Steve DeCollibus, Managing Editor, Circuitnet

Electronics manufacturing in the Americas is either getting bigger or it is getting better. Or it is getting bigger and better depending on how you look at it. During the first quarter of 2008 I have spent a good portion of my time visiting with and talking to tier one, two and three EMS companies and as would be expected a number of companies who supply to those industries.

My observation is that tier one has gotten better, tier two was already better and has paid off with them getting bigger, tier three has gotten bigger and better. This has been done while most manufacturing industries in the Americas have slowly begun to evaporate.

There are some electronics manufacturing markets that are experiencing declines, new automotive for instance, they are in decline because of drifts within that market and not electronics manufacturing. Even here the automotive after market in sound systems and performance enhancement circuits is doing well. So why after what appeared to be a terminal death spiral eight years ago are we seeing signs of a developing and revitalized electronic manufacturing industry in the Americas?

The basis for a lot of this excitement is that as OEM’s moved production off shore driven by the promise of low cost manufacturing, they left behind a substantial amount of high mix low volume work. This happened for a lot of reasons that don’t need to be repeated here. I believe that this work became the foundation that allowed companies like NBS in California and Inovar in Utah to grow from pretty much nothing into the multi million dollar operations they are today.

This work has grown to the point that we are seeing tier one companies trying to figure out how they can manage this work profitably. Where this falls apart for them is the incredible dedication to service and customer support the smaller EMS companies can bring to bear on this kind of business. One tier two player told me that they will take projects from a single board to tens of thousands of boards.

Why? That single board customer or a viable percentage of those single board customers lead to orders of a much higher magnitude. This company will also turn prototype boards around in two days if the customer asks and will test and make DFM recommendations as well. One of this firms biggest customers is one of the world’s largest EMS companies, not an OEM.

When you talk to people like Wayne Norton, President of Princeton Technology who says,”For many reasons, not the least of which is security, America needs to keep the high end work here. The complicated level of the projects that we do are needed by companies who want to be close by and who want to be part of the team.” He went on to say, ”In Q1 we received 5 brand new customers whose suppliers had moved off shore. They wanted the work done here.”

Princeton specializes in electronic contract manufacturing of electro-mechanical and mechanical products. Their specialties range from printed circuit board assembly, cable assemblies, complex box build and system level assembly and testing. Medical, Military, RF Communications, Aerospace, Testing and Control Equipment, Graphics and a broad range of commercial applications and OEM’s make up Princeton's customer base.

Another indicator of a growing market came from Andy Price one of the leaders at Circuit Technology Center in Haverhill, Massachusetts who told me they have just enjoyed their best quarter in five years and it looks like Q2 will be the same. The 25 years young Circuit Technology Center continues to be recognized as the country's most innovative specialist in circuit board repair and rework. Andy went on to say, “When capacity is limited at OEM’s and EMS companies that’s when we see business pick up.”

Brian Duffy, President MYDATA USA says, “We went into 2008 with low expectations, but have really been surprised by the first quarter.” As we talked, Brian said something that seemed to make a lot of sense as far as why the market seems to be performing better during this downturn than it has in the past, he said, ”People are running their businesses with the anticipation of a potential downturn, 2001 is still very fresh in peoples minds. Because of this they are running their businesses in a better way.”

Jim Griffin, Director of OEM sales at Cookson Electronics is seeing good business coming from the tier one and two companies, he says, “Right now we are doing very well and are involved in a lot of prototyping projects that take two or three times to get right, so a lot of short run high mix business” Jim’s business is global in scope, but he feels that the Americas is picking up, especially in Mexico and Brazil.

Another astute and indicative comment came from Bob Black, President of JUKI America said, “The dollar has fallen to a point and the price of oil has risen to a point where medium volume in Asia makes no sense. We are seeing a re-emergence of tier one and tier two manufacturers and Juki has been a big beneficiary of this trend, as more work is coming on line. First quarter was a record for us in the U.S. and second quarter seems to be running at the same pace.”

Mick Austin, V.P. Sales for Vitronics Soltec had this to say, “Globally we had a strong Q1 with the Americas having a better March than January. This momentum has continued into Q2 which has started very strong for us in the Americas, some of which is directly related to an "After Apex" affect. Tier 2 and 3 EMS are driving a good portion but we have also seen resurgence in Tier 1 guys too. Forecasting going forward is very encouraging so we are expecting an even stronger Q2 for the Americas”

Mick followed this up with a statement that I found even more interesting, “For us in the Americas, in Tier one it is mostly increased activity in automotive and additional needs in telecom segments. This is organic growth rather than pull back from overseas.”

These are just a few of the many comments I have had that support the notion that electronics manufacturing is expanding back into the Americas in a good way, it may never be what it was 20 years ago, but it is looking up when compared to the earlier part of this decade. I would like to hear what you have to say about this, you can respond with the form at the end of this article or email me at SDecollibus@circuitnet.com. If response is good we will do a follow up to this article later on in the year.