News06

EIPC Chairman Rex Rozario welcomed delegates and acknowledged their support at a time when the European PCB industry is facing an uncertain future: insolvency problems at major German manufacturers FUBA and Ruwel and the consequent effect on their material suppliers, massive layoffs and shutdowns in the EMS industry, many of the smaller PCB companies struggling to find work.

As Ho explained, "Make friends first and business later. The Chinese are bonding people. Friendship is forever; business is there when you need it!"

With a thin layer of ice on its canals, and a bicycle for each of its three-quarters of a million inhabitants, Amsterdam, the financial and cultural capital of the Netherlands, was the venue for the EIPC Winter Conference. The comprehensive event took place February 12-13, 2009, offered 22 presentations and was remarkably well-attended with 13 countries represented.

The second presentation demonstrated how a European PCB manufacturer could adopt positive tactics and move forward, rather than retreat, in a time of recession. EIPC Vice Chairman Giacomo Angeloni described the Somacis "Strategy for Survival." He likened the current situation to the parable of the seven lean cows devouring the seven fat cows. The lean cows of the moment are global crisis, erosion of market share, failure to develop human resources, crippling European bureaucracy, quick profit takers and communication problems. What can be done to avoid them causing a catastrophic collapse of the European PCB industry?

Angeloni explored the challenges, and described how Somacis had set out to secure its future prosperity. Reductions in costs and lead times were priorities, together with innovative technology and value-added services. Somacis' new emphasis was on fast prototyping and production in the high-technology market, with substantial investment focused on the technical enhancement of their Castelfidardo factory and the establishment of a new 15 million Euro factory in Manfredonia with the capability to produce complex rigid boards and prototype chip packages on very short lead times. Investment continued in their Chinese operations with the objective of increasing their presence as a domestic supplier of medium-to-high technology PCBs, rather than producing at low cost for import into Europe. The company was exploring merger and acquisition opportunities in the U.S., particularly in Silicon Valley and the Boston area, as well as in Europe and possibly Japan.

But, taking his own company Graphic PLC as example, Rozario offered some encouragement: Graphic had seen the early signs of recession back in 2007. Directors and managers had taken a pay cut, cost savings had been made wherever possible and all efforts had been made to improve yields. Prices had been maintained; the company was still profitable, with a full order book and was recruiting engineers.

Reflecting upon the combined effect of the shift of pcb manufacturer production to Asia and the global collapse in confidence in the banking system, he believed that global output would take two years to recover, and employment four years. And no-one could predict at what point government recovery initiatives would begin to take effect. He introduced the keynote presentation with the question, "What are the challenges and risks of purchasing PCBs outside Europe?"

EIPC Technical Director Michael Weinhold set the scene for Ivan Ho, EIPC Director for Asian Pacific Activities, to discuss "China's PCB Industry: Friend or Foe? How to build partnership and to minimise risk and surprises," with statistics demonstrating how the Chinese contribution to the European PCB demand of around 5Bn Euro has grown from less than 10% in 2000 to more than 50% by 2007, remarking that EIPC has a responsibility to its members to make them aware of the opportunities and risks involved in trading with Chinese manufacturers, and to advise them how to build successful relationships to complement their value-added services to European customers.

pcbchina began by analysing the geographical, production and ownership data for the Chinese PCB industry over the last decade, and explained how it had matured from its opportunistic beginnings to a $14 billion business, although the short-term outlook is not good—soaring unemployment, extended holidays, pay cuts, reduced working hours. Ho predicted that China's economic recovery would probably be faster than in the Western world because of the prompt reaction of the Chinese government to inject liquidity, reduce interest rates, cut taxes and sponsor infrastructure projects.

Ho described the traditional mindset of Chinese entrepreneurs: opportunistic, willing to take risk with little regard for business models, dive in first then learn to swim and over-promise first and apologise later. But Ho said these attitudes are mellowing, and the Chinese have recognised the need to invest in talent, expertise and equipment to grow the business by getting into higher-value markets.

He advised European companies to leverage their own brand names, and to make the most of their customer relationships and technical knowledge, with the objective of offering a seamless, value-added local service to their customer base whilst using Chinese partnerships to fill the gaps. It was important for a company to understand its competition, to clearly identify where it wanted to position itself in the market, then seek the right partner to match its needs. Careful research was needed, followed by proper due diligence and the building of strong personal relationships with owners and top management.

Unless otherwise stated, the content of this page is licensed under Creative Commons Attribution-ShareAlike 3.0 License