Eleven years at the PCIF - Brief Article

Electronics Times, March 27, 2000

PCIF executive director Brian Haken offers his personal view of the PCB industry

During the 11 years that I have been executive director of the PCIF, much has changed in the UK PCB, electronic manufacturing services (EMS) and supply sectors.

The industry we see today has altered beyond all recognition from 1989, the year the PCIF was formed. Then the markets were national/international, the UK had around 450 privately owned PCB fabricators and profit margins allowed companies to invest in new technology.

Today the market is global. This move has forced OEMs to restructure so as to be able to concentrate on core businesses and to outsource all areas of cost wherever possible.

This action has created a whole new industry sector - contract electronic manufacture (CeM). In the past few years, as vertical integration has steadily collapsed, CeM has taken over the manufacturing needs of the OEMs, with many companies now providing full turnkey facilities, from design through to PCB assembly, test, box and shipment direct to the customers. Due to the services now offered, the sector has been renamed EMS.

We have also seen the growth of the EU, which again affects the focus of trade organisations such as the PCIF. Trade groups therefore need to have a cohesive voice into the European Commission in order to influence legislators before they pass their laws. For this reason, we set up a pan-European body - the European Federation of Interconnection and Packaging (EFIP).

EFIP is accepted by the Commission as the voice of the PCB, EMS and supplier sectors, and is actively involved in addressing new legislation affecting our industry's competitiveness.

A good example is the directive on waste from electrical and electronic equipment (WEEE). I actively lobbied the Commission on behalf of EFIP against the clause banning the use of lead solder, which would have a dramatic effect on the PCB assembly industry. Our lobbying is likely to remove the lead ban clause from the directive.

As OEMs moved away from vertical integration to reduce their costs and improve competitiveness, so has the supply chain. Restructuring in the PCB, EMS and supply sectors has taken a firm foothold for exactly the same reasons. The number of UK PCB fabricators has been reduced to around 135 companies, with an even greater divide between the large and small. The top companies in both the PCB and EMS industries have turnovers in the billion dollar range, whereas the SMEs are below $100m with the greater percentage below $50m.

During the last two and half years we have seen price erosion in the PCB business of around 30%. And unfortunately this downward pressure on price will not go away as customers continue to demand `more for less'.

Falling profit margins create particular problems for SMEs. Not only do they require higher capital investment to keep up with changing technology but there is also the need to reduce costs, which does not sit easily with minimal net profit margins.

In June last year, the PCIF led a mission to Japan to look into how the Japanese are addressing the need to produce PCBs with sub-100 micro m tracks and gaps to satisfy the miniaturisation of electronic products. The Japanese have developed a high-density interconnect technique called build-up technology, and it is essential that their UK counterparts adopt this technology in order to remain competitive in the global marketplace.

In general, the PCIF has fulfilled its aims. We have created a single cohesive voice for our industry, successfully lobbied on pertinent issues of concern, and obtained substantial grant funding from the DTI and European Commission.

But there have been some areas where the PCIF has not been entirely successful. For example, we have not always been able to satisfy all the needs of members, especially the SMEs, and we have not been able to maintain the interests of our members at all times. Moreover, the PCIF has not managed to forge closer working relationships with other similar groups. But we are having positive talks with the Federation of the Electronics Industry (FEI), exploring how we can get closer to benefit our respective industry sectors.

My personal belief is that there are too many trade groups whose main concern is the importance of their organisations rather than that of their members. Globalisation is affecting the industries we represent and it is also affecting the viability of trade organisations.

As industries restructure, via mergers, acquisitions and closures, the result is fewer companies. Trade groups, such as the PCIF, rely on members' annual subscriptions to finance the running of their organisations. At the PCIF, we are re-visiting all aspects of the running of our organisation and how we communicate with our members.

We have already introduced many changes to reduce running costs and at the same time improved our communication tools. We are questioning the need to have the PCIF office in London's Docklands rather than operate out of a small provisional office at a much-reduced cost.