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Market Review

Which way now?

At the beginning of 2013 the UK economy is basically where it started 2012; weak growth and rising borrowing. For the electronics industry 2013 is set to be challenging so CIE approached a number companies to find out how they expect the year to unfold


s we enter 2013 it feels almost like groundhog day. The UK economy, like most developed countries,

found the going pretty tough in 2012 and ended the year very much where it had started it and most economists think that this state of affairs will continue into the new year. Many also expect the UK to lose its AAA credit rating which would deal a blow to the Government who, until the prospect of a downgrade became increasingly apparent, put great store by Britain’s status with global investors.

Lower growth and greater borrowing will certainly make 2013 hard going for the UK but if, as the Organisation for Economic Co-Operation and Development is forecasting, the global economy does pick up this year the UK may be helped by stronger global growth. It would be a help as policy makers in the UK seem to have little idea as to how to lift growth. While recent policy actions by the

European Central Bank and EU governments have reduced, for the moment, the financial risks associated with the sovereign debt crisis that has

Glenn Jarrett, Global Head of Product Marketing, RS Components

“While sluggish economic conditions worldwide have caused a decline in overall market performance for the distribution channel this year, the figures have not been catastrophic. The slowing market has even proved advantageous in some areas, with many customers electing to cut inventory levels to ease cash flow, relying on high service level distributors like RS to supply parts on a needs basis. This trend for short-term ordering has been especially evident in the e-mech arena, where some companies have been forced to adopt an emergency repair strategy for equipment

16 December 2012/January 2013

rather than performing routine maintenance. The main growth opportunities for us lie in eCommerce, which now accounts for more than 50% of our business and rising. As Internet trading increasingly becomes the norm in our industry, customers are seeking more and more to replicate the online experience that prevails in the B2C space, and this is driving us to tune our website functionality. The healthy uptake of our live chat feature, which adds a human touch to the web journey, is one example that shows the demand for the multi- channel distribution model remains as strong as ever.

Innovation is the lifeblood of the

electronics industry, and by supporting innovation distribution can play an important part in keeping the market

Components in Electronics

beset the trading bloc throughout 2012 it is unlikely that the UK economy will benefit from a strong recovery from its largest trading bloc this year. Any recovery will be weak in the north while the stagnant economies in the south, such as Spain and Italy, can expect to see a deepening recession. A contraction of around 0.2 percent is being forecast for the EU as a whole in 2013. As we went to press the US appears to have avoided the financial cliff that dominated the headlines throughout December. Across the economy most indicators are increasingly positive so growth of 2 percent is being forecast. The EU remains desperate for the US economy to take up the mantle of global economic engine and in many respects China is looking to the US as well.

The Chinese economy has slowed significantly of late with growth falling back to just 7-8 percent. With a new leadership in place further economic

buoyant. The acceleration in downloads of our free online design tools and resources is evidence that they are reaching a critical mass in the marketplace and that engineers are starting to trust us as a source of reliable, quality information. The economic downturn has also meant that businesses and education have been forced to implement cost-saving measures, and universities across the globe are now standardizing on DesignSpark PCB. This increasing adoption of free tools in education is an area that has immense potential for growth. With the leaps forward in desktop computing power, 3D design is no longer a preserve of the few, and supporting the convergence of electronic and mechanical design will be a major focus for next year. We have already started

stimulus can be expected but massive local authority debt could yet cause problems for the economy. Weak economic growth in the United

States, recessions in both Europe and Japan, and below trend growth in China all had an impact on emerging markets last year. Brazil slowed significantly in 2012 but the outlook is significantly brighter in the Far East where domestic demand has remained strong.

Beyond national economics commodity prices look like they may remain flat throughout the year, much as they did in 2012. Downward pressures will come from weaker growth and high inventories although if growth does accelerate in some key markets expect price pressure to mount.

While we may have avoided another US

recession, a Eurozone implosion, and a hard landing for the Chinese economy for the electronics industry, 2013 is going to be challenging.

that process by introducing ModelSource, which combines our 3D CAD model library and opens up the schematic and PCB layout libraries. In a world where engineers have less and less time and resources to spend on designing with individual components, we are also seeing the emergence of low cost modular solutions like Arduino and Raspberry Pi, which give engineers the scope to innovate without the need to design from the ground up. This trend for module level integration looks set to last, and we have put the processes in place to manage the high demand for these devices.

Supporting innovation through eCommerce is how we differentiate our business, and in 2013 we will continue to develop the tools and resources to achieve this.”

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