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Pete Starkey speaks with Burkle North America CEO Kurt Palmer about how their business has been affected by the pandemic of the past year, the recent relocation of their headquarters to North Carolina, and what his outlook is for 2021
Pete Starkey: Hello, I’m Pete Starkey with I-Connect007, delighted to have the opportunity to talk with Kurt Palmer, president and chief executive officer of Burkle North America. Kurt, welcome, and thanks for taking the time to join us. It’s great to see you again, albeit virtually.
Kurt Palmer: Thank you, Peter. Good to see you, and happy to talk with you.
Starkey: Thank you. Kurt, I recall it was two years ago when I sat with you and Dave Howard at the 2019 IPC APEX Expo in San Diego. You’d recently joined Burkle North America, and Dave was in the process of handing over the reins in preparation for his retirement. Your vision was to carry on the established Howard-Burkle-Schmoll enterprise while pushing the technology forward. Then, a year ago at the show I saw you in a conversation with Dick Crowe, reflecting on a successful first year at BNA and reviewing the Schmoll products that you were exhibiting, I recall a compact two-headed mechanical drilling machine, a laser drilling machine with combined UV and CO2 functionality and a digital micro-mirror imaging system.
You commented that the trends in Bürkle laminating presses were higher temperature lamination and increasing automation of the stages from lay-up to break-down. You also commented that there was a refreshing influx of younger people into the industry and what you described as an encouraging new energy. The past months have seen challenging times; here we are another year on, and IPC APEX EXPO goes virtual. Kurt, how has Burkle North America coped with the shutdowns and the pandemic crisis?
Palmer: It certainly has been a year unlike any in my 30+ year career in the PCB industry, but obviously I’m not alone in thinking that way. It was a challenge. I can remember, it was probably late March, being asked to put out a letter as the CEO about how we were coping. I went home and told my wife, "This is something I’ve never had to do before. So how are we going to do it? What’s this year going to look like? How can we predict it? What do we need to do be safe, to keep our employees and customers out of harm’s way, not cause any problems, but at the same time, still service them as they need to be serviced?” If you recall, in the beginning, there was talk of only essential businesses being able to operate. And that quickly evolved into 80% of all manufacturers still being able to operate because they were proven to be essential.
I remember thinking as all this was going on, “How do we prove we’re an essential business? And if we are, how do we help our customers survive through this?” All the restrictions in the very beginning were pretty onerous. Nobody was traveling, everybody was fearful of what getting an infection was going to do to you and the people around you. In that first two-month period, right after March 13, we really hunkered down. We put out a policy that we weren’t going to travel except for emergencies, and we quickly found out that that wasn’t really going to work. Our customers didn’t want to see Dave Howard or me out there promoting our equipment.
Starkey: What about the service engineers, though? They needed to be sure that their equipment was going to be kept serviceable and running.
Palmer: That’s exactly where I was going—our customers were still producing boards and, of course, machines break down or they need PMs, so we found out we needed to get out there. But with so much uncertainty, we had people within our own company less willing to travel than others, and I think we weren’t alone there. Everybody’s situation was different—people live with their parents, they have more exposure to the elderly—and early on, we knew that was an issue, and we had to juggle that. It became a big challenge as to who could travel, and with limited resources, how we could still get out to see the customers that needed to see us? Over time, people got more comfortable, more people were open for business, and our staff was more comfortable with traveling.
Within a couple of months, our service technicians were out on the road, just like they had always been. At the end of the day, our actual spending was down only 15% on the year, whereas our travel spending for our account managers in sales positions was off 65–70% from last year. We evolved into a lot more Zoom and Teams calls, saved a lot of money doing that, and found it was pretty much just as effective in the sales process.
Starkey: That runs into the next question, which was really, how did COVID impact Burkle North America’s business?
Palmer: On the service side, not at all. On the sales side, our PCB business was up slightly in 2020; we had a couple of other business units where equipment sales were down, order intake was down a bit, about 10-15% in a couple of segments. But on the electronic side, things were slightly improved over 2019, which was a surprise. I think that’s a testament to the industry that it still held steady. Some particular businesses actually did better through COVID and, because of COVID, it’s also a testament to our product lines. Both Bürkle and Schmoll are well-respected and were growing prior to COVID, so that just continued.
Starkey: When you’re bringing equipment in from Germany, did that still run smoothly, or did you have to overcome any challenges there?
