It's Only Common Sense: Saving the Military PCB Market


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Connect the Dots

Let’s connect the dots here. Dot number one: the merger of TTM and Viasystems leaves the Department of Defense with only one large qualified supplier where there were once two. Hell, if you want to go back a few years, there were once at least five or six or more, considering the ones that these guys have already swallowed: Automata, Sovereign Circuits, Chippewa Falls, to name a few, and a bunch of other mil spec shops that they swallowed on their way to their now billion-dollar run.

Ask yourself: Why are they doing this and how is this good for the industry? And more importantly, why are they being allowed by the DoD at least to do this?

Dot number two: The DoD continues to make it harder and harder for the remaining smaller military board shops to do business with them by steadily increasing the qualifications and specifications needed to be part of their qualified vendor base. They keep raising the bar, which makes it harder to even continue to be a military supplier, never mind becoming a new supplier with a desire to enter this arena.

The latest word on the street is that by the end of this year, if you want to retain your 55110 qualification, you will have to be 31032 qualified. Talk about a giant step! Talk about a huge barrier to those sub-$20 million mil-spec houses. And to add salt to that wound there are fewer D-CAS people on board than ever before, making it a much longer process to add or extend a qualification like 55110 to 31032.

Now ask yourself: where is this coming from? Who wants these specs and new qualifications? In whose interest is it really, to widen and heighten the barrier to doing business with the DOD to the point where the normal-sized board shop will not be able to play? For that answer see dot number one.

Dot number three: The price of entry, and the paperwork burden of dealing with large defense contractors such as Raytheon and Lockheed and others has become so cumbersome that even their own people don’t want to be bothered with using their normal purchasing channels, to the point that we now have an ever-increasing gray market. This allows designers and engineers to use no-touch online board services to buy their boards from completely unqualified suppliers.

So, ask yourself, why are they doing this? What purpose can this serve? For that answer, once again, please visit dot number one.

Dot number four: The large CMs are constantly trying to convince the DoD that we do not have a sufficient number of military PCB fabricators in this country to meet their needs and therefore they should be allowed to go offshore to purchase the boards that go into DoD assemblies. They also argue, as they always have, that the boards are just a commodity anyway and much too low on the supply chain to matter enough to have to be ITAR-registered or mil spec-qualified.

This time, we don’t really have to look very far to find out why the CMs would jump on this bandwagon; this has always been their M.O. They have always demanded the highest level of technology at commodity prices. After all, if the board is denigrated a commodity, they can pay peanuts for it.

Now, let’s connect those dots. First, the big guys are getting bigger and bigger by playing Pac-Man with the rest of the vendor base. Then they convince their DoD customers that they need to impose more and more qualification barriers to the existing vendor base, which will eliminate many, if not all (eventually), of their good sub-$20 million competitors, leaving them the only ones left to sell to their DoD customers. And then, since the big guys have shops all over the world, it behooves them to join ranks with their CM friends in claiming that, since there is not an adequate military PCB vendor base in this country, they just have to go offshore for the boards.

Man, once these dots are connected, it makes for a very ugly picture doesn’t it? In fact it just about wipes out the good, solid, hard-working sub-$20 million PCB shops from the vendor base all together.

These shops are being squeezed financially by having to spend more and more money on specs and qualifications to stay in the game just to keep up with the big guys. They are getting further squeezed by the gray market which is sucking away the business they should be doing. And finally, all of the profits are being squeezed out of them by the contract manufacturers.

You have to ask yourself, “How will this all end?”  And the obvious answer is, not well. Not well at all for anyone, especially the American taxpayer.

The DoD has to come to its senses. It has to wake up and start working with the sub-$20 million well qualified shops. These shops have been the backbone of the American PCB industry since its inception. It has to work with them and support them, making sure they pay prices that are fair enough for these shops to stay in business.  

In the end, all we can ask is that the DoD play fair, that the playing field is even, and that they just stick to the original rules. If they do that, our PCB industry will not only be sustained but will actually grow strong, thus creating a solid and secure vendor base able to handle all of the DoD’s PCB needs here on American soil.

So, how do we do this? How do we create a strong enough impetus to face the DoD and convinced them to start working to preserve our military vendor base instead of destroying it?

Hmmm, let me think. Is IPC still around?  Maybe they can help. Just maybe. It’s only common sense.

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