Rapid supply base changes threaten industry stability.
Is there anybody out there? Maybe it’s a sign of aging, or possibly paranoia setting in, but I find myself asking that question more and more.
And anybody is not just anybody. As I look around the industry, the anybody of yesterday is not the anybody of today – or tomorrow.
In years past, when I asked the question, the “anybody” I was referring to was competitors. Over the past dozen years, so many companies, especially in North America, have vanished. Many were proud icons of the industry. Some were fast-moving Tier 1 “players,” and many were the local companies that quietly made up the industry. Regardless of size, stature or location, the industry has fewer of those anybodies.
Today, my focus is quite different. Now I am looking at the shrinking supply base. Many companies are shrinking, if not going away. The risk is becoming a garden with no water or fertilizer. At some point, without those things that sustain life, the plants perish. Yes, companies still can purchase laminate, mask, chemicals – all the supplies that keep factories humming. On the surface, the answer appears to be, “Yes, anybody is out there.”
But look a bit closer and the picture is not quite so bright.
Many suppliers over the past decade have cut back on field sales and tech support – cut enough where, for many, support is nonexistent. The big guys may not be feeling it, but then again, most in North America are not big guys. Worse, when a big guy consolidates, the supply base tends to make further cuts, stretching even thinner the scarce customer support resources. Yes, on the surface, suppliers still offer “world-class” sales and tech support. But if there isn’t anybody available to show up when needed, then “world-class” does not work.
Many suppliers have cut their lines or products. The rational is if the market is not large enough to support a specific item, then it no longer makes “economic” sense to support that product. However, if North America has morphed into a geographic market made up of niche players, then by definition low-volume consumption of specialty products is what is needed to support that niche market. Cut those low-volume lines and the niche players perish. Over the past year alone, our company has received several “announcements” of discontinued or reformulated lines due to low volume, putting considerable pressure on finding satisfactory replacements – usually in days rather than via a controlled phase-out. That process is bad enough on a good day, but when suppliers and potential suppliers have virtually no tech support to provide needed information, the probability of success drops dramatically.
Some suppliers really have vanished. In some cases, distributors have abandoned our industry to focus on larger or more lucrative markets. In some cases, consolidation has reduced players. For whatever reasons, however, the number of vendors seems to have dropped. I say “seems” because, in some cases, it depends on where you do business. For those outside Asia, the numbers have dropped. Walk a trade show in China, however, and you see many companies active in the Asian markets that do not (and might never) sell to the West. These companies may (or may not) have a better product, but most likely do have a better price point. In many ways those unknown companies are more mirage than real, especially when they are not in your country and you don’t speak their language.
So I keep asking myself, “Is anybody out there?” and wonder, “If not, what is one to do?”
Maybe it’s we, the customer, who needs to go to them – to remind them we are still in business, still purchasing and still relying on a solid, committed supply base. When you can speak with a sales or tech support person, often you hear some comment like “headquarters does not think there is a market for ….” In short, the powers that be, too often pencil-pushers, don’t understand the implications of their decisions on individual companies or an industry. I’m not saying they are all that way, and not trying to paint a picture of “us” vs. “them,” but possibly we, the customer, are assuming that some suppliers have lost touch with their customers.
Maybe fabricators should band together and pick one week to visit their major suppliers’ top executives and remind them of their importance in supporting our industry in all geographic regions, large and small. Maybe senior management needs to understand that dropping a product can have devastating implications for the fabricator, end-customer and their own reputation. Maybe we need to remind some suppliers that when a designer chooses a laminate – and then finds it is no longer available – the likelihood that that company’s laminate will be chosen the next time is dramatically reduced.
I do think, however, the burden to remind the supply base of the needs, requirements and value of printed circuit board fabricators is now, more than ever, the responsibility of each individual company, especially the niche firms. And the message has to be that while the numbers and relative size of remaining companies have shrunk in Western markets, their relative importance has not. That message has to be communicated continuously to everyone with a stake in providing materials and supplies.
Is anybody out there? Does anybody care? I’d like to think that the answer to both questions is “yes.”
Peter Bigelow is president and CEO of IMI (imipcb.com); This email address is being protected from spambots. You need JavaScript enabled to view it.. His column appears monthly.
