At the close of 2008, in the midst of unprecedented global economic turmoil, the HKPCA and IPC co-hosted a trade show in Shenzhen. It was the seventh year for this South China show, which caters to PCB fabricators and their suppliers.
The show’s first day was slower than anticipated, and overall, the attendance for the three-day show could only be called poor. On the final day, the show floor was strangely vacant, a very unfamiliar picture when compared to previous events held in China over the past 10 years.
If the locals are to be believed, this will become the norm for the foreseeable future. Reports from the companies I spoke with at the show indicated a 30% to 40% decline in orders, putting most factories in the position of operating at 40% to 50% of capacity, far below breakeven. According to the Federation of Hong Kong Industries, up to 25% of the small- to medium-sized companies (including electronics firms) in southern China may be forced to close due to the decline in demand, displacing as many as 2.5 million workers.
In an interview with the show organizers, it became apparent that part of the concern for many companies is that businesses in China haven’t experienced a PCB industry downturn cycle – something to which many of us “old timers” from the U.S. and Europe have grown accustomed. The industry is relatively new in this region, and double-digit growth has been the rule, regardless of slowdowns felt elsewhere. Without significant crisis management experience to draw on, some companies in China are entering the uncharted waters of contracting markets. And what they may not realize is the decisions that will be made on how to run these struggling businesses during the next few months will have a far-reaching effect on the PCB landscape in China in the coming years.
Approaches to crisis management being taken by companies big and small range from personnel reductions of up to 20% to salary cuts and unpaid leave. We know from experience that plants operating at reduced capacity tend to see scrap rates rise. Thus, any company struggling with declining orders could benefit from a proactive scrap reduction program. Improving yields and reducing scrap will have an immediate positive impact on the bottom line by reducing waste and conserving resources. It also reaps long-term rewards. Companies that put engineers to work attacking quality issues (instead of laying them off or giving them unpaid leave) will find ways to increase first-pass yields that gain not only an immediate material cost advantages but also will add the long-term benefit of overall quality improvement.
In 2009, to help facilitate proactive programs for yield improvement and waste reduction, we will be inviting our columnists to focus on topics that provide yield improvement strategies. Starting next month, look for helpful tips on how to improve first-pass yields throughout the manufacturing process.
To bolster our readers’ needs for high quality information, UP Media Group will host our second Virtual PCB (virtual-pcb.com) trade show and conference on February 24 and 25. This fully interactive, web-based event debuted last February, with some 2,400 registrants. Virtual PCB brings together buyers and sellers from around the world. With the anticipated tight travel budgets in 2009, the ability to meet in a virtual environment where suppliers and buyers can exchange critical information makes Virtual PCB an essential venue for engineers and managers alike.
Along with the networking opportunities, Virtual PCB has a strong technical program that includes on-demand educational presentations, white papers and live group chats with industry experts on topics of high interest like routing, simulation, ECAD-MCAD collaboration, Lean manufacturing and more. On the trade show floor, attendees can talk to their colleagues and with exhibitors, download product literature and brochures and see demos. It’s an excellent opportunity to tune your skills and learn something new. For more information on how to participate go to www.virtual-pcb.com.
