Impact on Domestic Components Production Expected:
In December 2009, Passive Component Industry Magazine conducted a survey of 9,000 email subscribers in which we asked the following question- “In 2009 PCI Magazine noted the closing or exporting of dielectric materials production away from North America, (advanced ceramics, tantalum powder and polypropylene film)- what does this mean to the future of components manufacturing in North America?” As we documented the global passive component industry for the 2009 calendar year we noted that three companies either exported or closed their dielectric materials processing in the United States. Ferro Corporation announced early in the year for example, that they would be disbanding the advanced ceramic dielectric materials business in New York and consolidate development work at their Uden facility in Holland. The other consolidation in dielectric materials processing technology took place at the Boyertown, Pennsylvania operations of Cabot Performance Materials, which was consolidated into the Cabot dielectric powder plant in Japan in 2009. Moreover, as it was announced last month- the polypropylene capacitor film extrusion operations of General Electric in Fort Edward, New York will be disbanded, making it the third loss of a dielectric materials technology platform in the United States (also as noted at press time- Panasonic will close their anode foil operations in Knoxville). The interesting aspect to this shift in capacitor technology away from the United States is that the loss of technology was not in one segment of the market, but instead impacted four separate technologies supporting capacitor production in the hemisphere- nanotechnology of ceramic powders; sodium reduction of high CV/g tantalum powders, the extrusion of polypropylene capacitor film and the development of anode foil for aluminum capacitors.
Growing, Declining Or Remaining Unchanged?
74% of respondents to the aforementioned question believe the loss of raw material engineering capabilities in North America will lead to a decline in the ability for the Americas to produce passive electronic components. 15% of respondents believe that the North American market has already settled into a sustainable model and were unsure if the current loss of materials processing capabilities would have an impact- the damage being done a long time ago; while 11% believe that North America still represents a growth market for production of passive components, attracting new materials vendors over time- due to Federal funding of new capacitor factories in South Carolina and Maine through the American Reinvestment and Recovery Act of 2009.
The Majority Of Respondents To The Survey See a Bleak Outlook For US Component Manufacturing The overwhelming number of respondents thought the loss of dielectric engineering and production capabilities in North America would in turn affect any remaining component manufacturers in the hemisphere. The similar reasoning among the majority of respondents was that lack of close communication amongst component manufacturers and raw material vendors in passive components leads to the loss of innovation and new product development. This in turn drives the business forward and makes vendors competitive on a global scale. What is worse is that there is a loss of decades of materials processing know-how that cannot be re-emulated or taught in any university. The loss of that expertise, and the loss of the proximity among manufacturer expertise and supplier expertise means that there is a loss in innovation, which impacts competitiveness, and leads to demise. One vendor summed it up by saying that the logical progression of manufacturing was for the customers to move overseas, followed by the component vendors, and then the materials vendors would not be far behind.
Some Feel The Future Remains Uncertain and May Be Even Bright
Even though the largest number of respondents noted that they thought the loss of materials processing capabilities in North America would also impact the component manufacturing sector in the hemisphere. Still others remained optimistic or were more guarded in their responses. Some believed that there was positive movement in the NAFTA market that might encourage growth in dielectric production capabilities domestically- two new polypropylene capacitor plants will open as a result of the American Reinvestment and Recovery Act of 2009 (Kemet in South Carolina, and SBE, Inc. in Vermont). Other respondents believed that the component production capabilities in North America will continue to fragment into smaller specialty vendors catering to defense, medical and oilwell electronics companies, but these vendors will continue to thrive even though their materials would be sourced offshore as long as the source of the offshore materials was a US ally. And still other respondents believed that even though component manufacturing in the USA was on the decline, that US design was still a major factor, and as long as American brands could continue to win the coveted Approved Vendor’s List it made little difference where the components were manufactured. Offshore companies felt that US manufacturers still maintained vital customer contacts, sales and distribution channels in North America and that once domestic manufacturing of components was removed completely the market would change in a way
that would really be unprecedented in the global high tech economy- a consumer of electronics with very little
environmental impact because of a lack of manufacturing.
Additional Resources: (1) Polyethylene Terephthalate (PET) Supply To The Capacitor Industry: 2007-2014 Global Market Outlook ISBN # 1-893211-82-7 (2007) (2) CAPACITOR FOIL: Global Market Outlook: 2008- 2013 ISBN # 0-929717-85-6 (2008) (3) (1) Ceramic Dielectric Materials: World Markets, Technologies & Opportunities: 2008-2013 ISBN # 0-929717-76-7 (2008) (4) TANTALUM: Global Market Outlook: 2008-2013 ISBN # 0-929717-81-3 (2008) (5) Polypropylene Supply To The Capacitor Industry: 2007-2014 Global Market Outlook ISBN # 1-893211-83-5 (2007)