Palmer: Back in the spring, there were a couple of hiccups with some logistics in getting the machines shipped over. There was as much of a challenge with the lead time on manufacturing—that maybe impacted a few machines by a week or two at the most. But then getting them scheduled on boats and getting them over here, and planning all that, there were some issues, but nothing crazy. I think we got out of all of that pretty much unscathed. There’s actually a little bit more of an issue right now with freight and with shipping, but not really COVID related, best I can tell.
Starkey: That’s good. Kurt, I understand that you moved the headquarters of Burkle North America from Cyprus, California, to the Greensboro Technology Center in North Carolina in late September. How did that relocation go?
Palmer: That was a big move for us in September. It went well. We had considered that PCB customers might perceive a move to North Carolina to be negative, but we discovered that the location of our headquarters doesn’t really matter at all to our customers; they’re most concerned about access to spare parts and the people who can fix their machines. To improve things as we moved to Greensboro was to have two locations for stocking parts: one still in Southern California, and now one on the East Coast, in Greensboro, where several of our customers are with within a six-hour drive. We can deliver parts there same day.
That’s improved our ability to service the customers. There has been no backlash from customers as to why we would be going to a region where there are fewer customers. So, it’s been a success. Regarding the people side of the move, we had five employees in Southern California. One of them was planning to retire. Of the others, one person relocated with us to Greensboro, another stayed on working from home, and the remaining two have found new employment in SoCal. Personally, I was excited to relocate to North Carolina, and I’ve been extremely happy living here in Greensboro. It’s a great area of the country, and much better weather than Chicago, where I spent the last 30 years. Overall, it’s been a very successful move.
Starkey: So, what are the principal benefits of moving for the company?
Palmer: Because we’re in the Eastern region now, we’re three hours closer, from a time zone perspective, to the Bürkle and Schmoll offices in Germany. That makes a big difference. Cypress California is nine hours behind Germany, so you’d have to go in early to the office in California in order to have any chance to communicate real time. Now, with the six-hour time difference, we can have three or four hours of overlap every day. That makes a big difference for our customers—instead of going back and forth overnight with Germany for parts or service questions, we get real-time answers. This has further improved our response time to customers.
Starkey: I understand the challenges of time differences with a lot of guys based on the West Coast and me sitting here in the middle of England.
Palmer: Yes, it’s eight or nine hours for you.
Starkey: Sometimes it works to our advantage, we can effectively work around the clock, but sometimes the hours can get a bit unsociable to manage. I’m sure you know what I mean.
Palmer: Yes. I know exactly what you mean, but hopefully that’s pretty short-lived. I’m very optimistic for our near-term future.
Starkey: I think we’ve stopped presuming what will happen in the future, I think we just take it as it comes. Kurt, what’s your outlook for 2021?
Palmer: Very bullish. I’m a salesperson at heart, so I am an optimist, but I think it’s justified. We’ve already had some great orders come in through the first five weeks of 2021. Actually, just this week, so far, has been our best week since I’ve been at Burkle.
Starkey: What sort of equipment are your customers buying now?
Palmer: This week we got orders for an Optiflex post-etch punch from Schmoll, a CombiDrill laser, and an advanced CombiDrill laser, which is one of the Schmoll UV CO2 lasers. We continue to do well with lasers. Since our first laser sale on the West Coast four years ago, we’ve been growing that market very rapidly, and we do really well with our CombiDrills and Pico lasers from Schmoll. But the post-etch punch was a nice order that we received recently. We’ll be putting out an announcement about that sale; it is a customer that we’re very proud to be associated with.
Starkey: Do you find that the hard-tool multilayer alignment is still a popular way of doing things?
Palmer: I think it’s the most popular way of doing things.
Starkey: Yes. Sure.
Palmer: It’s also the most reliable, so I don’t see it going away anytime soon. Schmoll continues to make significant investment in that area to support that business. I trust Thomas and Stefan Kunz in terms of where they’re investing, I know they’ve done their homework and understand their market very, very well. That’s a market that’s going to continue to grow for us.
Starkey: Is there a development program based on what they see as the European requirement, what they see as the North American requirement or the Asian requirement, or is it just a considered blend of all three?
