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26 SMT Magazine • December 2014 FEATurE ket for PCBs is estimated to be about $1.05– $1.23 billion, with approximately one-third being sourced from overseas vendors, leaving about $670–$800 million produced domesti- cally. Based on these industry estimates, we can surmise that the TTM/Viasystems combination now accounts for approximately 46– 55% of that production basis. For purposes of this discus- sion, we'll put aside obvious conflicts of national security and focus on the strictly com- mercial issue of supply chain security. A simple financial analy- sis shows that there should be some concern for the long term. Both companies have posted losses in the previous 12 months' SEC filings, and now post a combined debt- load of over $1.2 billion. (Of course, a refinancing of the Vi- asystems debt should reduce interest expense substantially from the current ~$44 million annual expense.) However, unless operations are modi- fied to increase operating re- sults substantially, this com- bination warrants monitoring from a supply chain security standpoint. Other markets At least the military users have numbers to go over. Domestic suppliers for the automotive and telecommunications markets rarely show up on the radar anymore. In fact, we are down to only three TS16949 Automotive Production- certified manufacturers in North America, with a combined capacity to produce perhaps only 5–10% of estimated North American usage, and that's with purging a good percentage of their current customer base. The data can be cross-sectioned in another direction to look at capacity by capability. The majority of remaining PCB manufacturers are only capable of producing standard 2–6 layer technologies. Deep gaps now exist for simpler capabilities such as carbon printing and high- volume single- and double-sided boards. Vol- ume capabilities are also limited for higher technologies that include blind/buried vias, RF/ microwave, and higher layer-count PCBs. While volume production may not jibe with North American manufacturing, we do need to have backup for overseas production issues and surges in demand. In a nutshell, while the data is more detailed regard- ing the supply to the military market, all end-users are now at a greater risk for supply chain disruption than ever before. What can be done? I propose that the same free-market system that brought our industry down will help bring strength back to the industry. End-users are now more discerning about which companies can enter their supply chain, even to the point of performing fi- nancial analysis on the long- term health of each supplier. This approach only calcu- lates the safety of the existing supply chain. Some end-users may find that the existing sup- ply chain participants collectively do not come close to offering enough capacity to insure some amount of safety. Taking anoth- er lesson from Skynet, the solution may lie back in time. In our case, we need to pull a term from the 1990s: strategic supplier development. Strategic Supplier development My personal experience is from the automo- tive industry, but this practice has been used across almost all industries at some point or an- other. The premise is that in order to increase supply chain security and lower cost, you must increase supply. To do this, you need to grow your own supply chain given the current state of the industry. So, let's come up with a plan. OUTLOOK FOr 2015 ANd beYONd: A SUPPLY cHAIN PerSPecTIve continues The data can be cross-sectioned in another direction to look at capacity by capability. The majority of remaining PCB manufacturers are only capable of producing standard 2–6 layer technologies. Deep gaps now exist for simpler capabilities such as carbon printing and high-volume single- and double-sided boards. " "