PCBAA’s David Schild: Where U.S. Electronics Manufacturing Stands Today

Estimated reading time: 16 minutes

As the U.S. Congress looks toward a summer break, David Schild of PCBAA discusses the growing momentum in U.S. electronics manufacturing policy, emphasizing bipartisan support for reshoring efforts, the importance of targeted tax incentives, and the challenges posed by global competition. He highlights PCBAA’s growth, advocacy on Capitol Hill, and the need for sustained investment to revitalize the PCB industry.

AUDIO TRANSCRIPT

Marcy LaRont: Good morning, David Schild from PCBAA. It's great to have you here this morning. Thanks so much on this bright Monday after the July 4th holiday. Lots of things happening in the United States, as well as around the world, and PCBAA has certainly been in the center of a lot of it around business for printed circuit board manufacturing.

So, let's get into it. David. Let's talk about what has been happening on the Hill just recently. Let's talk about the Big Beautiful Bill Act that was just signed. Let's talk about the Printed Circuit Board and Substrates Act and everything else. China, let's talk about China.

David Schild: Absolutely. Marcy. Always great to be talking with you.

Where to start? PCBAA is coming into its fourth year and is very pleased to report that we've crossed 75 members and continue to grow. We started with five companies, really. Board shops are at the core of our foundation, and now we're into EMS.

We're into tests, we're into design, raw and refined materials. So, that's really a great place to be from a diversity of membership. I think now you're starting to see a recognition across the ecosystem that everybody outside of semiconductors has been largely forgotten in the public policy discussion around reshoring and restoring capacity.

So, the growth of our team is really about increasing our political footprint and bringing more voices to the table. I'm really proud that we continue to add people. And many of those folks were with us in Washington. June 9–11 was our annual meeting. This is our only in-person gathering of the year, but it is a great opportunity for members to spend time amongst one another and hear from key policymakers at the Department of Commerce, the Department of Defense. Sen. Ruben Gallego from Arizona was our keynote speaker, and it was also a time for all those folks to call on members in their offices on Capitol Hill. For almost 60 executives to descend on Capitol Hill and tell this story about the PCB ecosystem and why it requires smart public policy, that's always a good thing.

I'm glad that group continues to get larger year after year.

LaRont: Congratulations on 75 members. Congratulations on the diversity broadening within the organization. You've really worked with these executives and trained folks up to be more comfortable being on the Hill and talking to the representatives. How has that arc changed since you guys started out?

Schild: I think that executives can be forgiven for focusing on running their business and building boards, and it's the job of our team and our professionals to really get people comfortable. But I will just tell you, Marcy, you know, having done this for more than 25 years, the most effective story is the true story, the authentic story about manufacturing.

I can certainly go in and represent these folks, and I'm honored to do so on many occasions. But when somebody comes in and says, “I employ 50, 100, 5,500 people at my factory, and the product we make ends up inside this critical piece of technology, this critical system for the war fighter,” any number of examples that they might give, it's just so much more persuasive.

You know how it is with PCB factories, they're very nondescript. You can drive by one on the highway and have no idea what's going on inside that four-sided building. But our manufacturing executives really tell a story about career development, about, in many cases, family businesses that are second or third generation. It is so much more effective to bring people who are actually doing the work in to tell two stories. One, that there's a future in this industry, but two, that we face a really difficult global environment because many foreign countries have decided to subsidize manufacturing.

For a long time, we had this attitude in the United States that the market is really sorting things out and industries that succeed or fail are really just succumbing to market forces or thriving because of capitalism. Now I think we know a little bit better.

You saw it with semiconductors as well, that Nation states are really choosing to exercise industrial policy. Why is Japan, Taiwan, Vietnam, Thailand, and China succeeding in so many of these tech manufacturing sectors? It's because they've chosen to incentivize production on their shores. They have made worker housing available. They have given you the land. They have built a factory and leased it back to you for a dollar a year or whatever the number is. There's any number of anecdotes I hear from folks saying, “Look, these foreign governments are deciding that they want to own these verticals. What's our government doing?”

I was recently on Capitol Hill testifying, and one of the things that I said to the U.S.-China Security Review Commission was, “We are not seeing American PCB companies competing against foreign companies. We're seeing American PCB companies competing against foreign governments and knowing that it is a call to action in Washington for our elected officials.”

LaRont: I'm guessing that had quite an impression.

Schild: It's not just us. I think anybody in Washington these days has a story about rare earths, green energy technology, and manufacturing in the automotive sector. There's no vertical now, there's no part of the economy where people aren't starting to ask, “Okay, is the offshoring that's gone on completely driven by market forces or is it that countries have decided, you know what, we want to own this sector, and they acted accordingly?”

LaRont: You feel we're finally seeing some real acknowledgement around that as a truth.

