Business for semiconductor manufacturers rebounds

By NOELLE DINANT
Essex County Newspapers

The region’s economy looks strong into the coming year, based on the advance orders semiconductor manufacturers are logging.

The North Shore is a mini-Silicon Valley, rising and falling with orders for the tiny devices that control computer circuits. Along Route 128, many companies either make semiconductor parts or support the companies that do.

"There's a trickle-down effect," said Randolph Jezowski, owner of Ramco, a contract machine shop in Beverly providing precision machine parts to local semiconductor parts manufacturers.

The semiconductor business slumped along with the Asian market in 1997 and 1998. Many companies here make the machinery for the semiconductors that are built in Asia.

"Last fall, it was terrible," Jezowski said of Asian businesses. "They canceled orders. I had big backlogs back then and they were canceled."

Now that Asia's market is rebounding from its several-year decline, advance order numbers are back up to four to six months for most area manufacturers.

State Department of Economic Development officials say the advance orders bode well for the future of the economy.

"Advance orders are an excellent way to gauge the strength of the economy because they prove that businesses are thriving, not just in the short term, but in the long term as well," said Candice Perodeau, spokeswoman for the department, which oversees five agencies including one that helps manufacturing companies expand.

Robert Bullivant, manager of human resources for Varian Ion Implant Systems in Gloucester, said the company is booking six months in advance.

"It's such a variable market that we are in," Bullivant said. However, "our work orders are building."

Varian manufactures ion implanters, the $2 million machines that are used to manufacture semiconductors. They take about eight weeks to build. Varian employs about 1,000 and has openings for 235 more, Bullivant said.

Ramco, in Beverly, has three or four months' worth of orders ahead of it.

"That's a good backlog," Jezowski said. "We've had periods where we only had three weeks backlog," particularly the fall of 1998.

Started in 1983, Ramco is a family-owned business with 28 employees. The company focuses on local contracts since the larger orders go to plants in Mexico and China, Jezowski said.

"We don't see tens of thousands of things anymore," Jezowski said. "We see 50 and 100, or sometimes only one," such as prototype work.

"Large corporations are always looking to cut their costs," he said. "They can get the cheaper costs through cheaper labor overseas. And the skill requirements aren't as great for the larger orders."

Eaton Corp.'s Semiconductor Equipment Division in Beverly declined to release the number of months their advance orders go out.

But "we're experiencing a healthy advance orders rate," said Robert Mionis, director of worldwide operations. The company employs 1,000 worldwide and is currently hiring in all aspects of the business, he said.

The company's health is reflected in the general health of the industry as it rebounds from 1998's crash, he said.

"The semiconductor industry is experiencing phenomenal growth," Mionis said. "And it's being forecasted by industry experts to continue this growth for the next two to three years."

An industry analyst echoed Mionis' optimism for the company. In a July report on Eaton's semiconductor division, Schroder & Co. Inc. reported: "ETN's (Eaton's) orders in the quarter were 47 percent ahead of last year and were at the highest level since late 1997, when the semiconductor equipment market slumped."