Two-thirds of US PWB and EMS companies feeling crunch of Asian economic crisis

Citation

(1999), "Two-thirds of US PWB and EMS companies feeling crunch of Asian economic crisis", Circuit World, Vol. 25 No. 1. https://doi.org/10.1108/cw.1999.21725aab.027

Two-thirds of US PWB and EMS companies feeling crunch of Asian economic crisis

USA

Two-thirds of US PWB and EMS companies feeling crunch of Asian economic crisis

Keywords Asia, Economics, Electronics industry

Sixty-six per cent of companies in the US and Canadian printed wiring board (PWB) and electronics manufacturing services (EMS) industries are experiencing pricing pressure due to current economic events in Asia. That is according to the IPC, which released results of its survey, Effects of the Asian Economic Crisis on the US PWB and EMS Industries: The Year in Review. This report is the fourth in a series of studies performed by IPC on the effect of the Asian crisis.

Ninety-eight US companies (60 PWB, 27 EMS, ten companies that indicated they served both segments, and one that was unidentified) responded to the IPC survey out of a total population of 522, representing a 19 per cent response rate.

PWB companies remain significantly more affected by pricing pressure than EMS companies, with 81 per cent of PWB companies and 41 per cent of EMS companies reporting that they are experiencing pricing pressure. In July, 61 per cent of PWB companies and 24 per cent of EMS companies indicated pricing pressure on their business.

The number of PWB companies indicating that they are experiencing severe pricing pressure increased from 8.6 per cent to 10 per cent, while those experiencing strong-to-severe pressure increased from 36 per cent to 50 per cent from April to July. The percentage of EMS companies reporting strong pressure over this time period decreased nominally from 18 per cent to 17 per cent. For the first time in the four surveys, an EMS company classified pricing pressure as severe.

Among PWB companies, mid-sized companies (annual sales between $10 and $39.9 million) were most likely to be affected, with 92 per cent reporting they are experiencing some form of pricing pressure. Of these companies, 30 per cent reported experiencing mild pressure and 61 per cent reported strong pressure.

Participants who report they have not been affected were asked to indicate the primary reason why. Key factors sheltering this group included:

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  Customer base ­ 43 per cent.

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  Custom nature of their work ­ 21 per cent.

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  Technology level ­ 21 per cent.

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  Emphasis on service ­ 14 per cent.

PWB companies are more pessimistic about the expected effect of the Asian crisis than they were in the July survey. Seventy-three per cent of PWB companies expect to be negatively affected, up from 54 per cent in July. For the first time in the four surveys, the number of EMS companies expecting any effects from the Asian crisis decreased from 50 per cent to 41 per cent. Mid-sized companies of both types are most likely to anticipate a negative effect on earnings ­ 88 per cent of PWB, and 46.2 per cent of EMS companies.

Respondents were also asked to report if the Asian crisis would make it more likely that they would increase sourcing of certain key items from Asian suppliers. The percentage of EMS companies that report they are more likely to source PWBs from Asia increased from 20.8 per cent in the July survey to 46.4 per cent, while the percentage of PWB companies more likely to source chemicals from Asia has increased from 16.3 per cent to 17.3 per cent. The percentage of PWB companies likely to source laminate from Asia has increased from 34 per cent to 39.6 per cent.

The report says that overall effect of the Asian economic crisis on the EMS industry is expected to be between very low and low, while PWB companies are expected to experience effects in the low to moderate range.

For more information on the Effects of the Asian Economic Crisis on the US PWB and EMS Industries Survey, contact IPC Market Research Director Stephanie A. Kaplan. Tel: +1 (847) 790-5317, or E-mail StephanieKaplan@ipc.org