Imagine a future where the PCB industry thrives in Europe. That's the vision of Nicolas Schweizer, CEO of Schweitzer Electronic, who joins me to explore the potential of the European PCB industry. We dissect the crucial need for ramping PCB production domestically and the hurdles imposed by a shortage of skilled workforce. Delving into the realm of automation and artificial intelligence, Nicolas paints a picture of an industry poised for evolution.
But what about the regulatory landscape? With Europe's regulatory environment tightening its grip, how will international investors respond? Nicolas Schweizer doesn't shy away from discussing the burden of bureaucratic red tape that can deter growth. As we inch closer to 2024, the conversation around these challenges intensifies. Get ready to unpack the complexities and potential of the European PCB industry with us. Tune in to this discussion full of insights and forward-looking perspectives.
PCB@C-Level was generously hosted at productronica 2023 by Adeon technologies - learn more at https://www.adeon.nl
Like every episode of EMS@C-Level, this one was sponsored by global inspection leader Koh Young (https://www.kohyoung.com) and Adaptable Automation Specialist Launchpad.build (https://launchpad.build).
You can see video versions of all of the EMS@C-Level pods on our YouTube playlist.
Imagine a future where the PCB industry thrives in Europe. That's the vision of Nicolas Schweizer, CEO of Schweitzer Electronic, who joins me to explore the potential of the European PCB industry. We dissect the crucial need for ramping PCB production domestically and the hurdles imposed by a shortage of skilled workforce. Delving into the realm of automation and artificial intelligence, Nicolas paints a picture of an industry poised for evolution.
But what about the regulatory landscape? With Europe's regulatory environment tightening its grip, how will international investors respond? Nicolas Schweizer doesn't shy away from discussing the burden of bureaucratic red tape that can deter growth. As we inch closer to 2024, the conversation around these challenges intensifies. Get ready to unpack the complexities and potential of the European PCB industry with us. Tune in to this discussion full of insights and forward-looking perspectives.
PCB@C-Level was generously hosted at productronica 2023 by Adeon technologies - learn more at https://www.adeon.nl
Like every episode of EMS@C-Level, this one was sponsored by global inspection leader Koh Young (https://www.kohyoung.com) and Adaptable Automation Specialist Launchpad.build (https://launchpad.build).
You can see video versions of all of the EMS@C-Level pods on our YouTube playlist.
Hello, I'm Philip Stoughton. I'm here at Productronica 2023 and I'm joined by Nikolas Schweitzer and Schweitzer Ege. Nikolas, thanks for joining me. I just wanted to, before we start, tip my hat to your father, who was just such an important man in this industry, and I enjoyed spending time with him very much. Let's talk about you and let's talk about Schweitzer. Give me a very short potted history.
Speaker 2:My name is Nikolas Schweitzer. I'm the CEO of Schweitzer Electronic. We are not a startup. Our company is 174 years old and I'm the sixth generation of the Schweitzer family who is running the company. Basically, we are today the oldest PCB manufacturer in Europe and from a size perspective, we are number three. We are mainly focusing on high-tech PCBs on the power side, on the chip embedding side, on the sensor side, and our main customer area is automotive.
Speaker 1:Yeah, I mean, it's an interesting sector, isn't it? And you know I've been in the PCB industry for decades. I remember probably about the around about 2000. It was a significantly larger industry and much of it's gone to Asia. We're seeing this interesting reshoring phenomenon generally in the electronics industry and the EMS and it's. There's a lot of government emphasis around chips, around semiconductor, but the PCB industry is very, very important. How critical do you think it is to bring back and increase the volume of PCBs manufactured in Europe?
Speaker 2:You're absolutely correct PCB is a very crucial technology as it is a transformational technology for all the goals we are setting for ourselves for the climate change and the net zero impact we want to reach. So, basically, looking into the numbers just spanning between 2000 and 2022, for sure the global market increased by around 88% when it's about volume. But when you're looking about the footprint of Europe playing in the game we are coming from, I would say, about 600 PCB manufacturers start to 170 nowadays on the one hand side and we're coming from a 20% market share, global market share to only 3% nowadays for Europe. So, looking into the locations where PCB is very, very strong, also from a resilience perspective, for sure Europe has a lot of tasks to do to regain the strengths and ideally reach again 20% of global market share.
Speaker 1:Yeah, I mean that would be, that would be. I mean that's a significant growth in Europe. It's pretty clear, I guess, that it's been all about price. And when I look at printed circuit boards and I compare them with the EMS industry, one of the challenges with PCBs is they're just really easy to ship around the world. They're relatively compact and relatively small. Do you think that's why significantly more printed circuit boards fabrication has gone offshore compared to, say, contract manufacturing?
Speaker 2:Yes, this is basically one of the reasons, I think, why Asia, why especially China, is so strong. Meanwhile, when it's about market share, when it's about size of participating in the PCB industry, it's about 55% which is produced in China, it's about 80% 85%. When it's about production volume in China and Southeast Asia and Asia, excluding Japan For sure, it's a small, it's easy to ship product. Nevertheless, I think also the question of awareness, how crucial this technology is for innovation, for development of a country, is not yet understood to an extent where it should be. So, looking into the comparison of the semiconductor, where we see, with the resilience actions, with the chips that we see in the US, that we see in Europe, that we see also in other Asian countries, europe still has a way to go, also including PCB and the EMS industry into this thought about resilience, about innovation, leadership.
