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On the last day of CPCA in Shanghai recently, I was delighted to catch up with my friend and industry colleague, EIPC Chairman Alun Morgan, for a discussion on the show we were both currently attending, as well as the upcoming 14th Electronics Circuits World Convention (ECWC14), to be held in April 2017, in Korea.
Pete Starkey: Alun, you've been at the show right from the opening ceremony, which was a quite spectacular affair. Could you give me your impressions and reflections of the last three days?
Alun Morgan: Sure. We hear a lot about the markets and difficult times faced and struggling for growth, but actually you wouldn't know that coming to the show here. There are 10% more booths than last year, and there's a lot of activity in the show and the halls are pretty much filled. We're on the last day of the show now, so activity is dropping off to some degree. But it's been a very busy show, with lots of activity, a lot of people visiting, and all the stands seem to be very busy. A lot of exhibitors are here with very big stands and a very big presence. Certainly from previous years I think there is a much stronger focus on Asia here than in the past. In the past we've seen a very international focus. For sure there are many European companies and North American companies exhibiting here and obviously selling equipment into this market.
We shouldn't forget China accounts for nearly half of all the PCBs produced in the world, so this is the real manufacturing base and you see that strongly now, this has really come of age. You see this being a real Chinese show for Chinese exhibitors and Chinese companies and it really seems to be thriving; even though we hear of difficulties, you wouldn't know looking around the show.
Starkey: You hear of difficulties, people think it's in decline. It's not in decline it's just not growing at quite as spectacular a rate as before.
Morgan: That's exactly it I think. You know, if you talk about growth less than 10% in China, people think that's terrible. But actually it's pretty good. We're used to single digit growth in Europe or say the Western world. I think here they've been used to double-digit growth for so many years now, that when it goes to eight or nine percent or 10% they think it's terrible, but actually yes this is still growth. Of course there is still migration of business into this market there is no doubt about that. You know China is nearly 50% of world PCB production; Asia is over 90% now. That trend is continued, so whatever growth there is will be largely in these markets. So yes, we talk about difficult times ahead, but we're talking seven, eight percent growth still, so actually that's not too bad.
Starkey: Are you in a position to give an opinion of what's going to happen beyond the short-term, in the medium to long term?
Morgan: It's always hard to forecast about the way things may go. You hear a lot about migration in business, about re-shoring and on-shoring, all these stories. I think there's no doubt the volume for PCB production now is in Asia. I think that's necessary in many ways because here there is a low cost base, a very efficient industry here in China—very large factories producing boards very effectively, very efficiently, at high-technology levels and of course at low cost. That's something that we cannot really duplicate again in Western markets, but it's necessary because if a consumer item is to be produced it must be in a consumer price range. If it's thousands of dollars, no one is going to buy it, if it's hundreds of dollars then it can find a place. So, I think having this very highly efficient, high-technology production capability in China has opened up markets we never would have had otherwise.
Starkey: You mentioned efficiency. Now one thing I've noticed in talking to people in the show is the trend to increasing automation, the trend to increasing integration, the Chinese equivalent of Industry 4.0. I think a perceived characteristic of the industry over here is that there are lots of people doing lots of manual things, and these people are, I think, quite rapidly being replaced by machines.
Morgan: A very good point—I think it's no longer the case, the degree of automation is now massive in these companies. If you look around this show you see loads of equipment for automatic handling, many small robots, loading-unloading machines, automatic guided vehicles running around moving components, moving pieces. Actually I think the factories that are successful here are hugely automated and there are good reasons for that. You can think of labor being cheap, of course, that's always a nice model—think cheap labor, therefore you can make the boards easily. But actually, machines make boards far more reliably, so you have far more consistency of production. I think that's why automation has come around, because when you're making tens of thousands of units, they must all be the same. Doing it by hand is rather tricky; if you can automate the process then actually you get a far more consistent product, and the high quality is what's required to sell it.
So, that definitely is the trend. If you look here around the show I've seen no end of automation equipment here. You see the big drilling machines, the big plating lines, the big production screen printing lines, and imaging lines. Then you see on the front and back end of these machines a lot of automation for handling, so you see this being really hands off now.