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Even Board Shops Need to Make Money

We can sell the Model T at such a low price only because it earns such a nice profit. --Henry Ford

Yes, board shops need to make a profit. In fact, every business needs to make a profit, right? Talk about the epitome of common sense, right? So, why do our customers resent the very idea of a board shop making money? Why do our customers think we are greedy so-and-sos who want to rip them off and take advantage of them?

What is it with contract manufacturers who “offer” to come into our shops and show us how we should be pricing our boards? Or come in and “teach” us that by using Lean Manufacturing we can save literally thousands of dollars in manufacturing costs—that we can of course pass on to them?

In the end it’s all about respect. It’s all about our customers having a good understanding of what we do and how we do it.

Let’s settle this right now: Board shops as a whole do not make a lot of money. The margins are extremely slim and getting slimmer. The cost of doing business is always very high for one reason: Our customers and IPC have never met a regulation, specification and qualification they didn’t love to death. Every year, they come up with newer and tougher regulations and specs and qualifications that tax the board houses to a near breaking point.

Every year our customers come up with new ways to help shops in other countries compete against North American board shops. They are constantly searching the world for cheaper products built by emerging countries with economies that are years behind ours, thus allowing them to use cheaper labor and produce lower-priced boards.

So, what is it that causes our customers to go to the four corners of the world to find the cheapest PCBs known to man? Once again, I can only trace it down to one factor—a lack of respect. A complete lack of respect for the North American PCB industry, its technology, and its people.

Where does it end?

There were once well over 1,000 board shops in North America, and now there are fewer than 200. Does it end when they are all gone and we are at the mercy of the Asian companies? Does that sound good to you? Don’t you just love the idea of the Chinese building the boards that go into our jets and our missiles and our security systems and our medical devices? Is that really a great alternative for you, our dear customers, and our country as a whole?

And please don’t talk to me about how it was up to the American board houses to keep up and how instead of taking their sacks full of profits home they should have invested in their businesses. No, please do not give me that malarkey. Don’t you dare talk to me about a level playing field either, because that has been nothing but a myth for many years. We all know that while we were being strapped with more and more regulations, specs and qualifications, our Asian friends were given a pass because “their prices were just too good to pass up.”

So, now we are finally down to the basic technologies that just cannot go overseas. We do not want China being involved in our secret weaponry, security and space programs. At least I think and hope we don’t.  Let’s not forget that they are, after all, still…communists! They are communists have made it very clear that they have no real love for the United States. China is a communist country that will keep us around as long as we are critical to their well-being, but who knows what happens after that?

Well, there is a glimmer of hope. I’ve seen reports recently that tell us that the gap between American prices and Chinese prices is down to less than 10%, and some even say that it is as low as 5%. This means that we could start seeing some of our board business stay here for a change. It’s been called onshoring and reshoring, and I consider that a good thing.

But once that business comes back, who is going to build it? Will it be those smaller boards shops who are left…or will it be TTM? Think how much fun it will be when TTM is dominating the American board market. That will be fun for our customers who have always had an aversion to working with shops who are bigger than them. Think about how flexible they will be when they know you have no place else to go with your board needs. Think how nice it will be dealing with a company who has so many locations you have no idea where your boards are being built. And please don’t forget they do have offshore divisions; who’s to say that your boards don’t end up there? Just saying.

But there is hope. There are still almost 200 other shops left in North America. Why don’t you get out there and meet them? Why don’t you start stalking to them? Why don’t you get some idea of what it takes to build a circuit board? Why don’t you send your designers to those shops so they can get an understanding of how a board is built? Why don’t you try, just try, to make sure that your board vendors are healthy and that they are making enough of a profit to reinvest it back into their companies? Why don’t you start having a little more R-E-S-P-E-C-T for your North American PCB vendors?

It’s only common sense.