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It’s Only Common Sense: Six Game-Changing Trends for the New Year

The year 2019 is just around the corner, and smart companies are already deep into their strategic planning for the upcoming new year. As we start preparing our companies, it becomes crucial to examine trends that the new year will bring and develop our strategies around these trends. If you’re not already planning for the new year, then get with it. It’s October, for heaven’s sake, and time’s a-wastin’!

Looking into the proverbial crystal ball, here are six game-changing trends for 2019 that will impact our industry:

1. Tariffs will increase: Tariffs are here, and it looks like they will change—and already are changing—our industry. No matter what side of the political spectrum you are on, you are going to be affected by tariffs (10% now and 25% at the beginning of 2019). We’ve already seen a run towards Asian, non-Chinese companies for our PCBs. There is serious renewed interest in PCB shops located in Taiwan, Korea, Vietnam, and India. American companies with substantial offshore PCB buys will move to these countries as fast as the airlines will carry them.
2. PCB shops in the United States will see more business: Although we no longer have the infrastructure in the United States to handle the millions or billions of dollars that Chinese shops build for our American companies, there will be a trickle-down effect that will send more business to U.S. shops.
3. Contract manufacturers will be hit hardest by tariffs: CMs buy everything, not just boards. Nearly everything they buy comes from China. Prices will increase accordingly. Many companies I’ve talked to are already feeling the pain of increased costs from components to plastic molded parts. These companies are already dealing with paper-thin margins, and that paper will start to look more like onion skin than standard printer paper.
4. The Chinese will come: For the past 18 months, it has been a trend that Chinese companies want their own presence in the United States. They are looking to build sales teams here and buy existing PCB companies. They have been working on coming directly instead of through brokers—especially with tariffs in place, which is more evident than ever. It remains unseen how successful they will be in this venture.
5. Mexico will rise: While all of this has been going on, Mexico has become more vital to our industry than ever before. There are more CMs below the border than ever before, and they are doing very well. They will continue to thrive and be an influence on our economy for a few reasons, such as having the advantage of selling to North America without the hassles of dealing with the United States.
6. Technology will rule: The trend towards innovative technology from our customers will continue to grow as companies like Blue Horizon, SpaceX, and many others touch the sky with new and innovative products demanding equally high-tech PCBs that stretch the boundaries of physics. We are already seeing important partnerships being created between PCB builders and high-tech customers, which will continue to increase in the next few years. This will put shops who have invested in the future in a strong position moving forward.
7. Competition among CMs will become more intense: Competition will increase as more CMs strive to get their name in the marketplace. For many years, CMs were able to get away with fewer sales and marketing efforts because business came to them. In this new age of competition, smart CMs are already building sales forces and developing marketing plans to make sure they grab a piece of the market.

You may see these trends differently depending on how you look at the world’s glass—half-empty of half-full. I prefer a half-full perspective. Every one of these trends can be parlayed into a successful strategy for 2019 and create a thriving business atmosphere for years to come—from looking for alternative Asian PCB partners to doing more R&D in U.S. shops. As always, “When the going gets tough, the tough gets going.” Good companies will do well, but great companies will thrive.

It’s only common sense.

Dan Beaulieu is president of D.B. Management Group.