US PWB industry – a crash landing ahead?

Citation

(2001), "US PWB industry – a crash landing ahead?", Circuit World, Vol. 27 No. 3. https://doi.org/10.1108/cw.2001.21727cab.019

US PWB industry – a crash landing ahead?

US PWB industry – a crash landing ahead?

Keywords: Printed circuit boards, USA, Electronics industry, Market trends

The recent and unexpected economic slowdown in America has given cause for concern about the future demand for printed wiring boards in this region. Now is a particularly challenging time for the management teams of printed wiring board and supply chain manufacturing companies. The key questions being asked by these companies are: Will a downturn occur, when will it happen and how fast will demand fall off?

Over the last 17 years BPA has developed and refined a global printed wiring board market demand forecasting model. This forecasting tool monitors the cyclical behaviour of printed wiring board markets by region, and forecasts the short- (three months) and long-term (five-year) cyclical demand. Deborah Mann, BPA's PWB forecasting specialist believes "the model is particularly good at identifying the future turning points in the future PWB market cycle. Comparing our forecasts with actual demand has shown our ability to identify turning points with accuracies of ±4 months. In addition to this, the forecasted cycles consistently track extremely well the actual changes".

Deborah Mann went on to explain her latest forecast, which was completed in December 2000. "BPA's latest long range printed wiring board demand forecast shows a number of interesting movements. It was clear as early as January 2000 that a slowdown in the US PWB demand would occur in the second half of that year. In the third quarter of 2000, growth reduced from a high of 16 per cent to a current level (January 2001) of 9 per cent. It was evident that the US PWB industry was overheating, with substantial demand growth prior to the third quarter of 2000. This slowdown, which is now in the trough, should be seen as the "re-adjustment period" for the industry. The tremendous demand and growth for printed wiring boards, linked with an increase in prices, can only be sustained for a limited period. Also, the recent presidential elections and economic uncertainty has forced the US PWB industry to "take breath".

"What is positive, however", said Deborah Mann, "is that demand growth will resume from now into the second quarter of 2002. We are expecting the demand to peak at 13 per cent by this time (Figure 1). Beyond the second quarter of 2002, however, the USA will experience a severe downturn lasting almost one and a half years where the trough of the cycle is expected to occur in the third quarter of 2003, reducing to 1 per cent growth."

Figure 1 PCB growth curve and forecast, USA, 1990-2004 (captive and free)

Mark Hutton, senior consultant at BPA, also mentioned "this cycle has some important implications for the players in the industry. Our forecasts indicate that the market conditions over the next 12 months will be good, showing the underlying continued strength in the demand for PWBs. However, beyond the second quarter of 2002, a severe downturn will occur. Interestingly, this aligns itself particularly well with the recent indications of a slowdown indicated by several electronic system manufacturers including Motorola, Nokia and Nortel. The PWB industry correlates closely with the systems industry and this builds confidence in our forecast."

Mark Hutton also explained that "players in the US printed wiring board market must be cautious in investing in new capacity with a downturn looming in 2002. Also, it is highly likely that at this time prices of finished boards and materials will reduce."

Further information: Sarah Demmon, Marketing Manager, Tel: +44 (0) 1306 875500; e-mail: s.demmon@bpaconsulting.com