As we start preparing our companies for a new year; 2019 is just around the corner, and smart companies are already deep into their strategic planning for the new year. It is important that we look at all trends that 2019 will bring and develop our strategies around these trends. If you’re not already planning for the new year, then get with it. It’s October for heaven’s sake and times a wasting!
Looking into that proverbial crystal ball, here are six game changing trends that are going to make 2019 a rocking year for our industry.
- Tariffs, oh yes, those tariffs are here, and it looks like they are real and they’re spectacular in the sense that they will, heck they are already, changing the way we are being forced to adapt to them. No matter what side of the political spectrum you are on, you are going to be affected by these tariffs. Ten percent now and twenty five percent at the beginning of the year. We are already seeing a run towards non-Chinese Asian companies for our PCBs. There is serious renewed interest in PCB shops located in Taiwan, Korea, Vietnam and India for starters. American companies with huge offshore PCB buys are heading over to these countries as fast as the airlines will carry them.
- PCB shops in the US will see more business. Although we no longer have the infrastructure in this country to handle the millions, nay billions of dollars that Chinese shops build for our American companies, there will be a definite trickle-down affect that will send more business to our own shops here in this country.
- Contract manufacturers are going to be hit the hardest by the tariff. Theses shops buy everything, not just boards. When you consider that just about everything they buy is mostly from China, look for their prices to go up accordingly. The companies I talk to are already feeling the pain of increased prices for everything from components to plastic molded parts to, well you get the point. These companies are already dealing with paper-thin margins and now that paper will look more like onion skin than normal printer paper.
- The Chinese are coming. Yes, for the past eighteen months we have seen a trend where the Chinese companies want their own presence in the United States. The are looking to build sales teams here, they are looking to buy existing PCB companies. They have been working on coming direct instead of through brokers and now with the tariffs in place this is more evident than ever. I am not sure how successful they are going to be in this new xenophobic world order, that remains to be seen.
- Mexico rising. While all of this has been going on, Mexico has become more important to our industry than ever before. There are more contract manufacturers below the border than ever before and they are all doing very well thank you. They will continue to thrive and be an influence on our economy for a number of reasons, not the least being that one can get all of the advantages of selling to North America without all of the hassles of dealing with the United States. Look for those Mexican contract manufacturers to make it that much harder for our American CMs to compete and yes, look for that competition to get worse instead if better in the next few years.
- High tech rules: As we have already seen the trend towards innovative technology from our customers will continue to grow as companies like Blue Horizon, and SpaceX and many other tech companies touch the sky with new and innovative products demanding equally high-tech PCBs that stretch the boundaries of PCB physics. We are already seeing truly important and vital partnerships being created between the PCB builders and their high-tech customers, look for this to increase in the next few years. This will put those shops who have invested in the future in a very good place going forward.
And finally, in the spirit of under promise and over deliver, here is one more
- The competition among CMs is going to get more intense as more of them strive to get their name out there in the market place. For many years CMs were able to get away with very little sales and marketing as the business just basically came to them. Now in this new age of competition the smart ones are already out there developing marketing plans and building sales forces to make sure that they are grabbing their piece of the market.
Depending on how you look at the world’s proverbial glass as half-empty of half-full, and I always prefer a half-full glass these trends can be parlayed into a successful strategy for 2019. Every trend, from looking for alternative Asian PCB partners, to doing more R&D in U.S. shops, to CM’s getting involved in more marketing bode well for a thriving business atmosphere for years to come. As always when things are tough the tough get going and once again the good companies will do pretty well, and the great companies will thrive. It’s only common sense.