The year in review.

AT the end of each year, editors feel compelled to expound on the events of the past year. Since most of you know what happened and probably have a decent idea why these things happened, I'll try to put things in context.

For many companies involved with PCBs at one level or another, 2004 was the first profitable year since 2001. Last year marked the first time many of you received bonuses since the dot-com bubble burst, and the first time others had an actual travel budget. There were people at Apex in 2004, and not just vendors. It seemed as if 2004 were a harbinger of better times.

Naturally, something had to be wrong with this picture. So 2005 was going to be the year that double booking resumed, leading to massive inventories that would force the PCB industry into another downturn like that of four years ago. But inventories stayed under control, demand for products held, and the sky didn't fall.

We did lose a few players in 2005. A handful of U.S. and European board shops or locations shut their doors this year: CircuitWise; Prestwick Circuits; Epec; Photo-circuits' facilities in Peachtree City, GA; and DDi Europe.

And some PCB designers who had held onto dwindling positions for years were finally let go. But most laid-off designers found work before too long, according to our salary survey.

Overall, 2005 was a growth year, what Walt Custer describes as "modest global growth." Custer sees 2006 shaping up to be a flat year, with telecom growth accelerating and board prices and margins dropping. Speaking of margins, Dow, Dupont, and Rohm and Haas have raised prices in the wake of Hurricane Katrina, and Isola is considering a hike. Too bad fabricators can't raise the prices on their boards.

The Restrictions of Hazardous Substances saga continued, and no, it's not going away. We learned that most of the countries of the European Union missed the deadlines for ratifying their own RoHS regulations. Companies importing product into the EU on July 1, 2006 are required to understand the intricacies of RoHS or risk mammoth fines, but the regs are still being revised. Good luck trying to get a straight answer from the EU about one of the finer points of RoHS. If you're unsure about your company's compliance, don't worry. There will be plenty of lawsuits to learn from after the July 1 deadline.

Outsourcing continued apace. PCD&M contributing editor Dr. Hayao Nakahara found that Taiwanese companies operating in China accounted for 35% of China's PCB production in 2004, and he expects that figure to reach 50% before too long. Chinese companies accounted for just under 10% of China's total board production for 2004, matching the total for U.S. companies in China. Counting Hong Kong separately, there is only one Chinese company in Nakahara's list of the top 20 board makers in China for 2004, and an American company, Viasystems, is No. 1.

The long-feared migration of Chinese equipment into the U.S. didn't materialize. Equipment makers I spoke with have heard all sorts of stories about China copying Western machines--particularly wave soldering baths--but they don't appear to be selling in the U.S. The cost of entry into the U.S. market, and the liability risk, may be too steep.

Say what you will about the U.S. economy, but it's more resilient than anyone could imagine. We discovered that the U.S. could withstand hurricanes knocking out oil rigs and refineries, and displacing hundreds of thousands of people. Gas prices shot up, then back down again, almost to pre-Katrina levels in Atlanta. What sort of unemployment hit did Katrina cause? A loss of 35,000 jobs, not the quarter million that some analysts predicted.

The U.S. and China are the world's leading economic engines. By the time you read this, the U.S. economy will have chalked up 10 consecutive quarters of growth and be working on the eleventh. Keep that in mind.

Next year will be, well, eventful, especially in the lead-free arena. Keep reading PCD&M's iNEMI column "Countdown to Lead-Free," which continues through the July RoHS deadline.

Now go take a vacation, and forget about circuit boards for a while. See you next year.