Palmer: Well, they have a good spread of the market share across all three areas, so it’s definitely a blend of all three. Schmoll in Asia is huge, so they get their fair share of the market and they do well there; of course, what’s going on in the Asian market is equally as important to Schmoll as what’s going on in Europe and in America. In addition, Bürkle is very strong in Asia where they manufacture in China for the local market.
Starkey: I feel a bit frustrated at the present time that I’m not involved in printed circuit board manufacture anymore. In my day, I was very good customer of Schmoll and a very good customer of Bürkle. I had great confidence in their style of engineering and the precision and robustness of the engineering that was coming out of Germany—and is still coming out of Germany.
Palmer: We’re very fortunate to be partnered with two of the best in the industry in their respective fields.
Starkey: Sure. Kurt, are there any new products that you’d like to talk about?
Palmer: On the Schmoll side of the business, as you probably know, we have a variety of products for the electronics industry.
Starkey: Yes, there’s a whole list of them.
Palmer: We have lasers now, combination lasers with faster Galvo’s for faster productivity; that’s some of the latest technologies coming out of Schmoll on the lasers. On the direct imaging machines, we now are introducing at the virtual IPC show a tandem table direct imaging machine, but what’s unique about it is its ability to convert to a single table machine for large format. We have had several requests over the past 12–18 months for a 36 x 44 format. In this case, this machine will do 36 x 52 panels if you combine the two tables into one, but it also will run as a tandem table and image panels as large as 25 x 36 inches on both tables, for faster throughput. With mechanical drills, Schmoll is always pushing the envelope there and making advances in the depth drilling and depth routing technologies, to be more accurate in terms of how deep you go into the substrate.
So, there’s some significant technologies related to software development that are pretty cool. On the Bürkle side, we make presses for the lamination industry, but there’s quite a variety of options for that, and as I mentioned before, advances in high temperature machines and the automation side of it. We did quite well in 2020 with PCB press systems, supporting customers who want those types of technologies.
Starkey: Yes, and from the point of view of this being a virtual show rather than a physical show, as far as BNA is concerned, it’ll be the same, no different. It will probably be to your advantage because you never really used to like hauling 20 tons of laminating press into an exhibit hall.
Palmer: Yes. In the old days I used to see presses in the halls, but since I’ve been with BNA, we’ve never shown one at the show. You’re right, it’s a heavy piece of equipment, but the Schmoll equipment has been a little bit easier to bring over. The show is going to be interesting, because we’re spending about one third the money, and we’re doing some new things working closely with the IPC; they’re doing their best to make it effective for everybody. I was talking to Alicia Balonek at IPC and she said, “We basically looked at 500 different trade shows that have gone virtual, to try to learn the best ways to present virtually.” So, they have got some pretty good ideas. We’re fully participating with videos and sponsorships, and we’re going to see how it goes. We’re excited.
Starkey: And I’ll say, particularly with current technology, you can walk people around and you can exhibit very effectively, I think, if you’re clever about it.
Palmer: Sure, and maybe you can show a little bit more effectively than you can walking around the machine and looking at it. Even if it’s an animated video, you can really get a good feel for what that equipment can do. Now the key is going to be getting people to see the videos. Who’s going to be interested the week of March 8 to take the time and attend the virtual IPC? So far it seems like it’s going to be a good one.
Starkey: I think it’s going to be a really, really good event. Obviously, we’ll miss the opportunity to bump into people that we haven’t seen for a while and have those conversations in the aisles and in the booths. It will be a new experience. And whether it sets a pattern for future events remains to be seen.
Palmer: I think you’re right. But if I’m a betting man, I’d bet 100% we will have a show in 2022.
Starkey: I would like to think so. It’s a trip that I have been looking forward to for the last 20 years or so: my annual trip to the West Coast to see a network of people that, really, I’ve established over those decades of being involved and visiting the shows. I think it was Confucius who said, “It’s better to travel hopefully than to arrive.”
Palmer: That’s true. It will be good to get back to that next year, but meanwhile, we’ll just be patient.
Starkey: We’ll make the most of it.
Starkey: Kurt, it’s been wonderful to talk with you, wonderful to see you, even if we’re outside of physical handshaking distance. Thanks very much indeed for sparing us the time, and we wish you every success. I’ll see you at APEX.
Palmer: That sounds good, Pete. Appreciate it. And it’s almost like we’re at the show right now, with technology these days. This has been nice, not quite the same.
Starkey: No, not quite the same, but good anyway.
Palmer: You got it.