Circuit Express Sets Bar High With Low Volumes

Estimated reading time: 7 minutes

Circuit Express Inc. (CEI), headquartered in Tempe, Arizona, is a manufacturer of quick-turn and prototype PCBs. The company continues to add new customers to its roster every year, growing while others have faltered.

Travis Bice, president of Circuit Express, explained, "In this difficult and tumultuous time, Circuit Express Inc. is totally committed to being a strong and valued supplier of low volumes of bare PCBs in the quick-turn arena. To do this, we will continue with our intense focus on what we call 'The Big Four': price, delivery, quality and service."

I-Connect007 sat down with Bice to discuss the company's history and future, as well as his take on the military/aerospace market and the overall North American PCB industry.

I-Connect007: Give us some background on Circuit Express. When was the company founded? 

Bice: Circuit Express was founded in 1987, and we are still privately owned. I own 70% of Circuit Express, and the remaining 30% is owned by our employees. We have been an employee stock ownership plan (ESOP)since 1998.I-Connect007: What markets do you serve, and which segments have been particularly important for you? 

Bice: Circuit Express is diversified across all markets, but military/aerospace/defense accounts for well over a third of all revenue for the company and is our most profitable market segment. We have been a military supplier for over 14 years. CEI is well-versed in the needs and demands of the military and aerospace marketplace and during the current recession we've seen this market segment surge in growth. (See Figure 1.)

Figure 1: Circuit Express' markets served, with mil/aero/defense leading the way.

I-Connect007: What, in particular, would you say has contributed to CEI's growth in the mi/aero market?

Bice: Part of this growth can be attributed to our ISO 9001 certification and AS9100 certification which happened in March of this year. We forecast continued growth in this sector and are selling into new customer locations across the United States for the first time in our company history. We've now got feet on the street in the New England, Seattle and Florida territories.

I-Connect007: Many U.S. fabricators have struggled and even gone out business over the last 10 years. What have you done to ensure your business is positioned for growth? 

Bice: Firstly, we have been a very focused company. Since 1998, we have been determined to really focus on QTA and low-volume production. Now, 99.5% of what we do is producing low volumes of bare PCBs in short intervals, and 70% of what we ship is in less than five days, and 15% of our revenues are one-, two- and three-day turns.

We use, and only use, direct sales personnel and, therefore, they are employees of the company. This has enabled us to focus on attracting and retaining a large customer base, and constantly working for new relationships. Using direct sales has also enabled us to get a consistent and clear message into the marketplace about who we are. Our unique sales strategy also allows these direct sales team members to spend the majority of their time calling on new accounts and less time on non-productive activities like quoting, order management and receivables issues. We are convinced that Circuit Express customers see representatives of our company more frequently than any of our competitors.

We have also been dedicated to increasing our capabilities through capital expenditures, processes (ISO and AS9100) and training. In June of 2004, we purchased Southwest Technological Services, which brought our facility to 35,000 total square feet, and has kept us to a capacity level of 50 to 60%, enabling us maximum flexibility to book and ship quick-turns. We consistently reinvest capital back into the company. We have improved every key element of our equipment and processes over the last five to seven years. These enhancements have enabled CEI to become a leading-edge technology company that is capable of producing very sophisticated PCBs.

I-Connect007: What distinguishes CEI from its competitors?  

Bice: Again, our laser focus on being a low-volume provider of PCBs, and using only direct sales personnel. We are very clear on who we are, and do not dabble in assembly, design, offshore production, broker relationships, etc. Everything we do is about becoming a better and better supplier of quick-turn PCBs.

I-Connect007: In terms of business strategy and philosophy, how does CEI approach making decisions on growing into new markets or making changes to broaden your business services offerings? 

Bice: Our strategy for more than a decade is to be slightly behind the most leading-edge technology. Therefore, we consistently maintain a certain level of capital expenditures as I mentioned previously.

We focus on a large customer base, and we are very reactive to them. When we start seeing a large number of customers needing, say, immersion silver, we will react and bring on that process. Adding microvia technology would not be possible without the support of our customers, and we are working closely with a few of our customers where we have very strong relationships, to assist us in getting this new technology offering off the ground by year's end. By the end of this year, we expect to have produced our first revenue shipments of laser-drilled microvia technology which is yet another major leap forward in CEI capability and technology.

I-Connect007: How have these incredible economic conditions affected Circuit Express? What has been your first-hand experience there? 

Bice: It is obvious to all that the overall economy has been severely damaged, and this has clearly affected the electronics, semiconductor and PCBs markets. We experienced a drop-off in late Q4 2008, and at the start of Q1 2009 we were immediately tracking at 15% down from 2008. Fortunately, we have held flat at that rate (-15% against ‘08) for many months. Since we use only direct sales personnel, we receive a lot of first-hand information. There are a lot of OEMs, and various manufacturers that are definitely hurting. Military appears to be one of the stronger markets, while semiconductor manufacturers appear to be the weakest. The San Jose area (where we work with several semiconductor manufacturers) is off 50% for CEI. When is the recovery? I wish I knew.

I-Connect007: Is there anything that you're particularly proud of when you look at CEI and how it has developed over the years?

Bice: For over 14 years, Circuit Express has been MIL-PRF-55110 certified and has a successful history of supporting our aerospace and defense customer base. Over the last 24, months our management team put in hundreds of hours of work and performed hundreds of internal audits prior to our final assessment for ISO 9001/AS9100 certification. CEI passed the audit in February of 2009 and in March we became certified to ISO 9001:2000 and AS9100:2004B. Since that time we have had a tremendous and enthusiastic response from both existing and new customers, including Lockheed Martin who, in June, approved Circuit Express for space programs. CEI just shipped our first order to support the Orion program as a result of this space and AS9100 certification.

I-Connect007: Having been in the industry for over a decade now, how have you seen this industry change and develop; and what do you see for the PCB industry going forward? What are the greatest challenges for our industry and North American electronics in general today?

Bice: I have been in the industry since 1996, but there have been amazing changes! Firstly, I would say 9/11 caused immediate and everlasting changes in the PCB industry. It really opened the door to offshore competition for not just high-volume, but mid-volumes. Many PCB manufacturers that were producing mid-high volumes went out of business. Capacities were far too high in the U.S. to support the reduced orders that came following 9/11. In my opinion, those that managed to survive focused on military, technology, ITAR, quick-turns, high-mix low volumes, JIT inventories and had to be mindful of their labor! With the second huge downturn inside of 10 years, these issues are still prevalent, and are increasing in their importance.

Two dramatic downturns in the last eight or nine years have forever changed the way PCB manufacturers do business in the U.S. Tto maintain market share, U.S. manufacturers have to keep pace with the technological advancements, and deliver in short intervals, all the while maintaining material and labor costs. Another significant challenge is the intense pressure on our supply base. Suppliers are operating with reduced margins and reduced staff, and have to support increasing technology!

We must have a mindset to be able to offer what offshore companies cannot. ITAR, military, the highest-end technology, QTA, fast communication, etc. Some of the biggest challenges are: attracting and maintaining talent, having good and reliable suppliers (and hoping like heck they will stay in business) and being able to increase technical capabilities.

I-Connect007: Thanks for talking with us, Travis.Bice: Thank you for the opportunity.