At the IPC Technology Market Research Council's (TMRC) May meeting in Baltimore, the speakers concurred on their midyear business outlooks for electronics manufacturing: Orders are steadily up, but modest for some sectors, with intense price pressures still reigning supreme.

Speaker Walt Custer of Custer Consulting Group gave his typical fast-paced look at the macro and micro conditions currently affecting the electronics industry. According to Custer, world electronic equipment production is headed up. It's estimated at $1.199 trillion for 2004, a hefty $100 billion jump from 2003's $1.090 trillion.

Another macro indicator for Custer is world gross domestic production (GDP), with every country/region except China, surprisingly, and Japan, not surprisingly, projected to experience growth in its GDP from 2003 to 2004. Overall, the world's GDP is estimated at 4.0 in 2004 from 2.4 in 2003, with the U.S. weighing in at 4.6 (2004) vs. 3.1 (2003). China will hit 8.3 in 2004 from 9.2 in 2003, with Japan at 2.5 in 2004 from 2003's 2.7.

January/February figures released at conference time reflected that industrial production worldwide is also up, with Germany (+1.8), the U.S. (+2.7) and China (+23.2) all experiencing positive percentage changes from one year ago. Even though the world is in a growth mode, however, Europe is doing less well overall, according to Custer. Case in point: Britain was at -1.3, with overall Europe at only +0.6.

Custer summed up by analyzing the end market situation for electronics manufacturing. Both the computer and semiconductor industries have resumed modest growth, with personal computers (PCs) and cell phones actually enjoying robust growth. Along with security and medical, military has been one of the main industries leading this upturn, but Custer had two cautions for the audience: 1) it's not that big of a market and 2) it's U.S. presidential administration-dependent. On the downside, automotive has had stable volumes, but severe price pressures continue; and telecom/datacom, once thought to be headed for recovery, hit a negative plunge in late 2003 from which it has not completely recovered.

Shawn Severson, senior vice president with Raymond James, Inc., presented his take on the electronics manufacturing industry from a Wall Street perspective. According to Severson's analysis of the macro landscape, conditions are improving. Management teams at electronics manufacturing services (EMS) providers are indicating that business is better, with this positive sentiment the best that Severson has "heard in a long time." Overall, he predicted that 1) high-end information technology (IT)/telecom applications would make a recovery in 2004 and 2) investors in the EMS niche will be mostly concerned with EMS companies' ability to sustain the current recovery and growth throughout 2005.

Drilling down further, Severson indicated that EMS industry restructuring plans are mostly complete, with stabilized pricing and higher capacity utilization driving margins up. The caveat, however, is that EMS companies are still trying to re-price business they priced way too low during the downturn. Severson cited Solectron, in particular, for getting "into trouble" for not figuring out the cost of doing business and pricing accordingly; instead, Solectron's price-slashing was just an attempt to keep customers.

Other speakers focused on the overall theme of the TMRC meeting, which was disruptive technologies and how to cope as electronics manufacturers. Although lead-free and nanotechnology applications were the primary focus of these presentations, disruptive technologies are not the only bugbears challenging electronics companies' current growth. Other disruptions include the continued strength of the euro and the U.S. Federal Reserve Board's almost certain propensity to soon increase interest rates to avoid inflation and a rising U.S. domestic economy. The smart companies are the ones already planning for and addressing these issues. As Custer stated at the end of his presentation, "The law of the jungle will prevail. Financially and technically strong companies will survive."

Custer's statement clearly echoed that of keynote presenter Jack Shaw, who cited the example of Digital Equipment Corp. (DEC) being swallowed up by Compaq due in large part to DEC's not catching onto the PC revolution. He stated: "Every business in this room will learn to deal with disruptive technologies or they will become parts of businesses that have learned how to deal. It's not enough to accept change. It's not even enough to embrace change. You've got to seek out change."

Adapt to disruption or be swallowed: wise words for us all in this improving, but still challenging, electronics manufacturing environment.

Mack Technologies (Westford, MA), a contract manufacturer, has partnered with Ovation Products (Bethlehem, PA) to standardize on Grid-Lok fully automatic tooling for all DEK Screen Printers at their Westford facility.