Speaker 1:We can only have a successful manufacturing renaissance in Europe if we do have the whole supply chain. One of the challenges that I see with various parts of the supply chain, including semiconductor, but maybe including PCB as well is that, as we've allowed or as it's happened, that all that business has gone offshore. A lot of talent has gone with it. So if we want to gear up and aggressively grow our business in Europe, is talent available? Is there enough talent to be able to scale to meet demand if demand increases?
Speaker 2:This is a challenge in general, especially when it's about R&D. So all the PCB community nowadays and you know it better than I do is located in the Asian hemisphere or in the more in the American hemisphere. So it's also a part of our duty to really engage with young engineers with young talents and make them eager to work for the PCB industry. But at the end it's our own obligation to train them, to teach them in our companies.
Speaker 1:What about the role of automation in that? You know we look at automation in the SMT industry, in the EMS industry too maybe mitigate some of the talent shortages, but also to make us more competitive in higher labour cost regions. Is that something that's also reflected in the PCB industry?
Speaker 2:I think we came quite far. Also, our competitors came very far in Europe. Automation is one part of it. The other part of it, I think is and this is an opportunity I also see in the artificial intelligence is really to improve the software side of PCB production. For sure, we are still very hardware driven, we are very equipment driven, but incorporating more artificial intelligence into our processes to at the end, also improve quality as well. For sure, the quality level is very high in Europe and this accounts for all manufacturers. Putting the AI more into consideration in the PCB industry, as we find it already in the semiconductor industry more elaborated, it's one key part to also free resources on the engineering and on the talent side.
Speaker 1:So let's have a little dive into how we can perhaps improve a lot of the PCB industry in Europe. I guess one thing is demand it's having the EMS companies that buy from China it's the OEMs that buy from China having them understand the importance of it. How can we do that? Is it simply about communication?
Speaker 2:Basically, first, it's awareness created by communication. I think so, if everybody understands from a political level, from an industry level, from a general level, that PCB is not only not so important part of electronics, but it's a transformational technology which only enables all the targets also especially as Europe that we set us when it's about decarbonisation, when it's about the net zero act. This all for sure needs semiconductors. But, as we know, without the PCB, without the EMS industry behind there, the best chip doesn't work.
Speaker 1:Chips don't float? Yeah, absolutely, they have to be connected. You're active within the trade associations within the industry. What's their role in bringing awareness, but also actively, perhaps, lobbying and having a role within government and within legislation, and do you see them having some success?
Speaker 2:Absolutely so. Basically, I'm also the chairman of the association PCBES, which takes into consideration the PCB, the EMS and the ISS industry for Europe, for Germany, for Switzerland and for Austria, and we are the second largest trade association in Germany behind the FAUDE MR, and we are strongly working on creating awareness on a political level in Berlin, but also very strongly in Brussels and, from my perspective, we are already achieving the understanding and the awareness in this community how important PCB really is.
Speaker 1:When you look at goals and ambitions. Obviously you mentioned getting from a little bit over 2% to closer to 20%, a 10-fold increase, which would be absolutely amazing in itself. What time scales do you set yourself for that? I mean, this is a ship that sailed east over the last 20 years. How quickly can you turn it around and bring it back?
Speaker 2:So, as the tendency is still declined in the global market share because we also assume kind of growth in the next years, on the top line on the global level for sure, first we have to bring the turn around. So stop declining. This is the first target we're having. Second target is to restrain the existing PCB companies in Europe and let them grow and regaining the market share they recently have. What I would also appreciate and this accounts then for the existing companies but also for potential companies investing in Europe to create investment friendly environment. Especially for me it accounts for Germany to really pull in other companies and to convince them that investment in Germany, with all the environment, with the great innovation, with the great institutions, with the great universities, is worth doing. So I don't think I'm very frank and honest on this that this 10-fold growth can be only done by the companies existing currently in Europe. We also need the eagerness of international companies, americans or wherever they come from, to start investing in the European hemisphere.
Speaker 1:Yeah, I think that's really that that's really interesting and I think that's really important. And you know, when I look at companies like yourself with your, with your huge history, you obviously have a significant role to play, but you need young, innovative, vibrant companies as well that are going to kind of bring new ideas to the whole process. You mentioned the kind of environmental side and sustainability. When I look at shorter supply chains and I look at manufacturing for the European consumer market in Europe, one of the things that attracts me about it is the sustainability side. Is that something that you're finding customers care about and is that a card that you can play in this, in this discussion?
Speaker 2:This is a two-fold topic, I would say so. On the one hand side, for sure, our customers, and we are around 70% automotive supplier, so very, very strongly embedded in the automotive on the tier one, and on the OEM side, for sure, also in the high technology. Sustainability is a very important topic in Europe, it's a very important topic in in our customer interest and I really appreciate that this is the case. What I would appreciate is that these expectations or these needs, account for everybody around the globe, so that when we are talking about the co2 footprint of a PCB, all suppliers are measured with the with the same KPIs. This is number one. And secondly, for sure, europe has a very, very strong, yeah, eager to to regulate. So what also has to has to be done and this on a European and on on a national level is to decrease regulation and report a reporting obligations. The sense behind I understand, but the question of overwhelming regulatory environment is something which, at the end, also may bring others, international companies, away from investing in Europe.
Speaker 1:Yeah, you don't. You don't want a burden of red tape that makes it that makes it difficult to invest and difficult to grow aggressively, which is which is what we want to see. Niklas, thanks so much for your time. Really interesting topic. I think this debate is going to roll and roll as we get, as we get into 2024, but in the meantime, thanks very much. Thank you very much.