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Market Review

2013? At least it was better than 2012!

While the economy appears to be recovering there are still concerns that what we are seeing is neither balanced or sustainable. Neil Tyler talks to some leading UK businesses to gauge their take on 2013 and how 2014 appears to be shaping up


hat a difference a year makes. Back in February the talk was of a triple dip recession and of a lost decade as the economy stumbled its way out of the deep recession of 2008-9. Nine months on and the talk is of economic recovery and what looks like an economy that is finally entering a period of sustained growth.

The British Chamber of Commerce (BCC) expects UK plc to surpass its pre- recession peak late next year. According to John Longworth, the BCC's director general: "It is really great that next year the UK economy is finally expected to bounce back from the deepest recession in modern times. British businesses have remained determined to compete and grow in the face of difficult circumstances, and the upgrading of our short-term forecast is testament to their sheer hard work, resilience and creativity." The BCC expects the economy to grow

by around 1.4 per cent this year and 2.7% next year, slowing to 2.5 per cent in 2015 as rising levels of personal debt are expected to hold back consumption. UK manufacturing has been performing well with the EEF forecasting growth of around 2.7 per cent this year and the sector creating upwards of 5000 new jobs each month. However, output is still more than 10% below its peak, so their remains plenty of scope for the manufacturing sector to continue to recover in the years ahead.

Despite a stronger performance Longworth said that long-term challenges were still looming for the UK economy and it was increasingly important that it found ways of boosting both business investment and exports as household spending wanes.

10 December 2013/January 2014

According to Longworth, “Small businesses are still struggling to obtain finance.”

Central to the Government’s economic policy has been cutting government spending as well as lowering corporation tax and cutting the cost of capital. If the intention was by doing this they were going to enable companies to invest more it patently hasn’t worked - at least at the macro economic level. Forecasts made back in June 2010 said that by now investment would have risen by 35 per cent, in fact it has barely risen at all, up just 1 per cent and the UK is still running a balance of payments deficit of in excess of 55bn euros despite a deeply devalued pound. If the recovery is to be sustained at a healthy pace, it really does need a marked, extended pickup in business investment and in exports.

The electronics sector So how are companies in the electronics sector seeing things and how have the past 12 months been for them? Nigel Ward, Regional Vice President UK/IRL for SILICA & Avnet Abacus sees 2013 as having been a definite improvement on 2012. “Throughout the year we have seen

growth in terms of both revenue and market share and in general the market has improved this year and feels more robust, however the growth we are experiencing is primarily based on our customers’ short term business needs rather than any long term investment. Customers are still hesitant to give us any long term visibility of their requirements.” Chris Shipway, the managing director of

Components in Electronics

Avnet Memec UK suggests it is too early to be confident that what we are seeing is a sustainable recovery. “While it’s early days there seems to be

a more optimistic attitude within the market but I do think it is too early for us to say confidently that the upturn will be sustained. At a corporate level we signed a franchise agreement with Microchip this year and that will have a significant impact on our business both in the short and long term - it’s a door opening franchise for us. “Demands from customers mean we need to be more responsive than ever if we’re to ensure our customers get to their respective markets with new product introductions quickly.”

Steve Rawlins, the ebullient CEO of Anglia is certainly upbeat. “Anglia has grown by 5% in a flat market and we’ve continued to invest in our business throughout the year. I believe we are in a good position to grow as the recovery comes. Over the year, we’ve doubled the size of our FAE and sales teams and increased our inventory level by 10%, as well as announcing new services like Anglia Live.”

Despite the length and the severity of the downturn Rawlins has seen few manufacturing customers going out of business.

“In sharp contrast to 2008 for example, our total account base has remained very stable. At Anglia, these small CEMs have always been our lifeblood, and the flexibility they need is built into our approach to the market. Growth will definitely return in 2014. There is an established trend for manufacturing to reshore, and as the economy recovers more demand will be fulfilled by UK manufactured products.” While investment remains weak a number of companies have chosen to make significant investments in new facilities and technologies. Two such companies are Harwin and Intelliconnect. “The most significant event for us in 2013 has to have been the investment in new technology for our Portsmouth manufacturing plant,“ explains Ben Green, Technical & Marketing Communications

Chris Shipway:

“There seems to be a more optimistic attitude within the market”

“We are seeing an increased number of design wins and new project starts, which are mostly for products that we launched within the last 2 years which is very encouraging. Probably the biggest opportunity for us next year lies with ‘re- shoring‘. Device manufactures are bringing assembly back from Asia and are going to be looking to automate their production providing us with an opportunity to promote our range of SMT PCB hardware.” For Roy Philips, Managing Director of Intelliconnect, the past twelve months have seen spectacular growth both in terms of orders and customer acquisition.

manager with Harwin, a manufacturer of board-to-board connectors, high-rel/high- performance connectors and SMT PCB hardware. “In March this year Harwin invested over £1 million pounds in new equipment and machinery in the UK and this November we have invested another £500k in new stamping press technology equipment, again for the plant in Portsmouth.

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