EIPC Letter: Add Value to PCB Fabricators’ Service Capabilities
A recent EIPC initiative, offering guidance on the successful sourcing of PCBs in China, has prompted certain members to seek clarification of EIPC’s objectives in taking this action.
In this letter, we would like to explain why the EIPC Board of Directors has approved these activities. In addition, we would like to help PCB fabricators to gain a better understanding of how the total supply chain for PCBs to Europe works and how PCB fabricators may get involved in the trading business by adding high value when buying PCBs in China.
We would like to provide some background information to explain why this activity has been established, and why we at EIPC believe this is a necessary activity to help PCB fabricators in Europe to expand their businesses.
The requirements of the European assembly companies (OEMs and EMS) related to the PCB industry are the following:
- Reliable business partners;
- High-quality PCBs at low cost;
- To offer the total supply chain from prototypes, short series and large quantities;
- Short delivery service;
- Up to date know-how; and
- The latest manufacturing technology.
Based on these requirements, the European PCB industry is adapting different business models:
- Production of prototypes and large production in Europe only;
- Production of boards with proprietary knowledge;
- To manufacture in Europe what is more cost-effective locally and using resources in Asia when it makes business sense;
- Production in Europe, additional purchasing of low cost PCBs in Asia; and
- Production of prototypes and small series in Europe, large series in Asia with partners or in owned companies.
Let us look at some of the facts of how the European assembly companies (OEMs and EMS) are sourcing their PCBs.
Facts:
- The total demand for bareboard PCBs has not decreased over the last nine years.
- Less than 50% are fabricated in Europe.
- Almost 50% of PCBs are coming from Asia (mainly from China).
- A small part of this business is managed by many large and small European PCB fabricators. In some cases, this amount is higher than local PCB production
- Another small part is managed directly by Chinese PCB fabricators themselves.
- The largest part, however, is managed by agents who do not add value to the supply chain in supplying PCBs to the assemblers. (So called “non added value agents.”)
- Some agents have their own QC departments in China and can add value.
- “Non added value agents” are receiving between 18 and 25% commission on jobs sold to Europe (or to the USA).
- Many OEMs who sell equipment to China need a certain amount of “local China content” in the exported products. The PCB is a product that can fulfill this requirement (e.g. in the automotive industry).
- BOSCH began this process many years ago at the EIPC/IPC conference in Berlin, Germany.
- In the case of complaints, “non added value agents” send the complaint to the fabricator in China with the comment, “Please handle.”
- In many cases, this action takes too long to effectively help the assembly companies.
- If European PCB fabricators were part of the supply chain the quality management could be handled in a very different form.
- To provide the required knowledge base so that PCB fabricators are in a position to take PCB business away from “non-added-value agents.”
- To help the PCB fabrication industry in Europe understand the supply chain to European assemblers.
- To understand how to differentiate between what is offered to the assembler by “non-added-value agents” and what potential value the European PCB fabricator may add to the supply chain.
- To minimise the risks when buying PCBs as an agent for assembly companies in Europe.
- To learn how to establish a supply chain and get business from “nonadded- value agents.”
- To help EIPC member PCB fabricators to successfully expand their businesses.
We believe that this knowledge could help companies to better understand their strengths and to learn how to successfully win business from “non added value agents.”
We hope that you understand our motivation and that it is the intention of the EIPC to bring the European PCB fabricator back into the driving seat in delivering PCBs to European Assemblers.
Related posts:
