Issue link: https://iconnect007.uberflip.com/i/1288481
SEPTEMBER 2020 I PCB007 MAGAZINE 53 don't know whether there are any OEMs pro- ducing their own bare boards. I'd be surprised if anybody is still doing that kind of work. Johnson: That seems to be on the horizon. The environmental liability and cost increas- es all became a burden and moved fabrica- tion overseas, for the most part. Now, we can see some large-scale shifts in the supply chain again. China is increasingly proactive about being green and very assertive about making sure that fabs are not polluting. That, along with China emerging as more of a first-world country, changes the economics of the cost structure. Rodgers: We're starting to see people looking for even lower-cost locations—not just for bare boards, but for assemblies as well. This isn't just driven by tariffs; it's also driven by the chase for lower-cost labor. We see companies going to places like Vietnam or other areas in Southeast Asia. Mexico is starting to look at- tractive again, too. In most cases, the labor costs are still higher in Mexico than in China, but the gap between those is getting smaller and smaller. Johnson: Right, one of the pillars involves la- bor costs and expenses. Then, there is exper- tise. We need to go where the expertise is. Cur- rently, that may not be in the U.S. Rodgers: That's a very good point. Again, I'm not sure how many companies are still build- ing bare boards. There might be some proto- type shops building pretty small quantities, but this is expensive equipment—lamination, drilling, and electroplating—that most people have been getting out of over the years. Johnson: There are a few new facilities in North America. One lighting manufacturer brought its board fabrication back from China by build- ing an in-house facility in New England. They built themselves a private facility, and it was so effective that they built a new one that is es- sentially lights-out, fully automated, with most of their processes in a horizontal approach. Rodgers: At those low volumes, it might make sense to produce it in-house because of the costs; these offshore factories are typically set up for high volume. If you're running a low volume business, you have your own internal capability. At that point, the costs start to look more similar; the cost-to-outsource versus the cost to go in-house. If you're doing a lot of pro- totyping, having a small facility in-house and shortening that communication loop between your design team and the production of new components can be extremely valuable and can pay for itself. Johnson: We're starting to see co-op shops over the horizon, where a handful of compa- nies may partner together to build a facility, then cost-share the operations. Rodgers: Something we haven't talked about yet is time to market. If you're in a business that needs to respond quickly to changes in your market, you need a responsive supply chain. You may not be able to afford to have your components coming on a ship all the way across the Pacific Ocean. If you're making red ones today, and your customer wants blue ones tomorrow, it may be worth it to have a respon- sive supplier onshore, like the cooperative ap- proach that you were describing. It's certainly a higher cost, but it provides the responsive- ness that you need. We shouldn't overlook the fact that sometimes it's worth it to spend more money. Johnson: It boils down to the end-to-end cost. If I'm a job shop PCB facility in the U.S., how If you're in a business that needs to respond quickly to changes in your market, you need a responsive supply chain.