Independent Distribution
Independent dIstrIbutors expect another strong year
Businessmay not be as robust as last year, but some
independents say double-digit growth is likely in 2011 By James Carbone, contributing writer
Strong demand, production cutbacks by componentmanufacturers and resulting component shortages drove 20-percent plus growth formany independent distributors in 2010 and some believe that double-digit growthwill continue in 2011. Growth is expected to be especially strong in China, India and Europe.
Many independents said their sales grew 20 to 30 percent as
many OEMand electronicsmanufacturing services buyers scrambled to find components last year.
"Shortages led to a significant increase in business across the
board," said BillMasterson, generalmanager at Fusion Trade based in Andover,Mass. "Equipmentmanufacturers come to us for hard-to-find parts. Semiconductors were in short supply with long lead times," he said.
Masterson added "business is still up significantly so far this
year. Lead times aren't as long, but there are still pockets of shortages out there," he said.
Paul Romano, chief operating officer of Fusion, said
components "at the lower end of the technology spectrum" were in short supply last year and some continue to be an issue in 2011. He said there were shortages of capacitors, resistors, transistors,MOSFETS and diodes in 2010.
"It was kind of like rolling blackouts. As soon as one problem
area was put to bed, another one cropped up," said Romano. He said shortages have somewhat abated, but "there are still fairly significant issues across the board with powerMOSFETs continuing to be a nagging problemand relays are becoming a problem."
Carleton Dufoe, vice president of trade for Fusion, said suppliers 34 |March 2011
are nowadding capacity, but they are doing it so slowly because theywant to be profitable.
"Some are
running lean because they don't know where things are going to shake out for them," he
said.Memory suppliers such as Samsung are increasing their capacity. Some have EOL'd [end of life] a lot of product lines and are retooling their capacity to lines that will be profitable," said Dufoe.
"We have to have the ability to inspect the part, to make sure the part has not been altered," saidChuck Magee, executive vice president of America II
While suppliers are adding capacity and fewer parts will be in
short supply, Fusion is in position for double-digit growth in 2011, said Romano. One reason is strong demand in various geographies such as South America. In addition, "China is roaring and India is taking shape. Europe is hitting its stride," said Romano.
In addition, Fusion -- and other independent distributors --
attracted new customers in 2010 because of shortages. "These are buyers that did not go to independent distributors
in the past," saidMasterson. "They came to us for shortages and we have been able to retain those new customers."
Of course other independent distributors attracted new
customers as well, including America II. New customers helped the distributor have one of its best years ever. However, 2011 so far has been different, according to ChuckMagee, executive vice president of America II in St. Petersburg, Fla. He said the first half
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