCB producers and emanated from a receivership-buy-out of Viasystems Tyneside in 2002. Neil Chilton stated that whilst some elements of its market such as telecommunications infrastructure have declined during its first year of operation, other elements such as automotive have increased greatly. Their customer base is, therefore, very broad including a small percentage of Aerospace and Defence contracts.

UK production offers the full package, from prototypes to cost-effective high volume, with an emphasis on fast turn around; a good example of this being their contract to manufacture vast quantities of digital set top boxes. This was made possible due to the very modern, high technology, high yield automated equipment obtained from the Viasystems buy-out, eliminating much of the labour/cost content of manufacture.

Neil saw the pending environmental legislation as an opportunity rather than a threat, offering Circatex the ability to attract new customers.

Regarding potential partnerships with Asian PCB companies, Neil sees very positive advantages to strategic relationships, however, he emphasised the need to be focussed on his customers needs and ensure effective management both in the UK and with any potential Asian partners.

Alun Morgan, of Isola Werke, the largest global laminate supplier stated that the UK PCB market was flat when comparing 2002 with 2001, but predicted a small growth in 2003. However, the continuous downward pressure on prices would outweigh any potential rises in sales turnover.

PCB manufacturing in the west

One of the global telecommunications equipment companies has migrated a large share of its PCB requirements to Asian based manufacturers. This was driven from the need to reduce costs and to optimise local content supply. For the fairly standard technologies with medium to high-volumes, this has been very successful, particularly for products with a strong penetration into the local Asian markets.

This large migration has served to place a major focus on Asia, in particular China, by applying huge pressures on western-based shops to re-establish what value they add to their customers.

This re-focussing has driven some western companies to adopt a more rounded value package, including co-designing with their customers to lock themselves in to challenging higher technology designs, offering close working relationships supplying prototypes and offering quick turn around in 3-5 days. These value-added services are difficult for the Asian shops to compete with, even with a strong local technical sales force, since geographical, language and time differentials inevitably cause delays in responding to follow-up design questions, and they can typically only offer 7-10 days quick turn around manufacture.

Some western suppliers and customers have also recognised that they have a niche volume market, which the valued customers still see as a benefit over the Asian shops, i.e. for programmes with a short life cycle or new programmes that require a slower ramp to volume, hence requiring small discrete orders, sometimes with erratic forecasts.

Specialisation for building to challenging applications, such as in Aerospace and RF signalling are also proving to be areas where customers clearly prefer to have a closer working relationship with the western based shops. They can thus benefit from regular face-to-face developments and visits to the manufacturing line to explore new ways of building and improving the products.

All these niche local benefits would still be a tough sell, if the western board makers could not offer pricing within a realistic margin of the Asian board makers and, depending on the customer, the word “realistic” will have a varied meaning. Some of the smaller more agile western shops, with tight financial controls and a diversified customer base continue to fare well in this market, even offering competitive pricing over Asian shops due to their expertise and guarantee of high yields.

Open recognition of the competitive forces of both eastern and western fabricators is the key. Consequently, we have seen partnerships emerge with specialised quick turn around shops in the west. This action allows penetration into new designs using local expertise, tools and language to ensure that the key wins are made and serviced. These partnerships can simplify the tooling transfer when it is time to ramp up for volume, and sometimes also to eliminate the need to duplicate NRE costs.

From the western companies' perspective, alliances have also been initiated with Asian/low cost region manufacturers allowing further cost reductions to customers whose margins are being squeezed. This approach also allows high-volume products to be matched with an appropriate dedicated supplier. Whatever the reasons for alliance, partnership or even joint venture, this recognition is serving to secure long-term relationships with the original “designed-in” supplier.

With the PCB market now re-sized and re-positioned to climb out of the doldrums, we will see a return to a seller’s market, and strong partnerships between the customer and the supplier will again be a key in securing the required capacity. This expectation has already served to stabilize the price of PCBs, and for some customers they are already seeing some small increases. With so much of the world’s capacity now lost, it will be interesting to see how much of the demand will again rely on shops in the western world.


The responses from leading UK PCB manufacturers and a major global OEM, clearly indicate that the answer to my original question is, yes, the UK’s PCB companies can survive and prosper, provided that they are prepared to take both a long and hard strategic look at how they conduct their business, and appropriate steps to ensure that their competitive edge is maintained. Today’s global market is continually changing, necessitating the need to be vigilant in the way business is conducted. Being prepared to make changes as and when the market dictates is mandatory. In summary, the UK PCB industry does have a future!

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