NCAB 2019 Market Report: Competition Is Heating Up


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Johnson: What are the key takeaways for the PCB industry itself, including manufacturers and providers?

Nuttall: Keep in mind that we’re in a slightly different position because we’re operating in pretty much all territories, and the competition is heating up. I think the industry is mindful of what’s happening with the tariffs, and we’re seeing a slightly more aggressive approach from factories—both in terms of looking to secure both their domestic and export business. Factories begin to fish down to secure their order books. What we’ll find is that there will be much tighter competition, which will also translate into Europe and the Americas. Again, there is an expectation that the top-line estimates for the global year-on-year growth numbers will show a drop, but if we look at the areas that are expected to grow, military, aerospace, medical, industrial, and perhaps automotive may stabilize. This is also the area of technically challenging boards to provide higher performance. This will be the same in Europe as well. If that’s the kind of business manufacturers and providers have, that’s where I would focus my efforts.

Johnson: What should the consumers of our industry’s services be paying attention to right now?

Nuttall: Irrespective of where they are, pay attention to anyone offering bargain-basement prices as the reliability and quality of the product matches the cost. In this time where people are mindful about securing the business—not just now but for the second half of the year too—low prices often equal low-quality PCBs. In my view, that’s a short-term gain for long-term pain and sadness.

Johnson: You still get what you pay for.

Nuttall: Absolutely. Those are some of the challenges facing our sourcing team at the moment in China. We almost have to have sanity checks on the benchmarking that we do because we see some crazy prices. But when we visit the factories as a part of our pre-audit activities, we definitely wouldn’t place any orders there.

Johnson: One of your value-adds is being able to have a clear awareness of what’s really going on in that facility, whereas your customer may not.

Nuttall: Yes, and we’re looking at it not just as something that we do in Asia—which is obviously a large benefit having eyes and ears on the ground constantly—but also something where we continue to develop as part of our U.S. and European supply chain activities, both pre- and post-approval.

Johnson: Is there any industry-wide concern or caution that you see as you look forward?

Nuttall: The challenge will be the risks or downsides to what’s going to happen in the rest of the coming year. If we consider comments from the International Monetary Fund (IMF), they are predicting that world trade volumes will reduce in 2019 yet are expected to pick up in 2020. You could read the market watch report like it’s going to be doom and gloom, or you could read the report and say that it’s going to get tougher, but it’s a much better outlook for next year. Yes, we have slightly weaker global trade. Trade between Asia and the Western world is softening. The outlook is overall positive in that it may be tough for semiconductor and component suppliers and providers of circuit boards or services, but this is where you take the time to look inside and make sure that you’re best suited to weather the storm and continue strong in 2020. It’s going to get bumpy, but I believe there’s a light at the end of the tunnel.

Johnson: Companies that take this as an opportunity to retool, reconfigure, reapportion, and reprioritize are going to be the winners.

Nuttall: I agree, and companies that listen to the needs of the customers will also win. There is a more cautious approach to ordering patterns being seen, certainly in the U.S. and Europe as well, where there are ongoing Brexit issues. There is a level of destocking happening with customers operating on lower stock levels and ordering only when the demand is there. This means that dynamic lead-time management is key, and we have to be incredibly reactive and attentive to our customers changing, and potentially suddenly, in demand. In these situations, if you don't have the supply chain or the customers aren’t front and center to everything you do, you will miss opportunities.

Johnson: Wise words. Thank you, Chris. This particular report is quite insightful, and you and your team do great work putting it together every six months.

Nuttall: Thank you very much.

If you would like to learn more, NCAB Group would be happy to provide the full version of its most recent MarketWatch report.

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