July 28, 2009    Volume 16, No. 13

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It Is Now Obama’s Economy: America’s Oldest Printed Circuit Board Company Closes Its Doors

By Richard A. McCormack

The oldest printed circuit board (PCB) manufacturing company in the United States has shut its doors, a casualty of failed government trade and economic policies. “We have been around for the entire growth of the computer age, but I have stopped investing in job creation in manufacturing,” says Doug Bartlett, chairman of Bartlett Manufacturing Co.

As owner of the Cary, Ill.-based manufacturing company, Bartlett was hanging on early this year to see if President Barack Obama would change course from the Bush administration’s strict adherence to free trade. It was not to be. With the potential for skyrocketing taxes that will be required to pay off the Democrats’ massive government stimulus program, which has had little impact on the U.S. electronics manufacturing sector, “I am not going to be the government’s sacrificial lamb,” Bartlett adds.

It has now become Obama’s economy.

Bartlett Manufacturing, formed in 1952, was one of only about 300 printed circuit board manufacturers left in the United States. Bartlett has watched as the U.S. printed circuit board industry has shrunk from producing more than 30 percent of global output a decade ago, to less than 8 percent in 2008. Asia now accounts for more than 80 percent of global output of PCBs, up from 33 percent 10 years ago. Last year, total revenue for the U.S. PCB industry fell to $4 billion, down from $11 billion in 2000. “The industry has been crippled beyond repair,” says Bartlett. “Our kids are going to be fluffing dogs and doing toenails while the Chinese are making leading-edge devices.”

Bartlett, a former captain in the Marines, has worked tirelessly since 2004 to change U.S. trade and economic policy. He traveled regularly to Washington as an industry spokesman to argue on behalf of domestic manufacturers. He tried to start a printed circuit board trade association made up of American producers, as opposed to the existing trade association that is dominated by foreign producers. The industry was not robust enough to support a new American trade group.

As the industrial economy remains in deep recession, the U.S. domestic manufacturing community continues to lose champions like Bartlett fighting for American jobs.

Bartlett spoke with Manufacturing & Technology News editor Richard McCormack about the fate of his company, his industry and his experience in the political arena. Here’s what he had to say:

Q: You have been coming to Washington, D.C., for years trying to alert policymakers and the public about the economic risks of losing the U.S. electronics industry. Why haven’t people paid attention?
With such a big recession, I thought that somebody would look and say, “There is a fundamental problem and we have to address it.” I figured that at some point we would figure it out and quickly correct it, but people are not making the connection between the collapse of manufacturing and the collapse of the financial system. It is not a sound bite and therefore it doesn’t get the press it needs.

Q: What is the current situation with the U.S. printed circuit board industry?
The industry is on its last legs. At a National Academies of Sciences conference on the state of the industry, [Tsuneo] Nakahara [vice chairman of Sumitomo Electric] said that if the United States doesn’t do something, then within five years the industry will be obsolete. That was four years ago and that is exactly what has happened. So where is the R&D for the industry? It doesn’t take a genius to figure out that there only are a few pockets of R&D left in the United States. You need volume production to do general R&D, so therefore 90 percent of all electronics R&D is taking place in Asia. If that is where the electronics R&D is taking place, where do you think the technology is?

Q: Why did Bartlett Manufacturing go out of business?
I looked at the numbers and I could see what was happening so I chose to close down the factory. Over the last few years there was no credible response from our government to the macroeconomic problems that we face as an industry. There was nothing that anyone in the government was willing to do to change the macroeconomic scenario. I watched as the risk versus reward equation flipped in November. I waited for the administration to take office. I waited to see what their policies were going be. By mid March I realized that it was going to be more of the same policy and possibly even worse. I decided to exit the business and redeploy my assets. I had an exit plan that I established years earlier and I was waiting to see what was going to happen.

Q: Were you too early in closing your business? In other words, do you feel you are going to miss out on the growth that will come when the recession ends?
When I held my auction on Thursday [July 16], I spoke with a lot of the owners who came through looking at the equipment. There has been a massive drop off in business. Let’s say we were running at a level of 100 based-lined from June through October of last year. In November it dropped down to 60 and stayed there with some ups and downs until May. Then it dropped down to 40. I saw the drop after the September stock market crash and immediately started hacking and blazing, cutting costs. I reviewed the business plan and was looking to see if the economy was going to experience a “V” adjustment of dropping down and then coming right back. It is a dropoff that is going to stay for a while. I was not willing to pump my personal money back into an industry that is on its deathbed.

Q: How was the auction?
It wasn’t as bad as I thought it was going to be. Ninety percent of equipment was purchased. But the values it was purchased at were incredibly low.

