Emerald Group Publishing Limited
Copyright © 2011, Emerald Group Publishing Limited
The state of the European PCB industry
Article Type: Industry news From: Soldering & Surface Mount Technology, Volume 23, Issue 3
We have to keep in mind the complete PCB supply chain as it represents about 50,000 people in 1,000 different companies. And these are only the jobs for those people working directly in this industry or supplying this industry. Experience shows that each industrial job in general creates two or three further jobs and, consequently, we are talking of more than 150,000 jobs directly related to our sector (Figure 2).
Figure 2 PCB industry supply chain suppliers and manufacturers
The complete supply chain embraces not only the manufacturing of PCB but includes the suppliers of consumables, equipment, chemical products, services, software and their subcontractors. Some of these actors still are based in Europe and remain there because they still find a sufficient number of customers and they are exporting their products out of Europe.
A quick panorama of this industry and of the suppliers is shown in Figure 3.
Details about manufacturing of PCBs in Europe in our study are including not only Europe but as well the riparian countries to the Mediterranean Sea, like Northern Africa, Turkey and Israel, however, not including Russia and countries of ex-Soviet Union. This manufacturing base consists of 400 manufacturing shops representing total revenues of around €2,200 million in 2010, employing about 20,000 people for manufacturing and further 30,000 people in support.
About half of the total value is manufactured by about 100 companies based in D-A-CH (Germany, Austria and Switzerland), 150 companies in the UK, Italy and France are sharing 25 per cent of the value and another 150 manufacturers are based in the remaining countries and representing another quarter.
PCB manufacturing in all these territories is concentrating on high-tech products (multilayer, flex and flex rigid boards) and on a higher diversity of products and smaller volumes.
In 2009, total sales out of own production (namely excluding any imports) have dropped by 30 per cent versus 2008 but in 2010, we should narrow the gap to 2008 again. The erratic ordering during 2010 in our industry was attributable to the fact that the PCB industry is too far down the supply chain. The nose-diving demand in key industries like the automotive sector had consequences above average to the PCB industry (at first clearance of all stocks and then rapid stock-piling and increase of quantities). This explains as well the closures of important manufacturers in Germany or Italy.
About 20 per cent of all PCBs manufactured in Europe are used in the automotive industry. The industrial sector uses 35 per cent, military and aeronautics account for 10 per cent, communications for 15 per cent, medical for 7 per cent, and the remaining 13 per cent either cannot be attributed to a certain segment or may be found in the consumer and office automation business (Figure 4).
In 2009, there have been just 40 PCB manufacturers left in Europe with revenues in excess of €10 million per year. But these 40 companies represented about two-third of the total production value. Only a few of those top companies belong to a larger group and none to an OEM. Therefore, it becomes evident that this business is characterized by independent small and medium companies.
It also becomes apparent that manufacturers in some countries have a higher dependency to a certain industry than others (Germany to automotive, Switzerland to medical, Austria to telecommunications and France and the UK to military and aeronautics).
The global market share of European production represents just 6 per cent of all PCBs manufactured (ten years back, it was about double that amount). The USA today represents 8 per cent of world production (once 25 per cent) and the largest share of about 80 per cent originates from Asia.
Several European PCB manufacturers are importing PCBs from Asia in addition to their own production. This often represents 15-20 per cent of their sales figures.
The PCB industry in Europe can be characterised as a parochial industry as its customers are found in a close circle of perhaps 100 or 200 km around the production site. Export is rare and almost exclusively in the hands of the few big players.
Investments in new companies producing bare boards have come to a halt, only the existing suppliers are increasing and modernising their factories. As a rule of thumb about 8 per cent of the annual turnover is necessary to remain abreast with the pace of technology. Despite that, only a few companies are able to shoulder this burden. But manufacturing new technologies with old equipment is possible for just a short time only.
Another peculiarity of the industry is that cooperation between companies so far is very rare as one manufacturer sees the other as competitor only. Therefore, cooperation to solve mutual challenges, to serve shared industries or customers normally does not occur. For this reason, sometimes several solutions are presented to the market but none of those is able to survive as the critical mass is not reached.
Companies are managed by strong personalities which already have been facing difficult situations in the past. Unfortunately, the strategy of many companies consists only to stay alive longer than the closest competitor.
PCB manufacturers are embedded in a supply chain reaching from the design offices to EMS providers. Should the manufacturing part disappear to a large extent, there are good chances that designers and EMS will not have any base for their business left. This avalanche effect of course will cripple as well all the suppliers to the industry and the loss of industrial jobs in Europe will be much bigger.
This, in consequence, would affect the important manufacturers of equipment and consumables and they may transfer all their activities and research centres which so far served the European PCB industry to other locations. Some segments, like, e.g. aeronautics or military are very sensitive to this problem but the damage of the supply chain would apply to the European industry in general.
Our goal is not only to gain support for our ideas outlined in this paper but to defend the interest of this industry and to have Brussels and our governments to support our industry. But also, the end-users have to understand the importance of the PCB as a critical and strategic component for their own future and competitiveness.