It’s Only Common Sense: Where Will We Be in Five Years?

A friend of mine got me thinking the other day when he asked me what I thought the North American PCB industry would look like five years from now. That’s an intriguing question, isn’t it? I decided to really think about this for a few days.

Certainly, the next few years will be the most transitional years in the long history of the North American PCB industry. This industry began in 1951 when America’s first independent board fabrication company, Photocircuits, was opened its doors. Think of some of the other big names in the industry, companies that had once dominated, but now are gone. That list is obviously quite long, since we have gone from well over 1,000 shops (some say as high as 1,800, while others say the number was 1,200) to just around 200 shops left in North America.

The list includes Photocircuits, Maine Electronics, General Circuits, Capital Circuits, ACI, The Bureau of Engraving, Altron, Zycon, Hadco, Pacific, Diceon, Advanced Quick Circuits, Tingstol, Coretec, Bartlett, ASI, Continental Circuits, Circuit-Wise, and many others. There are too many to remember, and they're all gone, existing only in the memories of those of us who worked for them.

So, where is our industry going? What will it look like in five years, or even three? Well, here are a few things I know:

Buying Sprees

Some of our more prominent companies are on buying sprees right now. At least three American companies are buying everything they can get their hands on, with an end-game of a big payout in the next few years. These companies have three things in common:

  1. They have an aging management team looking for that last payout.
  2. They have venture capital money behind them.
  3. They are more interested in the top line than the bottom line. Don’t get me wrong, the bottom line is still important since a company’s selling price is determined by a multiple of their EBITA. But, that all-important top line is what attracts buyers and their investors.

So, watch these companies keep buying and growing. They are the ones I am talking about. This means that there will be fewer and fewer shops as the small ones get vacuumed up, or as I prefer to call it, “TTM-ed.”

Who is Buying?

So, who is going to buy these companies? Who is going to spend those big bucks on these American-based companies? Well, think for a minute…what country in the world has big bucks? Ummm, let me think. Yes, that’s right, China. The Chinese are coming, and they are coming with their dollars and their global ambition. Some of the big Chinese companies have already bought companies in Europe and they are now setting their sights on North America. This is a not a prediction; this is a fact. In the next 12 months you are going to see a Chinese company swoop in and buy an American PCB company. It will not be a large acquisition at first, but it will be the beginning of a trend.

Growth in a Different Way

Sadly, we will continue to lose North American shops. Those who refuse to change will choke on their own immobility. They will go down, and the last thing we will hear from them will be the dying words, “But I never had to do any sales or marketing in the ‘70s and had all the business I needed.” It will be too bad, but it is inevitable as these companies hold on to the past and refuse to adapt to the times.

The North American market will continue to grow. Right now, the North American market is rising to over $11 billion and growing every day. At this time, barely $3 billion worth of PCBs are being built in this country, while $11 billion are being purchased; obviously, that means that $8 billion are built offshore. That will change with global acquisitions on the horizon; a larger percentage will come back to be built here in North American—but by foreign owned (fully or partially) companies.

Mexico will start to be a factor as the Mexican demand for PCBs increases at a steady rate. This will also contribute to the growth of North American PCB fabrication.

In Five Years

Finally, combining these trends, here is what I believe the North American PCB industry will look like in five years. First, we will be part of the global PCB marketplace as the world gets flatter. Our companies will be larger and multinational. The number of shops will diminish but the capabilities and capacities of the American shops will grow. The North American fabricators will be part of multinational companies with locations all over the world.

Take the automotive market, for example. The prototypes and pre-production phases of a part number will be fabricated in the U.S. and then the production will go to Asia. But the difference will be that the part number will remain in the hands of the same company for the life of that part number. The same will apply to other markets as well.

These are exciting, if not outright historic times; but it is inevitable that the North American market will go in this direction. As the great economist Thomas Friedman continues to advise us, commerce dictates the flow of the world economy, and there is really nothing that governments and politicians can do about it. Commerce, like water, always rises to its own level. And. yes, that will be demonstrated by what happens here to our own PCB industry; the world is indeed getting flatter.

It’s only common sense.



It’s Only Common Sense: Where Will We Be in Five Years?


A friend of mine got me thinking the other day when he asked me what I thought the North American PCB industry would look like five years from now. That’s an intriguing question, isn’t it? I decided to really think about this for a few days.

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It's Only Common Sense: The Annual Meeting


Its that time of year again--if you're going to have a successful 2009, you'd better start working on it now...right now. This week's edition of It's Only Common Sense tells you how to get prepared for a successful 2009!

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It's Only Common Sense: What About This Price Thing?


Dan Beaulieu asks, "What are we going to do about always going for the lowest price at any cost?" The real cost of going for the lowest prices are real--very real, indeed. The customer may always be right, but when that customer insists on the lowest priced product, at the expense of quality, then that customer is not putting out the best product possible.

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Column: It's Only Common Sense from Dan Beaulieu "How to Motivate Your Salespeople"


Want to get the most from your sales team? Listen to this week's "Its Only Common Sense: How to Motivate Your Salespeople" and find out.

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Dan Beaulieu Column: "The Great Solution Is Staring You in the Face"


Why do we refuse to buy into a great solution to our problems even when it's staring us in the face?

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Dan Beaulieu Column: Be the Best You Can Be


Are you the best salesperson you can be? If not why not...its your choice.

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Dan Beaulieu: It's Only Common Sense "From Cold Call to Customer Base"


Do you hate cold calling?

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Dan Beaulieu's "It's Only Common Sense": This Is What I believe


Listen to this week's It's Only Common Sense column from Dan Beaulieu "

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Dan Beaulieu's "It's Only Common Sense": Yes, You Still Need a Brochure!


o you think the web site takes care of everything? That you no longer need a brochure? Think again my friend.

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Dan Beaulieu's "It's Only Common Sense": Old School vs. New School


Some companies are old school and losing while other companies are new school and thriving

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New Column from Dan Beaulieu: There's A New World A-Comin'


The world is changing -- are you ready?

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Column by Dan Beaulieu: Are YOU the problem? Making that plan work.


Learn how to succeed in making your business plan work.

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Want to hire great reps? Listen to Dan Beaulieu's latest column.


Want to hire great reps? Dan Beaulieu takes the mystery out of finding and signing the right sales reps for your company.

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Listen to Dan Beaulieu: "Beware of the bad guys."


Listen to Dan Beaulieu's column ths week. Beware the bad guys. Be careful, be very very careful, if that job offer seems too good to be is...

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