Not everyone is. That’s a mistake.
It hit me while walking through IPC Apex Expo in February. Talking with various colleagues, the famous quote from A Tale of Two Cities kept repeating in my head: “It was the best of times, it was the worst of times.”
At every industry meeting I have been to in recent months, the mood has been quite bullish, reflecting the best of times. The HKPCA Expo in Shenzhen was well-attended, and money was being spent – lots of it! Ditto for Apex, where attendance appeared brisk and North American companies were in a buying mood. Discussions revolved around adding capacity, further incorporating higher technology capability, and exciting new customer relationships – all of which overshadowed the news that tariffs and trade restrictions could be in the offing.
Speaking of technology and capability, improvements and refinements to equipment have enabled once very costly capability upgrades to become financially feasible for smaller companies or those with otherwise stretched capital budgets. Not since the 1990s can I recall such investment being made to ramp-up the technology capability by so many so quickly. Even in the often staid and steady world of “old technology” equipment, the increasingly omnipresent video imaging/registration/measurement technologies are breathing new life into even the relatively slow-changing world of wet process and drilling/routing equipment.
Meanwhile, markets, customers and opportunities to increase sales echoed that it was the best of times. Asia is busy with ever-changing, advancing and growing consumer-centric demand, while in North America the explosive automotive electronics market and the race toward commercially viable self-driving cars has opened the doors for many domestic fabricators to participate in R&D, alpha and beta programs. Plus, military/aerospace-centric fabricators are reporting surges in quoting opportunities and orders. Possibly even more positive: comments from some government officials close to the DoD that they see a need for more capacity throughout the electronics supply chain to support anticipated short- and long-term programs for new and replacement hardware.
In so many ways, as measured by spending, technology and market demand, our industry appears to be experiencing the best of times. As positive as the data may appear, however, a persistent skepticism and concern dampened many conversations. Especially within the North American contingent, there was a feeling that it was the worst of times!
Areas of concern voiced by some included the same challenges the industry has faced for years, if not decades. “Can’t find good people” seemed to be the most-voiced concern, followed by continued downward pricing pressure, lack of wherewithal (or willingness) to invest in equipment, and finally, lack of interest to compete in the certification-intense military and automotive markets.
In the worst of times, all these negative outlooks have merit. Based on decades of hard-earned experience, my definition of the worst of times is when there is a trifecta of no customer demand, intensely disruptive technology that is prohibitively expensive, and unattainable downward pricing pressure. When all three are in play, the hurdles of finding talent, capital and resources to meet customer requirements become insurmountable. Much of our industry experienced just such a period early in this millennium, a period that truly was the worst of times. The current landscape is quite different, however.
Asia has evolved from an emerging market to a maturing one, with defined industries that their capability and capacity can service. The West, especially North America, once again has markets that need competent, capable suppliers. And competent and capable means committed – committed to today, as well as to the long-term. More important, the growing Western markets are ones that offer long-term stability. Unlike the telecom bubble of the late 90s, markets such as military and infrastructure electronics are not as seasonal or cyclical. Investments made today have a strong likelihood to pay off handsomely in this more stable environment.
Then why the paradox, and what might it mean for our industry? Some of the reluctance for optimism is possibly due to caution – caution by those who survived the stark downdraft that decimated the North American industry in the early 2000s. Over-optimism that led to wasteful investment still weighs on many veterans’ minds. For others, possibly fatigue is setting in – fatigue from chasing certifications with no guarantee of orders; fatigue from investing heavily in equipment just to stay competitive; fatigue dealing with training the next generation of employees, hoping they become as competent and committed as the generation they will replace. As far as what this may mean for our industry, my guess is further evolution.
Our industry was sparked by highly entrepreneurial risk-takers who, through grit and sweat, made it grow and flourish. Today, while being entrepreneurial still offers competitive advantage, the grit, sweat and risk-taking has been replaced by process management, technology roadmaps and hardened focus. Many within the Asian markets of the past 20 years successfully applied process, technology and focus. Others in the West have also morphed their businesses from personality-driven to process-driven. Those are the people who would describe our industry as being in the best of times. Those who have a more negative slant will most likely, by their actions (or lack thereof), become extinct, and by doing so provide an opportunity for others to fill the void and prosper.
Whether it is the best of times or the worst of times boils down to an individual perspective. Currently the majority of the industry is enjoying the run-up. For those with a different perspective, the difference may be up to you, as the opportunity has rarely been better.