An industry icon reflects on five decades in PCBs.
I was fortunate to spend a recent afternoon with Hayao Nakahara, a man who started in the PCB industry about the time I was born. Naka – his industry nickname – and I shared our thoughts about the state of the industry and what the future may hold for domestic manufacturers. OK, it was more him sharing and me listening, but that’s beside the point.
Naka has forgotten more about PCBs than most of us will ever know. He started his career at Photocircuits in 1965 and, while working full-time, received his doctorate in electrical engineering from Columbia University. A 1981 recipient of the IPC President’s Award, Naka started his PCB consulting firm in 1989 and has been traveling the world ever since, visiting over 100 PCB manufacturers a year. These visits help keep him in the know.
Naka speaks with conviction and passion about our industry. “Rule #1: PCB revenue growth is directly dependent upon production capacity,” he says. “The amount of PCB production in North America and Europe is less than 10% of the world and will more than likely dip lower in the future.”
He recalls a time when the North American PCB industry employed nearly 100,000 people. Today, that number hovers at just over 20,000. There were over 700 manufacturers in the US and Canada in 2000, and now there are barely 200, a number that continues to dwindle.
When I started in the industry in the early 1990s, China was just coming of age, and its attractive pricing slowly leached production orders from the domestic industry. About two-thirds of today’s US manufacturing operations have revenues of less than $4 million per year, and some of them are struggling. Notably, Naka reminds us that “some of those revenues are hard to confirm as to whether they are truly ‘homegrown’ PCBs or are brokered, as numerous domestic manufacturers of all income levels have relationships with offshore manufacturers to supplement their income.”
Indeed, with board houses outsourcing production to meet the demands of their customers – an appealing option for many – it calls into question the true manufacturing numbers. The status of domestic fabricators may actually be even worse than we think. Unfortunately for homegrown manufacturers, just about any PCB produced domestically can be produced offshore with exceptional quality, decent delivery and at a double-digit discount.
Of course, the North American PCB industry won’t totally disappear, as there is a need for military, aerospace and medical work that must be maintained here, along with logistical reasons such as demand for prototypes. But Asia is now even giving domestic manufacturers a run for their money on quickturn orders.
“There will be continued consolidations,” says Naka, “as we have more shops than we have orders that require to be built domestically, and those manufacturers that remain should become healthier.”
The opportunities for the US to rekindle a strong and robust PCB industry – even with the new administration’s promise of bringing jobs back to America – will be few and far between. As Naka points out, “That is a dream, as there is no supply chain in the US to produce something like the iPhone domestically. Over half of the components are made by Japanese-owned companies, with manufacturing in Asia using total automation. The bulk of laminates are made in Asia, and what is made here is but a drop in the bucket.
“Most of the chemistry needed is produced over there,” he continues, “and who is really making any PCB manufacturing equipment here to support such an infrastructure? Besides, how many of those small, low-income North American shops can afford to buy direct imaging systems, laser drilling machines, horizontal plating equipment, and the like, which are vital to remain competitive in the future?”
The push for onshoring sounds great, but even if we were to solve the supply chain issue, could the American labor force cope with increased demand in production? Naka is doubtful that this very important component could be fulfilled domestically. “We tend to forget that technologies and skills are in the hands of people and not on paper records.”
It is true our traditional PCB workforce is diminishing, and those still in our industry are aging, as I pointed out in my recent blog post, “Where Have All the Young (PCB) Bloods Gone?” What would be needed to recruit, train and encourage the next generation of PCB manufacturing employees if that work came back? Do present manufacturers even have a business succession plan? Is Junior prepared or even willing to take over the family business?
Capacity, supply chain and labor are just a few of the challenges facing the domestic PCB industry that will eventually affect the number of surviving domestic manufacturers. Supply of capacity has exceeded demand. See Naka’s Rule #1. These challenges are very different from those Naka faced as a young engineer in Glen Cove, NY.
Reflecting on the future of the industry for which he has cared so long, Naka at last gets sentimental: “I will fade away gradually after 51 years in the industry, and I have no regret. These are your problems and the challenges you need to face. I am one of the luckiest PCB guys in the world.”