Laminate Companies: On the Move

It took until the second business day of the new year for the chips to start falling in the US printed circuit laminate industry.  On the same day, Isola changed hands and Park Electrochemical announced it was putting its PCB unit up for sale.

As the East Coast braced for a winter blizzard of epic proportions, Park Electrochemical sent a cold shiver down the spines of more than a few industry observers with its announcement of a “strategic evaluation” of its core printed circuit materials business, one that could result in a sale.

Park has been paring its PCB operations over the past few years amid falling revenues and tighter margins. Said revenues have been falling despite a rebound in the overall PCB market: Even as aerospace revenues have grown, overall Park sales have fallen year-over-year in 10 of the past 11 quarters, more than half the time by double digits.

Although it generates most of its revenue from the PCB materials unit, sources indicate the firm sees more upside in its aerospace materials division, which isn’t as susceptible to the commodity pricing pressures of board-level laminate. The sale or closure of the division could further disrupt the North America supply chain, however.

Park’s long history is heavily intertwined with that of the North American PCB industry, and one of the last remaining “family” firms. Cofounded in 1954 by Jerry Shore, his son Brian is now CEO and grandson Ben a senior vice president. Its sale, whenever that day comes, will truly mark the end of an era.

Meanwhile, in Arizona, Isola completed the transfer of its equity ownership to an investment group led by Cerberus Capital Management. This deal was not a surprise: Isola had reportedly been trying to restructure a debt load of more than half-a-billion dollars since last summer.

Isola was primarily owned by the investment firms TPG Capital and Oaktree Capital Group. It’s unclear at present how the stakes in the company are now divided. No doubt Isola won’t be one of the bidders for Park, however.

Couple this with the changes at Arlon over the past two years, and the US laminate industry continues to be in flux. Many of the other major players appear stable: Kingboard, Shengyi Technology, Nanya, Panasonic, Ventec (which merged with TMT in 2016). Among US-based vendors, Rogers’ position at the high-end has enabled it to remain financially sound. It may be the only one.

Demand for lower-tech materials isn’t enough to sustain footprints in higher-cost markets. M&A can result in stronger, more viable companies. Let’s hope that the future for Park (or whomever buys it) and Isola are brighter than the present, as the North American supply chain depends in large part on their success.

Jan. 5 update: Investment bank Needham & Co. says the Electronics unit could bring $50 million to $80 million in a sale.

Isola’s IPO

Isola is going public.

No big surprise there, except for 1) it is about six years later than I would have first thought and 2) November 2011 is not exactly the peak of the IPO craze.

Although I have known Ray Sharpe, Isola’s CEO, since his days at Alpha Metals (almost two decades ago), I haven’t yet spoken to him about the decision. That said, I would guess that Isola feels the next 12 months could be rocky. The company has blown the doors off so far in 2011, and perhaps they think they should strike while that iron is hot.

Moreover, if 2012 sinks, then they might need the cash from the IPO to help cover the downturn. I can’t see TPG wanting to put more of its own capital in.

Isola was the largest laminate maker to be privately held. This is a big story.

Are You Living in a ‘Material’ World?

When discussing RF/MW PCBs, starting with base materials seems like a logical place to start. However, the topic of advanced circuit materials is … well … complicated, especially for a single blog post. I’m sure this is obvious to you, but it took me the better part of this week to come to this conclusion with the help of Dale Doyle of Rogers Corp. and Denis Boulanger of Ventec. (Thank you both for your help, and graciousness!) In the end, I have resolved to leave the “heavy lifting” to the experts. Rogers, Taconic, Arlon, and Isola all have information-rich websites and employ amazing professionals like Dale and Denis who are invaluable resources (as are certain industry blogs).

Nevertheless, I did discover that I have a thing or two to contribute when it comes to this subject, as it is related to printed circuit boards.

There are a wide variety of high performing substrates on the market ideally suited for RF/MW applications. At Transline, we use all of them — because you specify them on your blueprints. In fact, we stock almost every part number of Rogers material, and many of Taconic and Arlon and a few Isola. We do this to shorten lead times and because approximately 60% of our business is in the RF/MW industries. Due to our fluency with these materials, I feel qualified to give you a snap shot of what happens after your order hits our shop floor.

First off, RF/MW materials act NOTHING like FR-4 materials in our manufacturing process! They don’t even behave like each other or one part number to another, or one material supplier to another. That is because they are all made differently and have unique compositions: Teflon, ceramic, duroid, PBD, hybrid mixes, and so on. Further, some are reinforced, some aren’t. Some are reinforced with crushed fiberglass, some with woven fiberglass. The highest-performing materials, with no reinforcement, can have dimensional stability issues so severe that they make your board fabricator want to start parking cars for a living.

