Mixed Results for June’s IPC Book to Bill Ratio for the Rigid & Flex Circuit Board Market

IPC Results for June 2013

If you haven’t noticed things slowing, you may not be alive. Check your pulse because the defibrillator could be your next investment. The past month or so has seen a significant slowdown in overall activity in general. It is fortunate that PCB Solutions has no debt, solid cash flow and a very good customer base to keep business flowing. While we don’t rely on new customers and new opportunities for our monthly revenue, it is always helpful but being stable now, we can survive the slower months without any worries and our customers should feel the same level of confidence.  In a day and age where many firms are struggling for survival, PCB Solutions is simply concerned about growth and doing better tomorrow than we did the day before.

IPC Book to Bill results for June 2013 are mixed and keeping hope they state that things are positive.   The ratio ended up above parity at 1.05 but balance of the results are less than mediocre. IPC noted that “based on the market’s slow response to order growth this year, IPC has revised downward its 2013 sales forecast.”

Comparing months we see that June 2013 was worse than June 2012; this is not a good trend.  It is especially not good considering it was down 3.4 percent and that is only for shipments. Bookings, our real hopeful number of what is going to happen with next month’s shipments were down 6.1 percent as they reflect year over year results.

Even scarier are the numbers for the PCB industry’s potential for the second half of the year when you look at the year to date figure that reflects a 1.3 percent drop in bookings.  Shipments were down 4.7 percent over this time last year.

A window into the previous month’s numbers show the only positive IPC can generate with a 12 percent uptick in shipments BUT and a very large BUT at that we see that bookings were down 3.6 percent. In our mind, they are just grasping at positive straws that are not there. IT is not a positive result when shipments begin to outpace bookings and we feel it is lucky that the numbers came in at 1.05. At least, we guess, we are not below parity and sinking at any alarming rates.

The conclusion: it is just getting tougher to earn a buck out there. We see having to become more and more aggressive with marketing and sales follow up.  We are not confident at all that our government has any whit about them on how to spur the economy forward. It has been 4 years of trillions of dollars being pumped into the system with the only benefactors being the banks. Manufacturing in American seems to be picking up a little pace but the overall activity is sluggish and leans more towards extreme slowness. We simply work to be more aggressive with pricing and provide top notch service to our customers to help separate ourselves from our competition.

Now on to the Flex Circuit market

One of the shining stars, however, of the PCB industry lies in the flex market posting year on year growth in the month of June. Yes! Some good growth in a market where we are strong. Even though we are below last year’s levels, we are still showing some strong improvements. Looking at each month’s improvements, we see a good trend of chipping away at the negative margin – again, grasping for any positive straws out there.

Again we see statements from IPC grasping for anything positive. Sharon Starr, IPC director of market research noted the following:

Until this June, monthly PCB orders outpaced sales every month since January, which has produced positive book-to-bill ratios for the past six months,” said Sharon Starr, IPC director of market research.  “A turnaround in sales growth this year still seems likely, but is not happening as quickly as the leading indicators suggested. Based on the market’s unusually slow response to order growth, and the industry slowdown worldwide, we are revising our outlook for 2013 North American PCB sales growth,” she explained. “We expect to see sales strengthening in the second half of this year, resulting in 2013 sales growth of less than 1 percent.”

It is wise to not pay attention to the month over month numbers. If there are any increased there, it is a reflection of the volatility in the market and not real trends.  We need to set our focus on the year over year and year to date numbers reflecting how pcb manufacturing is progressing or in our current state digressing.

Again, our team simply focuses on consistently 1) lowering costs, 2) improving delivery, 3) adding value through service.  In addition we continue to look for new and emerging markets that will help support our customers.  An area we are growing is the design and engineering services.   A future blog post will discuss projects we have successfully completed.

 

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