Q: What did you buy it for and what did you sell it for?
Of the five drilling machines that I bought for $130,000, on average they sold for $3,500. Just a year ago, they would have sold for $40,000.

Q: The global market for printed circuit boards has been robust over the past nine years, but not in the United States. Why?
There is an economic concept that the United States will give away low-technology jobs and focus on high-tech jobs. They say that the country is going to lose the low-tech circuit board industry. Well, what the average guy isn’t told is that the entire electronics industry is a high-tech industry by any measure of anything, and it is effectively gone now in the United States. The United States has 8 percent of the world production, but at least 30 percent of that is re-sold Chinese product.
When you have a situation of a weakening high-tech industry, you would think that the government would look at it and say, “This is a poster child of what’s going wrong. It needs to be saved.” But in the last six months, the industry has been crippled beyond repair.
Everyone says the future is high tech. But you can’t hold together high-tech pieces of equipment unless you have nuts and bolts, wires, circuit boards and flat screens. If all you have are a few tech components, you’re screwed because you don’t have the mass of jobs and wealth to bring it all together. We had engineers working in our factories, but those factories are now in China. The knowledge dies off and so we are going to die off. Our kids are going to be fluffing dogs and doing toenails while the Chinese are making leading-edge devices.

Q: Where do you foresee the PCB industry and America in six months or five years?
We’ll always have a few circuit board shops around — 200 nationwide — but they’ll be small mom-and-pop shops. We will buy all of our production technology from Asia. The military is one of the few markets left because it is a protected market and everyone who is left wants to build for that market. It’s the only market that the Chinese can’t take and so it’s become very aggressive. That is good for the military.

Q: Did you try to become part of DOD’s “Trusted Sources” program for American producers?
We went there and made a presentation in Columbus, Ohio. We got a standing ovation. But it was the typical thing I’ve seen quite often. You are fighting the great fight, they slap you on your back and they encourage you and then you never get a purchase order.

Q: Did the U.S. government kill the American circuit board industry?
Yes. U.S. government policies have killed many American industries. There is a march to free trade, which is okay so long as the rest of the world is playing by the same rules. But our government, our professors and our geniuses like Robert Zoellick [former U.S. Trade Representative and now president of the World Bank] — he is the worst of them all — have been on a march to a free-trade utopia. They just killed us.

Q: Are you surprised that the Obama administration has continued the same policies of the Bush and Clinton administrations?
If there is anything we have learned in Illinois it is that Chicago politicians are all the same and Barack Obama is a Chicago politician. He kept saying there was going to be a new direction. That has gone by the wayside. What might educate him is a huge unemployment rate.
I have watched as many of my friends went out of business even after they plowed all of their own money back in. They could not change the macroeconomics. Only one person can do that: the guy in the White House. Obviously, the political motivation isn’t there.

Q: What did it mean for your workers when you decided to close down.
I had spent a lot of time talking to my people about the recession, comparing money to water. I said: “Look guys, we’re going across the desert and we only have x amount of water. Don’t waste the water. Don’t waste a drop of it.” For the past two years I was talking with them weekly and in biweekly sessions about the importance of not wasting money in the business and in their personal lives. As we saw the slowdown, some people had opportunities in other areas and I suggested they take them because I knew there were going to be more layoffs. Now our people are working at McDonald’s. A lot of the senior managers looked at the industry and went into other industries. One of my assistants went back to school for health care because she said there is no future in this industry and she has another 20 years left in her career.

Q: You are one of the rare people from American industry who was concerned enough to get engaged in the political process in Washington. What was that experience like?
Financially, it was a waste of money. However, I am also one of the rare people to have been educated at the Naval Academy. I got a four-year education at the expense of the American people. I served my country in the Marine Corps, but I got paid for doing it. By getting involved, I felt that I was putting my personal money to right a wrong that I see in our country. National sacrifice was part of what we learned at the Naval Academy. We were able to get the story out. At least now a lot of people know the story about our industry.

Q: You made the case for years that the U.S. government needed to force China to stop manipulating its currency and that a domestic electronics industry was essential to assuring the future of America. Why didn’t you get any response?
Because I did not have enough money to give to their campaigns. The companies outsourcing production have PACs. They have the ability to put money into campaigns. Even when we went into see Sen. [John] Kerry’s [presidential campaign] group, the first thing [former Lehman Brothers general partner and assistant secretary at the Department of Treasury during the Clinton administration] Roger Altman asked is if we were prepared to donate $50,000 to his campaign. My mouth dropped open. I could not believe he had the guts to say it. I was stunned that he was so blatant. That was my experience in Washington. Does it mean I’ve given up on Washington? No, because I’m talking to you. There are shining stars who are trying to get the story out, but the momentum is horrendously against them.

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