Schild: If you look at the bipartisan support for our legislation, Democrats and Republicans do have this in common. I also think people understand this overlay of national security and economic security concerns. For any number of reasons that are just practical, you don't want to depend on a supply chain that stretches 7,000 miles across the Pacific for things that you rely on every day. You get into some uncomfortable questions about whether or not a lot of your critical technologies are being sourced inside a geopolitical competitor and sometimes an adversary. That question opens eyes that maybe are not open by the economic calculus. So, I'm thrilled that people are taking this seriously, but now we need action. We need actual investment, and there's any number of places that could happen.

LaRont: Well, let's talk about some of the wins that we've seen recently, and also some of the work that still remains to be done, maybe where it's a bit incomplete. First, let's talk about trade and China.

Schild: We have watched very carefully, as you know, that the tariff environment has fluctuated, and one of the things that we've constantly pulsed our members on, and I think you see IPC (the Global Electronics Association) doing this a lot as well, is what has been the effect. I would say it's a mixed bag.

Certainly, we understand that some deliverable products become more competitive when a higher tariff regime is imposed. The problem, of course, is that American manufacturing also relies on inputs from foreign producers as well. So, if the machine tools and the raw materials that are in your U.S.-based PCB factory suddenly cost more, those costs are going to show up for your customer.

Our take has been, and what we have told lawmakers is, the application of tariffs should be a scalpel and not a sledgehammer. It needs to be discreet. It needs to be targeted, and that mirrors what you've seen in other sectors of the economy. We certainly understand that they're a tool in the toolkit.

I like to tell lawmakers that the other tools that are incentive-based—tax credits and grants from departments like the Department of Commerce and the Department of Defense—those are equally effective. I don't think that any one arrow in the quiver is going to be the solution. But you know, we are constantly asking our folks, where are tariffs showing up in your business case, in your bottom line? Again, the results have been mixed so far.

LaRont: So, we are now at a reciprocal tariff, it seems, between China and the U.S. So, it looks like we're just about neck and neck, and that puts us in an entirely different situation.

I know the market liked that news very much. I know we'll all continue to watch and see what's going to happen, but it seems that both the United States and China are very committed with a lot to gain and a lot to lose on both sides. That is good to see. Let's go to the domestic agend and talk about the Big Beautiful Bill Act that just passed and what's in there for manufacturers. Then let's talk about what wasn't in there and the things that are still being worked on.

Schild: Sure. So, I think you've seen organizations like AIA and the National Association of Manufacturers praise the fact that there are incentives for American manufacturers inside that bill. And of course, a lot of that falls across our industry.

I did not see specific microelectronics incentives, and certainly, as that bill was working its way through, a lot of people sort of wanted to hitch their star to that wagon or their wagon to that star, I guess. That bill was about some really high-level concerns, mostly extending previous Trump tax cuts, making a lot of changes to entitlement programs.

While I'm thrilled that there might be general manufacturing incentives out there, we remain focused on HR 3597, which is the Protecting Circuit Boards and Substrates Act. It's a bill that, in concert with our friends at IPC, we've been working on both sides of the aisle. Its two major components are, we think, the most targeted way to benefit our industry, an industry that, as you know, has contracted severely since the year 2000. We used to have 2,200 board shops. Now we have only like 143 board shops. We're going in the wrong direction.

Bill Blake Moore is the Republican lead sponsor. Raja Krishnamoorthi is the Democratic lead sponsor. That bill has a grant program to be administered by the Department of Commerce. Those grants would allow, like the CHIPS Act, manufacturers to hire new workers, expand facilities, and improve training programs—investments that we think are very reasonable and for a very modest amount of money.

The second more important aspect of that bill is a 25% tax credit to be taken by the purchaser of American-made PCBs and IC substrates. The reason that's so important is that's the missing link in the business case right now for private investment and for the expansion of our industry. People are saying, “Where is the customer? The customer's overseas because of price.” A tax credit, a buy America tax credit, essentially says to companies that want to diversify their sourcing, that want to buy American, now it's cost competitive to do so.

LaRont: That's tremendous. Where are we at exactly with the Printed Circuit Boards and Substrates Act?

Schild: That bill's been reintroduced. This will be its third reintroduction. There are a couple of next steps. One, we've got to get a critical mass of co-sponsors, and those are already starting to show up both on the Democratic and Republican side of the aisle.

The next thing I think you'll see is the communities of jurisdiction starting to consider this bill: Ways and Means, because it has a tax provision, Energy and Commerce, and Science and Technology. We're looking forward to talking to those committees and their lead staff about the importance of this bill. We are always looking for other legislative vehicles that might offer opportunities for these.

You do see fewer and fewer pieces of legislation moving through Congress now, Marcy, and many people—the Big Beautiful Bill is a great example of this—sort of attach their concerns to those legislative vehicles that are most likely to end up on the President's desk.

Now we've got the language out there. It's filed, it's official, it has bipartisan support. If there is a China competitiveness bill, if there is a CHIPS 2.0 bill even in the National Defense Authorization Act, there may be an opportunity to take some of these PCB Act provisions and move them forward closer to completion.

