Estimated reading time: 5 minutes

It's Only Common Sense: A Short History

Editor's Note: To listen to Dan's weekly column, as you've always done in the past, click here. For the written transcript, keep reading...Let me tell you story. A number of years ago some people in this country decided to start making PCBs. This was a relatively new technology in the early '50s coming into its own due to the invention of the transistor. After a few years, a number of companies were building PCBs and the industry began to grow. And it was a good thing.Soon companies large and small started buying their PCBs from these builders, or fabricators as they like to be called, everyone else called them board shops. These companies continued to grow. Again, a good thing.After a while customers started taking more of an interest in these circuit board shops and how they went about doing things. Soon these customers told them that if they wanted to be true partners--if they wanted to win more of their business--they would have to start doing things their way. Additionally the vendors, the companies who sold to the shops, agreed with those customers. In fact, there soon formed an unofficial alliance between board shop vendors and board shop customers so that if the board shops didn’t want to buy something from their vendors the vendors would then go to their customers and get them to make the board shops buy their products using a process called “speccing in.”Before long, the vendors and the customers were completely in control, making the shops do what they wanted them to do.But the customers still were not happy with the board shops because they wanted to squeeze more out of them, so they invented a concept called a “partnership” which meant: “You will do what I say and like it if you want me to give you business.” And they gave them the business. Oh did they gave them the business.Soon the customers told the board shops that they would have to lower their prices if they wanted to keep the business. So, trying to be good partners, the board shops did everything they could to lower prices. Then they told them that they would now pay them in 60, 90, or even, in some cases, 120 days! And, once again, wanting to be good partners, the board shops agreed. They had to.But all that was not enough for the customers. They came up with other things they wanted the shops to do to keep their business. After all, the customers told the board shops, it will help you in the long run; it will make you a better company. So they invented things like SPE and JIT and Lean and CAT and HAT and 6012 and Nadcap and 31032 and anything they could to make sure that shops were doing everything they could to help the big companies stay profitable.As expensive as all the changes were, the board shops did their best to keep up. After all, they wanted to be good partners--like Charlie Brown tries to be a good partner to Lucy by letting her hold the football.One day the board shops found out that the big company customers were starting to buy some of their boards from other companies: Asian companies like Japan, Taiwan, and, eventually, China. When they talked to their customer about this they were told not to worry about it, the customers were just buying cheap boards from these countries and it would not hurt their “partnership." Then customers started buying more and more PCBs from Asia, even bragging that the prices were so much better that if the American board shops wanted to hold on to their business they would have to “sharpen their pencils.”“But what about all of the specs and JIT and Lean and the Quality levels and EPA do those shops provide all of these things?” the board shops asked. The customers, especially the bigger ones, told them not to worry.When the shops began seeing the boards from Asian houses and saw how inferior the quality was they asked their big customers about that. “Don’t you worry about that,” the big customers said, adding, “Frankly, their prices are so ridiculously cheap that we can afford to throw away half of their boards and still make out. Make sure that you keep your quality levels up and make sure that you keep meeting our requirements if you want to keep what business of ours you still have.”A few years later one of the very big customers--one of the biggest, actually--urged one of the largest and oldest board shops to get involved in a very high-tech project that would make all of them rich. They told the large board shop that if they helped them develop the process; and then invested over $100 million dollars of their own money in their factory, they would get a ton of business from this big company…promise. The big board company, wanting to be a great partner, did just that, they developed the process and they invested the money--actually over $180 million dollars. They did everything they could to accommodate their customer’s needs. But, alas, the big customer said, “We have found someone in China who can build these boards so much cheaper that, well, what can we say, you just can’t meet the price so we’re afraid its goodbye. But, hey, thanks for the process anyway, the Chinese would have never figured it out without your help.”Recently, after 9/11, the U.S Department of Defense brushed off and age-old regulation called ITAR which demanded that any product built for the government had to be built by Americans working in American companies. Well of course this wasn’t convenient or cheap enough for many of the customers so they decided that it would be more expedient to define the PCB as too far down the supply chain to require the ITAR regulation. With that self-serving philosophy they've been playing fast and loose with ITAR ever since.Even more recently, when the few remaining shops, less than 300 down from 2,000 or so tried to protest all of this behavior as unfair, they were told to basically shut up, that they should have changed, that they should have kept up, that we are not socialist and cannot rely on our government to protect us. They were actually told that they should have done what their customers told them to do all along and everything would have been fine.Listen to their customers? That’s their consolation? Just suck it up and make the best of it? It’s our own fault that the North American industry is in the poor condition it’s in?Is it really? Think about it…I don’t buy that. It’s only common sense.