An Update on Walt Custer’s EIPC Business Outlook Webinar

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But Friedrichkeit did have some good news for the automotive sector. In August, new registrations of electric cars in Germany had risen by 308% to 33,203 vehicles, representing a record 13.2% share of the total market. Plug-in hybrids had shown impressive growth in August, up by 448% to 17,095 units. In the first eight months of 2020, new registrations of electric cars had amounted to 163,139, corresponding to 9.2% of all new passenger car registrations.

Optimism was growing among German exporters, and the upturn in industrial production in many important customer countries would benefit the German export industry. Manufacturers of electrical equipment expected their exports to grow in the fourth quarter, as did the automotive industry. In contrast, the mechanical engineering sector did not expect any major increase.

In Friedrichkeit’s review of the fortunes of the European PCB manufacturing industry, he observed that in the first quarter of 2020, manufacturers in the Germany, Austria, and Switzerland region had reported a 7.5% drop in sales compared with 2019, and in the second quarter German manufacturers had seen a 17.4% drop in sales compared with the equivalent period in 2019. German PCB production had shrunk about 10.4% to 752 million euros in 2019, following 839 million euros in 2018 and 788 million euros in 2017. For the full year of 2020, an overall sales loss of -18% for Germany could be assumed, corresponding to about 620 million euros. Leading German manufacturers were reducing their staff.

Thanks to its global diversification in the high-end PCB sector AT&S was one of the few PCB manufacturers to come through the crisis relatively well. Compared with 2019, its second-quarter turnover had grown 11.3%.  

Friedrichkeit’s outlook for 2020–2021 was that despite lowered economic forecasts, the global megatrends in the electronics industry as a whole would remain—particularly due to ongoing digitization, the new 5G mobile phone standard, and the rapidly growing data volume.

Custer echoed the concerns highlighted by Gasch and Friedrichkeit, commenting that the problems were unlikely to go away overnight and estimating that the overall European PCB industry could be down 10–13% for the full-year 2020. Supply chains had gotten shaken up, and people were starting to look for sources other than China for low-cost manufacturing. Political decisions had muddied the water, and the automobile industry was in a state of flux, although the rapid progress in the electric car business was good news.  

Changing subjects, he looked at world figures for the supply side of the PCB industry: process equipment, materials, and laminates. In the second quarter of 2020, process equipment sales had increased by about 2%, which was remarkably good considering the circumstances. Materials suppliers’ sales had fallen about 16%, and laminate sales had increased by about 1%. In his world model, PCB shipments per month were slightly up, mainly due to the seasonal build-up in Asia, but Europe was “down there with the rest.”

World Bank forecasts for GDP growth predicted that Europe would be down 9% for 2020 then increase by 4.5% in 2021. Restating the concerns about the 2020 economy he had listed at the beginning of his presentation, the global manufacturing decline had been made worse by coronavirus-driven shutdowns; automotive and aerospace production had been hit particularly hard; service and travel sectors remained in major recession; tariff, trade, and Brexit issues continued; and that geopolitical concerns remained very significant. Once again, Custer made it clear that business conditions were improving, manufacturing was recovering, and industrial production was currently at a much better level than it had been a couple of months previously. And it was encouraging that the PMI for Eurozone manufacturing was currently indicating positive growth.

Morgan thanked Custer for his most informative presentation and reminded the audience that, after 50 years in the industry and many years as a director of the EIPC, Walt was retiring from active service and phasing-over the lead of his consultancy to his son Jon.

I also want to add my personal thanks to Walt for all of the wisdom and the wealth of data and market analysis he has provided over all the many years. I have been privileged to be a member of your audience. Enjoy your retirement!



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