LaRont: Well, let's talk about timing for a second, or let me ask you about that. Obviously, this was a really critical time for the Trump administration, for the country, and that is probably one of the reasons why everyone was trying to hitch their wagon to this star, and getting this passed. What is the legislative activity now going to look like with this now behind us?

Schild: The biggest focus now will be on the budget. Last year, unfortunately, we moved forward a continuing resolution instead of the traditional appropriations approach. The problem with that, of course, is that when the president's budget is submitted, one of the things that we are always keeping an eye on is where the money is for American-made microelectronics.

In recent years, that has been inside the Defense Production Act. I am disappointed that this year's submission does not include money for microelectronics. We really went over a cliff there, and so what I would say is we're going to be working again with our friends at IPC to restore a lot of that funding and really hold the Pentagon's feet to the fire and say, “Hey, you've done two things. You have identified printed circuit boards and IC substrates at a critical technology. We can't produce the systems we need for the war fighters without these technologies. At the same time, you have defunded the program inside the DPA that was helping to build factories at places like Calumet, TTM, GreenSource, Summit. So, if you are going to say, on the one hand, this is a priority technology sector, your budget should reflect that.”

There are smart people at the Pentagon, on the UN Armed Services and appropriations committees, who understand that. We've had some luck in the past getting funding restored, and so we're going to cross our fingers and work towards that goal again.

LaRont: What is the timeline or deadline for that first budget to go in and be considered?

Schild: Well, it really depends on what happens in the House and the Senate. The first step is always that the president's numbers come out, and it was a little backwards this year.

There was the mini-budget that moved its way through Congress. Now, we're seeing the justification documents after the fact. That's a little out of order. Traditionally, we're not going to see appropriations bills considered until the fall, and there are opportunities here to restore funding to these programs.

A lot of work will be going on in July. Congress, as you know, is largely absent and back in the districts in August. You and I should talk again in September for an update on where this funding is. But I just want to emphasize to all your readers that this is a recurring process/problem every year.

The Pentagon, the Department of Commerce, the White House have to decide where their budget priorities are. When we are aligned and we see that there's funding for microelectronics, that's good news, and we protect and keep sold those programs. When we see what we're seeing this year with a zero, the goal is to get us back into a healthy place that's sustainable.

LaRont: Right. If the last couple years have showed us nothing, it's like you can't assume that you have the win now and stop talking about it. You have to continuously be up there and be someone that they recognize, someone that they hear. Otherwise, you will lose ground and you'll be back where you started.

Schild: The semiconductor industry is really a great example of why you have to keep your ideas sold. The passage of the CHIPS Act was not enough. The disbursement of CHIPS dollars was not enough. Now you see the Trump administration, in some cases, trying to claw back some of those dollars, some of those programs.

We want those factories to come online in Arizona, New York, and Ohio. I'm impressed with what our friends at SIA and SEMI continue to do, but there is years of work ahead of us.

LaRont: I know this is slightly out of your lane, but I'm talking about the CHIPS Act and all the things that are being discussed. President Trump's not a fan necessarily of the CHIPS Acts as it was written, as it stands, and he is looking at making some significant modifications going forward, but still trying to address the overall objective. What are your thoughts on that? Are they in near-term jeopardy or is it just going to be a different way it's structured?

Schild: We have heard a great deal from the Commerce Department that encourages me about where the administration is going on industrial policy. I think the tools may be different. I think the initiatives may vary from what you saw during the Biden administration, but what I see that is consistent from administration to administration is a desire to see more U.S. factories come online, a desire to see less dependency, especially on our adversaries and global competitors.

The way we're going to get there may have changed. But I think the goal is the same, and that's what we remain focused on.

LaRont: Well that's great. This has been really interesting, David. Lots of great work with you and PCBAA, of course, and with IPC/Global Electronics Association. Congrats on the wins that have occurred and that are occurring.

Here’s to everything that needs to be done next. I do look forward to talking to you again in a few months’ time. But before we wrap up, is there anything else that you'd really like to let our listeners and industry members know?

Schild: No. I'm very grateful to the work that you and now the Global Electronics Association are doing to spread the word about the importance of American manufacturing.

It's an exciting time. I think the wind is at our backs regarding industrial policy, but we've got to keep moving forward. We've got to grow the team and, big wins are possible. I always cite the CHIPS Act is something that, 10 years ago, nobody would've imagined that the government would've invested in semiconductor production.

Now, there are actually factories rising from the desert floor outside of Phoenix. So, let's not have a failure of imagination. Let's not have a failure of initiative. We can do this. But we've got to keep our sails all sort of pointed in the right direction and work together, get it done.

LaRont: Well said, thank you so much again for spending this time. Continued good luck, well done, and we will talk again soon.

Schild: I'd like that. Thanks, Marcy.