Industrial Management: Manufacturing
The Cinderella of Circuit Boards
Pioneering Dynacircuits is emerging as a star
When Dynacircuits LLC cut the ribbon last fall on its new printed-circuit-board factory just south of Chicago's O'Hare International Airport, it was a triumph of will for an unlikely pair of executives. Each had struggled alone to pull off a risky vision. Together, they may have hit the big time.
Celebrating the end of a long turnaround process was Richard P. Golden, CEO of Dynacircuits in Franklin Park, Ill. And he had good reason to rejoice: His little company is pioneering a breakthrough in circuit-board production--new technology that he predicts will double Dynacircuits' revenues this year, to some $45 million. And that's just the beginning of his new assault on the $9.3 billion U.S. market.
Also smiling was Daniel H. Leever, CEO of MacDermid Inc., a $382 million maker of specialty chemicals in Waterbury, Conn. His company developed the breakthrough technology, called ViaTek, and the new Dynacircuits plant capped years of searching for a suitable U.S. partner.
Printed circuit boards are those slabs of plastic riddled with metal-rimmed holes. Various chips get plugged into the holes to create the electronics backbones for all manner of products, from microwave ovens to jet-engine controls. Traditionally, the holes--or vias, in industry jargon--have been lined with copper that connects with the copper circuits sandwiched in the plastic. While copper is an excellent conductor, it is applied by electroplating, an environmentally disruptive process that soaks up lots of electricity and generates rivers of noxious chemical wastes.
Responding to both environmental and regulatory pressures, MacDermid in 1993 developed ViaTek, an "electroless" method for printing circuits and lining holes that uses nickel instead of copper. No electricity is needed for plating, and the environmental assault is drastically reduced. Circuit-board makers in green-friendly Europe snapped up the process. But MacDermid had trouble finding a U.S. taker.AUTOMATION BINGE. Then, in November, 1998, Leever dropped in to see Golden. Bingo. It was a meeting made in manufacturing heaven. Both CEOs are staunch advocates of total quality and factory automation. In fact, Dynacircuits in 1993 became the first circuit-board company to win certification under both the ISO 9000 quality standard, which is overseen by the International Standards Organization in Geneva, and the rigorous QS 9000 standard laid down by Detroit's Big Three.
Equally important, Golden has been on an automation binge since taking over Dynacircuits in 1990. The company was then struggling for survival, losing $2 million a year on revenues of $10 million. Despite the red ink, Golden quickly plowed $170,000 into automation projects. By late 1995, the company had an automated production line capable of turning out boards with printed circuits on both sides. That helped the company turn the corner and post a 1995 profit of $500,000. And thanks to its quality efforts, it also managed to attract an august list of new customers, including Motorola, Lockheed Martin, and Ford. "If I hadn't come up with superior technology and a better way of doing it, we would have folded," recalls Golden. "You've got to take risk regardless of size."
Leever was so impressed that he agreed to lend Dynacircuits $9 million--almost half of the $21 million needed to launch the ViaTek process. "The technology requires a very significant level of automation," explains Leever, plus a firm commitment to quality. A dozen candidates had previously been evaluated and rejected, because they were wary of the up-front investment. "In almost all cases, they wanted to make compromises we felt would hurt the quality of the end product," he recalls.
Hitching up with a small, cash-strapped company was a gamble, Leever admits. "But we had confidence that because of their difficulties, they had greater incentive to make this work." Most important, Leever saw Golden as "very entrepreneurial, very prepared to throw out the rule book and start all over again."ATTRACTIVE COSTS. The bet appears to be paying off. Dynacircuits has emerged as the Cinderella of the circuit-board business. After visiting the new factory, customers sing its praises. "I've never seen that degree of automation," says customer William Lach, manager of electrical commodity procurement at Yazaki North America Inc., a manufacturer of automotive power-distribution systems. To David J. Anderson, staff scientist at Motorola's Automotive Industrial & Electronics Group, cost savings are the main attraction. "Their technology doesn't use electricity, it's simple, uses less floor space, and makes the selling price less," he notes. Dynacircuits charges less than 8 cents per square inch of printed circuit board, compared with the U.S. average of more than 9 cents.
Production takes place in a tidy, off-white shop. Three robotic arms handle everything--dunking the boards in chemical baths, perforating them, then placing them on a conveyor. A single worker monitors the whole show. Defects are now 2%, down from 3%, and by yearend they'll be trimmed to 0.5%, says Golden. And the ViaTek line churns out 220 boards an hour, double the output of Dynacircuits' best previous line.
Golden is so pumped up that a second ViaTek factory is already on the drawing board. It will be built in Mexico. As for MacDermid, things are looking so good for ViaTek that Charles A. LoCastro, a specialty chemicals analyst at Donaldson Lufkin Jenrette Inc., figures the company stands to rake in more than $200 million from sales of chemicals for the new process. Not a bad return on a $9 million loan.By Ann Therese Palmer in Chicago