DKN Research, www.dknresearch.com
Sanmina Corporation announced it will close one of their printed circuit board operations in Owego, New York. Hundreds of employees were told they would lose their jobs. Sanmina Corporation is the largest EMS company in the U.S., and this plant could be the last volume manufacturer in the States.
During the 1990’s, Internet Technology was ramping up and the computer industry, telecommunication industry and EMS industry were booming. Printed circuit manufacturers were benefactors of this influx of business and most of them expensed millions in capital expenditures to increase their manufacturing capacities. Major electronics companies increased their in-house manufacturing of printed circuit boards and assembling, and hired engineers and operators for this production. Some companies could not wait to grow internally, and acquired many firms through mergers and acquisitions. Many EMS companies quickly grew by purchasing printed circuit board manufacturing facilities. Outsourcing was the norm for several electronics companies that decided to sell their manufacturing facilities at inflated prices. The spike in business was dramatic, and the electronics manufacturing structure changed overnight. Sanmina became the largest manufacturer of printed circuit boards in the U.S.
The business environment changed drastically in 2001 with collapse of the IT bubble. Early on in the recession, many companies were able to weather the storm; however, market conditions worsened, and purchasing manufacturing facilities lost its luster. In an effort to reduce labor costs, companies moved their manufacturing facilities to China. For some it was too late, their only option was to close plants and liquidate buildings and equipment at rock bottom prices. The printed circuit board industry in the U.S. lost more than one hundred thousand jobs in five years.
At its peak, Sanmina operated ten circuit board manufacturing facilities in New England and New York with over ten thousands employees. All but the Owego Plant closed during the early 2000s. The Owego Plant survived all these years, but production continues to shrink year over year.
I am saddened to lose business colleagues from the industry. Over two hundred circuit board manufacturing firms remain in the U.S., unfortunately they are prototype shops or small volume manufacturers. The glaring problem with these smaller manufacturers is a lack of an engineering staff. Their R&D capabilities are not equal with their competitors. The large circuit board manufacturers and in-house manufacturers for major electronics companies retained their R&D capabilities. It’s unlikely to expect any significant progresses for new technologies without the existence of these large and well-funded companies. Small companies have to develop new leading technologies using their own limited resources. Not impossible, but a daily grind for most of them.