Issue link: https://iconnect007.uberflip.com/i/1392944
80 PCB007 MAGAZINE I JULY 2021 In the late '90s, the industry started to pull back. Demand dropped with the tightening economy. e supply of manufacturers out- weighed the demand, and the wars broke out. It became a consumer's market. Customers threatened to take business to other suppliers who offered discounted pricing. It was then that supplier XYZ would cave in and match the price. is is when the dominos started to fall. As with any business, there are fixed costs: building/land, utilities, insurance, and taxes. ese do not change, and in many cases some of them increase over time. Continuous pres- sure to reduce costs from the manufactur- er started a practice of taking losses, in some cases, just to keep the business running. is worked somewhat during this time as mar- gins could be made up on quick-turn or high- demand orders. e problem was that there was no lower control limit to stop the fall. is practice continued until smaller shops began to disappear, either crushed by the price-cut- ting competition or unable to keep up with the fast-changing technology with no margin to expand or upgrade. Printed circuits are the building blocks to almost everything today. Even your toast- er has one. e costs of production have not changed significantly. e same basic con- cepts still must be used to produce them. Yes, there have been efficiency enhancements and automation to lower production time, but these have also required capital investments requiring depreciation over time. e cost is fixed, yet the buyers and customers still de- mand price cutting. No one ever put the flag in the sand saying "enough." Margins con- tinued to decrease and what was a strong di- verse group of manufacturers in the Pacific Northwest no longer remains. ey are gone, stamped out or purchased by the mega-man- ufacturers. Making matters worse is the out- sourcing offshore where certain variables have been manipulated or compromised to reduce cost. e problem is that now customers do not have a vast selection of manufacturing ven- dors to choose from. e much smaller arena of manufacturers still fight for the business and still compete against the mega-manufacturers. Some find a niche and can continue to thrive, but others are finding the end to a dream. Now, throw in a pandemic and the work- force disappears, or shops are forced to close due to cases of infection. e government kicks in and helps those in need but over- looked the scenario that the help was provid- ing higher wages than minimum for the jobs that needed filling. Now the manufacturers are in trouble as they cannot find workers for their paid wage scale. Human nature is keep- ing workers away as they are financially better off staying home. How low does this bar go? Had someone kept an eye on the downward spiral the indus- try may have stayed buoyant. However, it did not happen and now margins are at a bare min- imum and mostly below healthy model limits. Since fixed costs could not be adjusted, wag- es and employee counts were the variable that had to be adjusted. e industry is no longer appealing to the college graduates as future projections are unstable and personal growth is limited in many aspects. Another economi- cal problem is now we are down to a supplier pool approaching a monopolization. is "eggs in one basket" approach is dangerous for obvi- ous reasons. If those suppliers fail or have ex- tended production interruptions, it will cause an immediate supply chain crisis. How to recover in this industry to make it stable will be a challenge. Unless mindsets and models change, this "limbo bar" will stay where it is and hopefully not go any lower. PCB007 Todd Kolmodin is VP of qual- ity for Gardien Services USA and an expert in electrical test and reliability issues. To read past columns or contact Kolmo- din, click here.