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Written by Mike Buetow   
Wednesday, 31 December 2008 19:00
Caveat Lector  With every upturn comes a downturn, sometimes softer, sometimes harsher, but unshakably inevitable.

And with every downturn comes a shakeout and subsequent revitalization.

Granted, this downturn is shaping up – mentally, at least – as one for the ages. (In fact, most electronics companies are sitting on piles of and cash and are taking measures like buying back stock on the cheap, which is good for their investors, if not their suppliers.) What will we lose this time?

To answer that question, I give you Buetow’s Second Postulate*: The more we have of something today, the less we will have of it in 2010.

We are already seeing moves on this front. Take, for instance, inspection equipment suppliers. There are scores worldwide, many of which aren’t dedicated to electronics manufacturing, and all of which, even in good times, battle for sales and margin. Orbotech has announced plans to bail from the assembly AOI business, and Saki Corp. signed a deal to acquire x-ray equipment OEM MacroScience Technology. As other players focus their operations, we can expect several more announcements along these lines over the next year.

Another area that's ripe for consolidation is placement. Of the major players worldwide, just two or three were growing as 2008 came to a close. The rest were treading water, or altogether sinking.

On the other hand, what I don’t expect is a fire sale among the largest EMS companies. Although layoffs will be common in the coming months, all the majors have adequate combinations of cash on hand or credit facilities to ensure they will see 2010 intact. Heck, even the chairman of one major EMS firm just bought shares in his company on the open market for only the second time in his career. If that’s not confidence, what is?

Another area that’s ripe for a shakeout: trade shows. Many companies make obscene amounts of money on these anachronisms. Yet, even during the recovery of 2003-2008, attendance has been falling across the board, in some cases drastically. The reason is simple: There are simply too many other more cost-effective ways to gain the information that was once the domain of the conventions.

Equipment suppliers simply can no longer afford to pay $25,000 to $150,000 to ship machines across the country (or an ocean), especially when the drayage just to move the machine from the show loading dock to its place on the convention center floor can set a company back a cool $25,000 or more! That’s greed.

Even mighty Apple, perhaps the world’s greatest marketer, is bailing from the eponymous MacWorld. As the company explained in a statement last month, “Apple is reaching more people in more ways than ever before, so like many companies, trade shows have become a very minor part of how Apple reaches its customers. The Apple.com Web site enables Apple to directly reach more than 100 million customers around the world in innovative new ways.”

Ah, the Web. Like Apple, that’s our ticket, and yours too. Next month, Circuits Assembly will host the second Virtual PCB (virtual-pcb.com) trade show and conference. The fully interactive, Web-based event debuted last February, with some 2,400 industry professionals registering to attend. It’s truly an international show, with almost 48% of the attendees coming from outside North America.

With many companies putting the clamps on travel for the foreseeable future, Virtual PCB offers the ability to meet colleagues and suppliers in a dedicated venue. Moreover, this year’s show, which takes place Feb. 24 and 25, has a strong technical program, aided by programming courtesy of the SMTA (smta.org), that includes on-demand educational presentations, white papers and live group chats with industry experts on topics such as SMT defects and solutions, solar meets SMT, test and inspection, Lean manufacturing and more. On the trade show floor, attendees can download product literature and see demos. For information, visit virtual-pcb.com.

We can, and will, revitalize electronics. And the true innovators will exit the recession in a stronger position than when they entered it.

*Buetow’s First Postulate, introduced in February 2005, states “for every problem, there’s an equal and opposite opportunity.”



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