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U.S. PWB industry: crash landing ahead? (Feb 2001)
February 12, 2001 |Estimated reading time: 2 minutes
U.S. PWB industry: crash landing ahead?
The recent and unexpected economic slowdown in the US has given cause for concern about the future demand for printed wiring boards. Now is a particularly challenging time for the management teams of printed wiring board and supply chain manufacturing companies. The key questions being asked by these companies are, Will a downturn occur, when will it happen, and how fast will demand fall off?
Over the last 17 years, BPA has developed and refined a global PWB market demand-forecasting model. This forecasting tool monitors the cyclical behavior of printed wiring board markets by region and forecasts the short- (3 months) and long-term (5 years) cyclical demand. Deborah Mann, BPA's PWB forecasting specialist, believes that "the model is particularly good at identifying the future turning points in the future PWB market cycle. Comparing our forecasts with actual demand has shown our ability to identify turning points with accuracies of ±4 months. In addition to this, the forecasted cycles consistently track extremely well the actual changes."
Mann went on to explain her recent forecast, which was completed in December 2000. "BPA's latest long-range printed wiring board demand forecast shows a number of interesting movements. It was clear as early as January 2000 that a slowdown in the US PWB demand would occur in the second half of that year. In the third quarter of 2000, growth reduced from a high of 16% to a current level (January 2001) of 9%. It was evident that the US PWB industry was overheating, with substantial demand growth prior to the third quarter of 2000. This slowdown that we have experienced and is now in the trough should be seen as the 're-adjustment period' for the industry. The tremendous demand and growth for printed wiring boards, linked with an increase in prices, can only be sustained for a limited period. Also, the recent presidential elections and economic uncertainty have forced the US PWB industry to 'take a breath'."
"What is positive, however," said Deborah Mann, "is that demand growth will resume from now into the second quarter of 2002. We are expecting the demand to peak at 13% by this time. Beyond the second quarter of 2002, however, the US will experience a severe downturn lasting almost one and a half years where the trough of the cycle is expected to occur in the third quarter of 2003 reducing to 1% growth."
Mark Hutton, senior consultant at BPA, said, "This cycle has some important implications for the players in the industry. Our forecasts indicate that the market conditions over the next 12 months will be good, showing the underlying continued strength in the demand for PWBs. However, beyond the second quarter of 2002, a severe downturn will occur. Interestingly, this aligns itself particularly well with the recent indications of a slowdown indicated by several electronic system manufacturers including Motorola, Nokia and Nortel. The PWB industry correlates closely with the systems industry, and this builds confidence in our forecast."
Hutton also explained that "players in the US printed wiring board market must be cautious in investing in new capacity with a downturn looming in 2002. Also, it is highly likely that at this time prices of finished boards and materials will reduce."
BPA's PWB Information Service provides decision-makers in the industry with regular short- and long-term market and technology forecasts worldwide by major region. For further information about BPA and its services, contact Sarah Demmon, Marketing Manager, at (+44) 1306 875500 or e-mail at s.demmon@bpaconsulting.com .