The installations have provided an automated tooling option on every printer and feature Stealth Mode for zero-time support tooling setup when changing from one product to another. In addition, compliancy issues are eliminated as the support pins reset for every circuit board.

Mack process engineer Bill Dampier said, "Since our tooling is now fully automatic, our operators and setup personnel have no concerns with support tooling issues and are able to focus on other aspects of the assembly process. In addition, virtually no training was required to operate the system since it is triggered automatically by the host machine."

Quality engineer Eric Wolf stated that their printing process quality has stabilized due to the repeatable support of the system compared to conventional methods: "Our operators are no longer concerned about the printer tooling setup even for the most densely populated double-sided PCBs."

Ovation Products, a division of Airline Hydraulics, is a manufacturer of automated tooling solutions for the electronics assembly industry.

www.grid-lok.com

www.macktech.com

Copyright 2004, UP Media Group. All rights reserved.

Elcoteq Network Corp. (Espoo, Finland), an electronics manufacturing services (EMS) provider for the communications technology industry, has added three surface-mount manufacturing production lines at Elcoteq America's facility in Monterrey, Mexico. The addition is a result of increased orders to manufacture mobile phones and similar wireless communications products.  The addition brings the number of lines to 10 and increases capacity by 43%. Elcoteq will be expanding its work force by 200 employees.

The majority of the new equipment will be purchased from Siemens and Panasonic in keeping with Elcoteq's strategy to equip all its manufacturing plants with similar equipment so process transfer and supply chain management are facilitated and optimized. Plants are located in Europe, Asia, Mexico and the U.S.

The Monterrey plant was established in 1999 and has a production area of 18,300 m² and approximately 1,200 employees who manufacture electronic and electro-mechanical assemblies.  The facility has ISO 9002, ISO 14001, QS 9000, ISO/TS 16949 and BS7799 (Information Security Management system) certificates. They practice six sigma methodology and have eleven black belts. The facility has achieved World-Class Quality Level status based on GE Quality Assessment guidelines and was awarded the 2003 Quality Award by the government of the state of Nuevo Leon, Mexico.

Joe Foster, director of operations, Elcoteq Americas, said, "This increased capacity is consistent with our long range plans of growing Elcoteq's presence in the Americas."

www.elcoteq.com

Copyright 2004, UP Media Group. All rights reserved.

Sanmina-SCI Corp. (San Jose, CA), an electronics contract manufacturer, announced that seven of its medical device manufacturing facilities have been certified for ISO 13485 or 13488 as well as for Canadian Medical Devices Conformity Assessment System (CMDCAS) by TUV Rheinland of North America Inc. (Newtown, CT), a compliance engineering and independent testing services provider. The TUV quality sanctions augment earlier facility registrations for all seven facilities by the United States Food and Drug Administration (USFDA).

According to John Hendrick, executive vice president of Sanmina-SCI's Medical Systems Division, ISO 13488 certifications have been granted to facilities located in Alabama, China, Ireland, Singapore and Sweden while ISO 13485 certifications have been granted to facilities in California and Israel. The Israel facility was granted ISO 13485 certification by the Standards Institute of Israel, which plans to transition its certification to TUV Rheinland later this year.

Hendrick said, "By the end of the third quarter 2004, we expect to earn two more TUV certifications—one for an additional facility in Alabama and another for a facility in Mexico—which will expand TUV quality certifications to nine Sanmina-SCI medical facilities worldwide."

According to TUV Rheinland, the ISO 13485/13488 quality standards are specific to medical device quality systems and supplement the more generic ISO 9001 and 9002 standards that apply to many industries. The company also notes that the European Union (EU) has issued a number of directives that set forth compliance criteria for medical devices destined for the European market. These directives apply to a number of medical products, including active implantable medical and in vitro diagnostics devices. With its recent certifications, Sanmina-SCI is positioned to comply with EU directives, since a significant portion of demonstrating EU compliance depends on the prior establishment and independent assessment of quality systems.

www.sanmina-sci.com

Copyright 2004, UP Media Group. All rights reserved.