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It's Only Common Sense: Predictions for 2014

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...At the end of every year I like to look back at the past 12 months and reflect on what's happened, evolving trends, and what both mean for the coming new year.

I think the big story for 2014 will be new product development. As I pointed out in last week’s column, more and more new and exciting ideas will come to life in the coming year. This will help us all grow our businesses, but we'll have to be more flexible. These new product developers, our customers, will be looking for total solutions--they'll want suppliers to provide design, fabrication, and assembly all in one purchase order. This will bode well for some companies, but others--those without design, fabrication, and assembly under one roof--will have to open themselves up to multi-company partnerships to provide customers a complete solution; a concept-to-reality solution.

Look for more mergers and acquisitions in the coming year. These will happen not only because companies will want to provide complete solutions, but also because they will want to expand capabilities, both technologically and geographically. We already see evidence of companies seeking to be more global and provide customers with a complete womb-to-tomb solution for products. I see companies being able to provide customers PCBs from prototype to proof of design, from pre-production to production to mega-production services. This means you'll see companies with shops in North America, Europe, and Asia. We are already seeing this with companies like Graphic PLC and Somacis. Along these lines, look for European companies to start buying up more American companies. There's a lot of under-the-radar activity occurring in this direction already.

I can also predict that sometime, if not in 2014, then in the next few years, Asian companies will start looking at the possibility of owning American board shops.

Currently, there are fewer American board shops than ever--some are still tottering on the brink of disaster. But I believe that some of those left standing survived because they deserved to survive. They are well run and well financed--industry leaders when it comes to quality, technology, and service. These companies will not only survive, but thrive in the brave new world of PCBs.

And while we’re talking about well-run board shops I have to mention that service, now more than ever, will be the key ingredient to growing any PCB business. Customers are more unforgiving than ever when it comes to all aspects of service. They expect their boards to be perfect and on time, every time. They expect their vendors to keep up to date with technology and they expect all of this at a great price.

Ah, yes, pricing. What about pricing? I predict that sometime in the next year, customers will be willing to pay a premium for the great service they demand. They'll be willing to pay for quick turnaround times, engineering help, all of those little extra services that an American neighborhood board shop can give them…services they cannot get in Asia.

Now, on to Asia. Asia will continue to dominate our industry, but not in every way. As Asia's economy continues to grow at a rate that's quickly bringing most of the population into the middle class, the continent is starting to lose their price edge. You'll see their wages increase, their cost of living rise, and, thus, their prices go up. Sure, they'll still kick our butts on high-volume production, but they won't really be that competitive when it comes to small volume and quick-turn. They also don't have the right flexibility, reliability, credibility, and trustworthiness to work with new product development companies. These companies are not comfortable sending their new ideas to China right out of the gate. They also need the engineering hand-holding that only American PCB vendors can provide.

One thing I can guarantee is that 2014 will be one on the most interesting years our industry has seen in a long time. Overall I feel it will be a good year, maybe even a great year for us. The one rule, the one characteristic, that will help you be successful in 2014 is to embrace change. Don’t fight it. Don’t come up with 50 good reasons why you should stand still, but, rather, embrace change and plan your a flexible strategy. Change is the only true consistency that 2014 will bring. It’s only common sense.