Top 50 Distributors Report
A TOUGH YEAR FOR DISTRIBUTORS
Gina Roos, contributing editor
There is no doubt that it was a tough year for the electronics distribution industry in 2012 as they faced slow demand throughout the year. Many of the
challenges can be traced back to 2010 and 2011, which wasmarked by component shortages and allocations coming out of the global financial crisis and two natural disasters. Distributors had to deal with high inventory levels as a result of
customers buying toomuch inventory in the previous years to ensure a stable supply, which needed to be worked off in the latter part of 2011 and into 2012. Since inventory wasn't an issue, and most components were available in short lead times, buyers started to put a lot of pressure on distributors, pushing component tags down and eating into theirmargins. Because of these issues the North American distribution industry
virtually remained flat in 2012, decreasing revenue by nearly two percent. Only five of the top ten distributors reported growth, all at less than five percent. Global sales also declined, falling four percent compared to the previous year. In addition to low demand and economic uncertainty in the global
market, distributors also noted several other factors that have impacted sales in 2012. These includemanufacturing lead times,
4 |May/June 2013
Distributors had a difficult time adjusting to slower growth and predicting demand cycles in 2012, after dealing with sharp spikes in demand, followed by toomuch inventory in the channel over the previous twoyear period. By Gina Roos
commodity prices, outsourcing to lowcost countries, price increases fromsuppliers, and government regulations. But could we see a repeat of these wild swings in demand? Due to
currentmarket conditions and a lack of investment in production capacity over the past year, distributors predict that we could see a replay of 2010 if there is an unexpected spike in demand. This would immediately push out lead times and cause hedge buying or double ordering by OEMs to ensure supply for production, starting a new cycle of upticks and downturns within a year. Some of the leading distributors, including Allied, Avnet, Future
Electronics,Mouser Electronics and TTI share their thoughts about what happened in the distribution industry in 2012, and what we can expect in 2013. Turn to page 22 for a complete analysis of what happened in the North American distribution industry last year. ESNA's Top 50 distributors report ranks the leading distributors by
revenue in North America, along with their sales growth rates, sales breakdown by component type, and valueadded sales. Not surprisingly, the top ten distributorsmaintained their top ten ranking in 2012. The report also discloses which distributors hold the largest NA
market share for semiconductors, passives/electromechanical devices, interconnects and computer products. You'll also find out who has the highest productivity levels, based on sales per employee. Only four of the top ten distributorsmade the top ten ranking for leaders in productivity. Distributors also tell us which industry sectors they believe will generate the greatest growth potential in 2013.
www.electronics-sourcing.com
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