A capable, qualified RF/MW PCB manufacturer must be a virtual guru when it comes to materials. They must be experts at knowing how each substrate brand, each composition, each part number, at each copper weight and thickness responds to … (taking a big breath) … etchant, plating chemicals, heat, lamination, moisture, and a whole host of processes met in fabrication. These laminates can be moody and fragile … nothing like good old predictable, robust FR-4. So, just as a good RF/MW engineer brings some art and magic to the science of their design process, so it is with the board manufacturer.

Why is this important to know? Because many an excellent PCB fabricator has made the innocent, though faulty, assumption that because they can make extremely complex boards with FR-4, that this RF stuff will be a cake walk. They may have even enjoyed success with some RF boards made on a specific material, but unable to succeed on another. (Shortly thereafter is when you get that embarrassed phone call informing you that they can’t make your boards after all.)

What I am proposing here is that RF/MW PCB manufacturing is a specialty, just as RF/MW engineering is a specialty within the general discipline of electrical engineering. Far too many PCB suppliers and engineers appear to lack this awareness. Why do I believe this? Because I work with RF engineers daily who have the scars to prove it! I believe this because after having 16 years of experience working with very complex FR-4 boards, and a one year working with RF/MW boards–I still feel like a rookie when it comes to RF boards. I also hear evidence from materials suppliers and buyers. I hear it from engineers on LinkedIn. It is for these reasons that I was compelled to create this blog.

So, here are a few possible solutions I hope may be helpful:

When you evaluate a new RF/MW board supplier, consider asking what percentage of their business is RF/MW, and how long they have been doing RF/MW PCBs? Which materials are they accustomed to working with? Ask questions about their quality and test records that verify their ability to successfully hold the tough impedance tolerances you may expect. Ask for RF/MW customer references. Ask your substrate rep for recommendations — in some ways, I think they have the best seat in the house, often offering some much-needed objectivity.

My advice is this: Don’t rush, headlong, into a relationship with a new supplier because they can save you 10%, because by doing so they may, unwittingly, cost you far more — like the loss of an important customer. Think more along the line of long courtship and marriage, rather than one-night stand in Vegas (a tall order when we are all so price driven!). Finally, look and listen for signs of true expertise. Look for that rare mix of knowledge, skill and experience mingled together with a twist of art and magic.

Blogs are designed for dialogue, so please offer your feedback and comments. If you have more ideas or input on this topic, please share it. We have much to learn from one another and I look forward to hearing from you!

Best wishes,

Productronica Wrap Up

We’re down to the last hour of Productronica. All in all, it was a better-than-expected show, modest by historical standards but strong compared to everything else this year. Perhaps more important, after a year of malaise, there is a noticeable improvement in the general outlook for 2010. The optimists far outnumbered the pessimists this week.

Time was, Productronica was equal parts assembly and fabrication. No more. While assembly commands four-plus halls, the fab side has been reduced to a single hall. On the fabrication side, laminate makers Isola, Arlon, Kingboard, Ventec and others were on hand, many in booths more in tune with the current market conditions and expectations for the show. Precious little equipment was being shown. Gone are the days when visitors could see 40 to 60 ft. plating lines in action.

David Rund, president of Taiyo America, called the show “excellent,” adding that with 80% market share in the US, Europe was the next big market for the soldermask supplier to target. He added that many attendees appeared concerned about the supply chain, and were attempting to assess their supplier’s financial viability before ordering product.

I did see a few sales were made. Teknek sold a CM8 clean machine to Graphic. David Westwood will become GM of Teknek US and, with marketing manager (and wife) Jenni Westwood, will be moving to Charlotte, North Carolina, to launch the company’s operations.

LPKF was drawing a crowd to gawk at the sharp BMW motorcycle on display, a vehicle (get it?) to hightlight LPKF’s micromachining and LDS laser process that the automaker uses in a number of its products, mostly for steering control boards.

Holmuller is quickly coalescing with parent company Rena. It was a little odd not seeing Joe Kresky there, however.

Electrolube introduced some 13 products this week, most of which were non-VOC flavors of conformal coatings. Customer demand is driving its push into that technology, Karen Harrison said.

Kodak rolled out Accumax, a new red-sensitive film. The company agreed that not many visitors were from outside Europe.

Staff I spoke with at Ventec, Isola and others remarked that the show was smaller than in the past.

Rogers called the show “smaller than usual, but not too bad,” estimating perhaps 20% of the attendees they saw were from outside Europe. Interestingly enough, the attendees were almost all PCB manufacturers, not the OEM designers the company typically targets. John Hendricks says it could be because the visitors want to see the company’s tech support staff, and because they are now offering more high temperature products that would appeal to fabricators. The company is ending its polyimide lines because, as Hendricks told me, that is “a dogfight we don’t want to be in.”

Meanwhile, Arlon was showing EP-2, its enhanced polyimide for high-speed digital applications, which features a Tg of 250®C, lower moisture absorption and lower electrical loss.


Saw old friend Hans Friedrichkeit, the longtime Photo Print PCB maven, now with PCB-Network. He’s also a board member for the Productronica show.