CIE Sept09 P8:Layout 1 07/09/2009 11:09 Page 8
Front End I AFDEC
A market sprint
or limp into 2010?
Following a dreadful first
half to 2009 Adam
Fletcher wonders whether
the UK/Ireland electronic
components market will
make a Usain Bolt-like
dash for sales or face a
long hard struggle for
growth
T
he hype in the UK media over the last
few weeks suggests that the current Billings declined by 30% compared to the economy. How to finance the growth cycle
recession will be over before we same period last year, and by 13% required for recovery? Organisation’s often
realise it and that economic growth has or compared to the previous quarter, so the UK come to grief as they struggle to meet the
will soon return. The Office for National electronic components distribution market cash flow demands of growth, particularly
Statistics confirmed that output from the UK does at least appear to be out performing where customer orders have been taken at a
manufacturing segment in May and June other European countries! discount to meet competitive market price
increased by 0.4%, whilst the Purchasing The historical statistical data gathered by pressures. This will almost certainly be
Managers’ Index currently stands at 47, its afdec and IDEA over many years have exacerbated in the current recovery cycle
highest level since May ’08. The UK Business Adam Fletcher proved to be a reliable indicator of future due to the banks’ lack of ability or will to
Confidence Monitor published by the performance but the current recession has lend and the excessive premiums they will
Institute of Chartered Accountants in decline in the range 18%-to-25% on the bucked many of the previous trends, making seek to charge borrowers over base rates.
England and Wales recorded its largest same quarter last year. extrapolation in the short term at best Central bank interest rates are likely to
recorded quarterly gain and predicts third Analysis of afdec members statistical unreliable. For example, in July ’09 the increase over the next few years, which
quarter 2009 GDP growth of 0.5%. returns reveals that total Billings (sales consolidated Book to Bill ratio (a key coupled with fluid exchange rate variations
The semiconductor market, normally an invoiced, less credits) in the UK and Ireland indicator of future performance) of afdec between the US Dollar, Euro and Sterling
early change indicator in the electronic in Q2 ’09 declined by 18.6% compared to members experienced one of its largest rises and large rises in raw material and energy
components market, is also producing Q2 ’08 and that the sequential growth for many years, climbing to 1.21:1, costs, will force price rises across a wide
significantly better financial results. Major (decline) between Q1 ‘09 and Q2 ’09 was predominantly as a result of increased variety of electronic components markets.
manufacturers such as Analog Devices, 8.9%. Semiconductors Billings declined activity in the UK semiconductor market. The inconsistent nature of the recovery is
Infineon, Intel, Microchip and STM have 16.8% in Q2 ’09 compared to the same Pundits are having a tough time also likely to unbalance supply and demand,
reported sequential (better than the period in the previous year and the attributing this Bookings (net sales entered) leading to dramatic lead-time fluctuations.
previous quarter) growth and are forecasting sequential growth (decline) was 5.7%, growth and have little idea if it can be Whilst I welcome the recent good news
continuing growth to the financial markets, suggesting that sales through manufacturer sustained especially because Billings were and recognise the steps the economy is
much of which can be attributed to authorised distributors in the UK/Ireland close to average in the period. I suspect this taking are in the right direction I remain
increased demand from customers in Asian electronic components market in Q2 ’09 is just one of the many conflicting signals we doubtful that the electronic components
markets and a return of the automotive remains in negative territory. Despite an are likely to see over the next couple of industry or the UK economy is sprinting
sector to volume production. improving forecast it seems likely that results years but anecdotal evidence supported by towards consistent growth. The best we can
I’m not convinced! Read beyond the will remain negative throughout 2009, industry surveys suggests that whilst hope for is the maintenance of a brisk
sound bites and headlines and dig a little probably resulting in an overall market business confidence is improving in the UK, walking pace with the minimum of trip-ups.
deeper into the financial reports and it decline in the range 9%-to-11% over the it remains very fragile.
becomes apparent that the sequential previous year.
growth for these semiconductor At a European level analysis of IDEA Recovery phase? AFDEC | www.afdec.org.uk
manufacturers is indeed in the range 4%-to- (International Distribution of Electronics It seems likely that we are now entering the ECSN | www.ecsn-uk.org
20% but the growth is coming from a very Association) trend statistics for Q2 ’09 recovery phase of the recession, which itself Adam Fletcher is Chairman of
low base and actually represents an overall reveals that total European Distribution is a challenging period for industry and the AFDEC/ECSN
Diary Dates for CIE Readers…
Anti Counterfeiting Forum website; lessons learned and
activities in the pharmaceutical sector that could benefit
the electronics sector; how Government is responding to
UKEA Seminar – ‘’Anti Counterfeiting Forum’’ - Thursday will include presentations providing information on the size
the problem; and issues and trends that will influence how
15th October 2009 and nature of the problem; work being undertaken by the
the problem will affect the sector and how the sector will
As part of its strategy to help UK companies address this semiconductor industry to combat counterfeit
need to respond in the long term.
growing threat, the UK Electronics Alliance, in conjunction semiconductors; current supplier standards and
There will also be an opportunity for delegates to raise
with the Component Obsolescence Group, Electronic certification systems and how a coordinated approach in
questions, get further guidance and to provide feedback
Components Supply Network and Intellect, is organising a the UK will help component suppliers and users; setting up
on what further action needs to be taken.
seminar to be held on Thursday 15th October at the internal procedures to safeguard against counterfeits
For further information please visit
Heathrow Windsor Marriott Hotel. infiltrating the manufacturing process; best practice
www.ukelectronicsalliance.org.uk or email
The seminar, scheduled to run from 10.00am to 3.30pm techniques to identify counterfeit components; the new
anticounterfeitingforum@googlemail.com
8 September 2009 Components in Electronics www.cieonline.co.uk
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