Front End I Electronic Components Supply Network
Slight growth predicted for UK components market
As we start a new year, the Electronic Components Supply Network (ECSN) looks back over the previous 12 months and predicts some growth in the UK and Ireland electronic component market
L
ooking back over 2015, it’s safe to say it was a tough year for the electronic component market in terms of
growth, and as we enter a new year, it is predicted that things are not going to get better in a hurry. According to the manufacturers’ authorised distributor (AFDEC) group within the Electronic Components Supply Network (ECSN), the UK and Ireland electronic component market is likely to remain ‘flat’ in 2016. The forecast recently released by the association indicates that the market will at best achieve only slight growth and may even contract in 2016. Predicted figures in the range of two per cent to minus two per cent with a zero per cent mid-point (‘flat’) confirm members’ concerns that any recovery in the manufacturing sector of the economy will be extremely gradual and is only likely to continue in-line with improvements in the macroeconomic environment. Analysis of the consolidated returns
from the association’s membership indicate that the overall UK/Ireland Distributor Total Available Market (DTAM) in the current year will show a decline of approximately one per cent compared to 2014. The association’s ‘flat’ forecast for 2016 points towards a DTAM value of around £1.1bn within a Total Available Market (TAM) value of circa £2.9bn. Presenting the forecast, Aubrey
Dunford, ECSN market analyst, confirms it’s now likely that the UK / Ireland electronic components markets results for
2015 will end just beyond the lower end of the range of guidance provided in the association’s forecast delivered in December 2014. According to Dunford, the first half of the year saw a recovery in growth, which was in-line with the association's guidance, but this growth trend stalled in the second half of the year, principally due to sluggish growth in global markets, especially in the key European markets. “Whilst automotive,
aerospace and defence markets have recovered well, the critical industrial components market on which much of Europe relies on to drive growth has continued to falter,” says Dunford.” According to Dunford, the continued slow-down, in particularly the Asia Pacific market, has meant that the whole supply network remains overstocked and it will take some time for manufacturers to adjust their production levels in-line. Steve Rawlins, CEO of Anglia Components says the market has increased by as much as 10 per cent in volume terms, but the pressure on average selling prices (ASPs) means it has remained flat in terms of value. He believes that the only way to grow faster than the market is to be smarter than the market and this means building up your knowledge and understanding. “Sometimes there are two, three or even four intermediaries before the end user and each one will have an impact on the design,” says Rawlins. “An effective demand creation distributor needs to understand not only what the direct customer is looking for but also what drives their customer.”
Aubrey Dunford 10 December 2015/January 2016
ECSN/AFDEC chairman Adam Fletcher, believes that the problem for the electronic components market is not ‘if’ but ‘when’ and ‘how strong’ the recovery will be. “We have seen a much wider than normal range of opinions from our members, other industry associations and industry analysts, who are all seeing positive signals in terms of opportunity.” But he remains concerned that this
Components in Electronics
optimism is not yet feeding through to the real numbers. Some remain positive about the coming
year. Chris O'Neill, senior sales manager of North Europe at Omron Electronic Components says, “Although the ECSN is forecasting a flat market, Omron views 2016 positively. We believe that innovative new products, and market trends such as the re-shoring of production, will help boost demand during the year.” John Macmichael, managing director of Solid State emphasises that they
“We see some growth opportunities in project business, in particular infrastructure projects. However the gestation period can be long with design and funding changes. We have to take a longer-term view to the business whilst continuing to develop innovative products and solutions for our customers.”
CamdenBoss also enjoyed steady
growth both nationally and internationally in 2015, but is finding that the longer- term forward order book is still struggling to build at levels previously seen. Long-
are continuing to see strong design activity in the UK and are consequently focusing their efforts on supporting the design community. ISMOSYS managing director Nigel
Watts agrees. He sees further significant growth both in terms of designs and production revenues in 2016 and beyond, but he believes that sales, marketing and design support teams in the UK electronics industry need to do more to identify, drive and secure the next tranche of high growth emerging customers and do everything in their power to ensure the eventual revenue remains ‘local’ by introducing them to partners with the ability to serve their interests in Europe rather than scour the globe for ‘low cost’ options that often ultimately prove to be anything but low cost. Peter Hannon, managing director of Harting, says that forecasting customer demand is proving problematic for 2016.
term projects are materialising at a much slower pace than the project was often targeted at and roll-out dates to full production are frequently moving out. “The complexities of projects for enclosures and inter-connections are increasing and our customers are definitely demanding total solutions to help minimise their overall costs,” says managing director, Nicki Kay.
Adam Fletcher concludes by stating his belief that all organisations right across the electronic components supply network must continue to improve their collaboration and forecasting to mitigate supply problems. “Well-managed, open, honest, communication throughout the supply network costs virtually nothing but provides great value for everyone, not least by increasing confidence in our own capabilities.”
www.ecsn-uk.org www.cieonline.co.uk
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