ZTEST Electronics Monthly Corporate Update for December 2002
ZTEST Electronics Inc.'s (TSXVE: YZT) wholly-owned subsidiary, Permatech Electronics Corp., is an ISO 9002 certified Electronic Manufacturing Services (EMS) provider founded in 1982. Permatech's offerings include Materials Management, Printed Circuit Board (PCB) Assembly, Testing and Design services. Permatech operates from a 20,000 square foot facility in North York, Ontario, Canada.
Manufacturing Industry Activity and the EMS Sector
On January 2nd, 2003 the Institute for Supply Management, www.ism.ws/ISMReport/ROB012003.cfm , reported that economic activity in the manufacturing sector grew for the first time in four months while the overall economy grew for the 14th consecutive month. The Purchasing Managers' Index (PMI) was calculated at 54.7 percent. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting. "The manufacturing sector rebounded in December. A strong showing in New Orders drove the PMI upward, while the Production Index strengthened and helped push the PMI up by 5.5 percentage points. The question at this point is whether the manufacturing sector can continue to gather momentum during the first quarter of 2003," commented Norbert J. Ore, C.P.M. chair of the Institute for Supply Management™
As reported by press release December 30, global semiconductor sales reached $12.68 billion in November 2002, according to the latest report issued by the Semiconductor Industry Association (SIA), www.sia-online.org/pre_release.cfm?ID=251 . This represented a 1.3% sequential increase from the $12.51 billion in revenue reported in October 2002, continuing the trend that began in the fourth quarter 2001. November sales were up 19.6% from November 2001 sales of $10.60 billion. "The November sales of the global chip industry underscore the healthy recovery that has been building momentum throughout this year," stated SIA President George Scalise. "The wireless sector continues to be the strongest single market." Semiconductor sales have a material effect on the Electronics Manufacturing (EMS) sector as the Printed Circuit Boards (PCBs) used in electronics assembly are populated with semiconductors. Therefore it is typically understood that increased semiconductor chip sales will lead to higher PCB assembly activity.
According to a report issued on December 26 2002, http://www.ipc.org/html/nov02btb.htm , the U.S. Printed Circuit Board (PCB) Industry Book-to-Bill Ratio for November 2002 was 0.92. Sales billed (shipments) in November 2002 increased 1.9 percent from November 2001 and orders booked increased 4.5 percent from November 2001.Compared to 2001, bookings of PCBs are down 13.7 percent year-to-date, while shipments of PCBs are down 23.6 percent year-to-date.
Permatech Established Business
With Permatech's long operating history, it has built a core base of customers who provide a stream of consignment and turnkey assembly orders. This core customer base is well diversified in the Medical, Power, Computer, Telecommunication, Wireless, Industrial and Consumer Electronics markets, limiting therefore the company's exposure to any one industry. The charts below show on a rolling six-month basis:
The proportion of revenue generated by each market served
The proportion of revenue attributed to turnkey vs. consignment business,
New Business Development
The first of four PCB layout designs for an industrial customer was delivered during the month of December; the balance of PCBs is scheduled for delivery in January 2003. PCB layout for an instrumentation company was completed as well. Parts procurement commenced and a prototype assembly is scheduled for January.
Permatech delivered the first run of an assembled product to a new customer in the computer industry. Components placed on these boards included multiple BGA, Micro BGA and Ultra Fine Pitch packages, located on both sides of the board. Initial feedback from the customer indicated error free delivery. Both parties expect to continue the business arrangement providing for regular monthly delivery of assembled boards.
Mr. Brian Gidley, Quality Manager, has left the company due to his family relocating out of the province. The vacant position was filled from within the company, with Mr. Suren Jeyanayagam taking over the Quality Manager position effective December 1, 2002. Suren has held various manufacturing and testing positions with ZTEST since 1990. One of his main responsibilities will be the completion of the ISO9001:2000 registration during the 2003 calendar year.