The view from the North America by Paul Waldner

Recently, I have taken over the responsibility for global sales at Multiline Technology (MT). MT is a leading supplier in the world for registration systems used by Printed Circuit Manufacturers to make sure that mechanical and photo-lithographic processes line up to each other. Better Registration Systems are what our customers need when they discover that their holes are breaking out of their pads (either on outer-layers or inner-layers) or their solder mask isn't covering tracks near pads. On my first couple of trips around the world in my new capacity, it is clear that the three major geographic markets of the world are markedly different in the way that they invest in the kind of equipment MT sells. The Asians are largely investing based on production capacity issues although technical enablement plays a role as well. The Europeans investments are almost exclusively for purposes of technical enablement and largely made by companies who never before needed the kind of machines they are presently buying. The North Americans are up-grading existing technical capabilities to fit with their customer's perceived needs for better registration and higher layer count demands. The customers with facilities in North America generally fall into four categories: * Large global companies with either production and/or sales/engineering operations in North America as well as larger capacity production in Asia (Sanmina, Viasystems, Multek, Merix, Parlex) * Medium to large-size companies with multiple operations in North America who specialize in small to medium, delivery-time sensitive, medium to high-tech production to large OEM and EMS players (TTM, Coretek, DDI, Tyco) * Manufacturers who are themselves manufacturers of Military Electronics or companies, who specialize in supplying to Military suppliers (Rockwell, Litton, Lockheed Martin,) * Small companies who serve a local or regional market with technologically advanced or delivery-time sensitive products (Electro-pac, Harbor Electronics, Flexible Circuits) In all cases, these companies are investing to improve technical capability at home. The average layer-counts of most of these companies was in the region of 6 to 8 layers in the year 2000. Today, most of them say that the planned average layer-count, after technology improvements, should be in the region of 12 to 16 layers with panel sizes staying put at an average largest panel size of 18 or 21 x 24. Many of these producers are looking at maximum panel sizes of 24 x 30 because of customer's requirements for larger circuits or because of the need to be more cost efficient in the use of materials. What is striking to me is the general sense of optimism across the board among manufacturers in North America. Most of the companies I talked to feel like that they have right-sized over the last several years and are now ready to take on the challenges that their customers are throwing at them. One of them, Sanmina in Owego, was even proud to announce that they are hiring people again. Nobody feels like the old days are returning, but none of the people I talked to expected that to happen. They are just happy that the opportunity seems to be there to earn healthy profits again and money for investments seems to be flowing again. How will Europe get to the same point? The answer seems to be by completing the process of matching supply to demand and by getting the communication right between end-customer in the supply chain and the PCB fabricator. Somehow, it seems that the North American PCB industry has managed these two important steps and now is set to profit. As a leading indicator to this process, I can only give the following anecdotal information; Multiline Technology's sales to North America in the last three months were the best since 2001. I wish that I could take credit for that but I can't—everyone knows that equipment sales, from initial inquiry to order, is a long process (generally from 6 months to two years and sometimes longer) and I only started my responsibilities in December 2005. The reality is that North America went from a world market share of bare board production of around 26% to 29% (depending on who's numbers you believe) in 2000 to a market share of around 12% today. This is a very large loss of business which will not be recovered anytime soon. North America is, however, beyond the denial stage and beyond the complaining and is well into the planning of the future. We in Europe could learn a lesson or two out of this process. Is there a way to keep the quality of life advantages that Europeans have while at the same time have the ability to right-size ourselves a'la Americans? Is there a way that we can get the same communications into our supply chain in Europe to be able to know the direction of our customers better? The answers to those questions are key to our business health in the future. Paul Waldner