Reading time ( words)
IPC Director of Market Research Sharon Starr found time to discuss the recently conducted and published surveys and research reports and a few others still in the works. These reports are free to survey participants, which is certainly a great incentive for taking the time to complete them. (Hint: That’s a call to action for those of you sitting on the sidelines.)
Patty Goldman: Hi Sharon, nice to see you once again. I understand you have plenty of information to share with us.
Sharon Starr: Oh, yes. As usual, there's a lot going on in market research at IPC. Some of our most time-honored annual studies are coming out and three were just published in September. One is the World PCB Production Report for the year 2016. That's always published the year following the year that it covers. I believe that report may be in its 40th year. It's been very popular for a long time. Basically it offers a view of the footprint of the PCB fabrication industry: what's being produced, where it's being produced, and the historical and business trends, both regional and global. It’s always an interesting report because it shows us how the PCB industry as a whole is growing and changing. Globally, it grew at about 2.2% last year, after a slump for the last couple of years. North America is interesting, too, because it shows that the decline in PCB production that North America has been experiencing for the last 10 years or more may be coming to an end, or at least the rate of decline is slowing almost to a standstill, which is good news for the industry in North America.
Goldman: It sure is.
Starr: The other interesting thing we learned from the 2016 report is that India's PCB industry is really booming and it had the fastest growth of any country in Asia. India is now among the top 10 PCB producing countries in the world, at number 10. The largest is China, of course, and China is still growing its PCB industry. In fact, just over half of all PCB production in the world is done in China, based on value of PCBs, not units.
Goldman: Who is second?
Starr: Taiwan. In fact, Taiwan is an interesting case because Taiwan is a small country. There's a limit to how much they can produce on the island, and so they do most of their PCB production offshore, mostly in China. A lot of the Chinese PCB production is owned by Taiwanese companies.
Goldman: Is that counted as China production or Taiwan production?
Starr: In the World PCB Production Report we count it as China production, so we can see where the PCB production is happening, but we also report on the amount of PCB production value based on company nationality.
Goldman: So even though Taiwan is a very small country, they still produce enough in Taiwan to make them number two?
Starr: Oh, yes. As a matter of fact, Taiwanese companies are the biggest producers in the world. They produce almost a third of the world's PCBs, but they do most of it offshore.
Goldman: China is number one and so Taiwan must be a distant two.
Starr: As the location of production, yes, they are. Third is South Korea, then Japan and the U.S.
Goldman: We're down the list a bit, aren't we?
Starr: Yes, but we're still in the top five, which is good. North America now has a 4.9% share of world PCB production. It’s small but becoming more stable.
Goldman: How is Europe's PCB industry?
Starr: Its PCB production share has been declining, like North America’s and Japan’s have been. Europe’s share of world PCB production is now just 3.6%. It decreased about 3% in real terms in 2016. Germany is still one the top 10 PCB-producing countries, though, at number 8. The former heavy hitters in the industry are the ones declining and a lot of the new production is moving, not only to China, but now to Southeast Asia, like Vietnam and Thailand.
Another report that we published in September is our annual Study of Quality Benchmarks for Electronics Assembly. It’s our most popular study. Companies use the data to compare their quality measurements to their segments of the industry. The report presents the results separately by type of production, region and company size.
We also published our 2017 Annual Report on the North American PCB Industry in September. The data comes from our PCB statistical program, which has been in existence for many decades. It's a very strong program. The companies in the survey sample represent more than half of the North American market. That report shows us what’s happening in the market, as opposed to production. The PCB market, like production, has also been declining slowly in North America, but the report shows that the rate of decline is slowing and leveling off.
Goldman: We always hope that it will go in the other direction.
Starr: Yes, and of course the military and aerospace segment is the biggest. It accounts for about one-third of all the PCBs consumed in North America. That market does continue to grow slowly.
Goldman: What is number two in after military? Is it medical?
Starr: No, it's communications, mainly for the infrastructure segment of the market.
Goldman: That's interesting, yet from a reliability standpoint, I would have thought medical would be second.
Starr: Medical is important in North America because it’s a market that requires high reliability, which is a major focus of the PCB industry here. It's also a growth market.
Goldman: We know in Europe, automotive is king.
Starr: Actually, in Europe, about 40% of PCB production is for the industrial electronics market. Automotive is second with about 20%.
So those are the newest reports. We've also got a new program in the works that is designed to measure the health and outlook of the electronics industry. We conducted the first survey in July. It’s called “Pulse of the Electronics Industry.” This new program gathers feedback every quarter from every segment of the industry worldwide on the direction of indicators for the health of the industry currently, and the outlook for the next six months and the next 12 months. We're conducting this survey every quarter so that we can start to build from a baseline and really see how things are changing. We'll know a lot more after we conduct the next quarterly survey for the fourth quarter. After we have a few quarters’ worth of data and we can start to see trends, we'll make the quarterly reports available for sale. While we fine-tune the program, the reports are being provided only to the participating companies. All companies in the industry are welcome to participate.
Goldman: How do they go about participating? Do they contact you or is there a website they can go to?
Starr: They can contact me and my colleague, Piyamart Holmgren, at MarketResearch@IPC.org. We're sending out the quarterly surveys by email with a link to a secure online survey platform, and the surveys are strictly confidential..
We’ve already made some interesting discoveries in the responses to the third-quarter survey. For example, the industry segments that are most bullish about the direction of the industry are the equipment segment and the PCB fabricators. The PCB fabricators haven’t rallied for a long time, but they seem to be rallying now. They are expecting to see some growth, and that's very interesting. It will be interesting to see what happens and what the next quarter's forecasts will be.
Goldman: I think that in the PCB industry you've had the decline, companies have disappeared, and now we're down to like the survivors, the winners, the ones that are doing the right things. They're the ones that have figured out the right way to do things and they expect to keep doing the right things and growing.
Starr: In North America, the survivors are stronger. They’ve developed niche markets and business models that work for them, but there are many right ways to succeed in this fast-changing industry.
Goldman: They’ve figured out how to survive and flourish, more or less. They've figured out the formula for whatever it takes. And the ones I've talked with, you're right, they're enthusiastic.
Starr: Before we close, I would also like to mention an upcoming study. This is the year for our biennial Wage Rate and Salary Study for the North American Electronics Assembly Industry. The survey collects data from electronics assembly companies, including OEMs and contract manufacturers. It covers employee benefits, HR policies, workforce growth and management practices in the North American industry. The report will be published by the end of the year.
Goldman: Thanks so much, Sharon. I really appreciate your time today.
Starr: You're welcome.