Industry Comment
ITSA - Connector sales growth in some sectors belies a tough year ahead
ITSA represents UK connector and component companies supplying into the UK electronics industry. Since connectors of all types and formats are fundamental to virtually every technology-based product or system, what ITSA’s members are experiencing is a pretty accurate barometer of how the UK electronics industry is doing in these unprecedented times, says John Biggs – ITSA Chairman…
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ack in August we reported that, while the easing of the COVID 19 lockdown had many positive benefi ts, the pandemic would continue to have an ongoing and negative impact on the UK electronics industry. Just over three months later, the numbers reported by ITSA members for the third quarter clearly demonstrate how signifi cant the impact has been. News that a vaccine could be available by the end of the year was a single major plus in these diffi cult times. The other issues creating concern in August were BREXIT and the tensions between the US and China. Either a deal or a no-deal BREXIT still remains possible but we are hopeful that the US election result will be a positive step towards improving the relationship between Washington and Beijing. Hopefully, there will be some positive news from these developments. On a less than positive note, forecasts compiled by the Government show the average prediction for this year’s UK GDP is now -10.1 per cent with unemployment expected to hit 8.3 per cent by the end of the year and only improving to 6.6 per cent by the close of next year. The fi gures also show that the UK economy is expected to rebound by only 6.5 per cent in 2021.
ITSA Members report sales down 9 per cent YTD
According to ITSA Chairman John Biggs, its members sales were down 9 per cent YTD when compared to 2019. “Of bigger concern is the fact that orders are down 19 per cent and book to bill is down at 0.83:1.” Says John Biggs. “This will inevitably lead to lower revenues in Q4 and beyond and also reflects the fact that members are not enjoying long term order schedules. Member’s export revenues are only down by 5 per cent but orders are down a huge 22 per cent,” adds Biggs.
30 November 2020
Medical and value add solutions grow Sectors that have shown good billings include medical with members reporting an 83 per cent increase, while value added solutions have shown positive signs during the last quarter at 7 per cent growth. According to ITSA, this should be looked at in conjunction with pure product sales as there is a definite trend of moving from component sales to solution sales.
The communications sector was up by 37 per cent which, in ITSA’s opinion, refl ects the need for more bandwidth for home and remote working. Test and Measurement, which links very closely, to communications and medical was up by 51 per cent.
Broadcast really suffered in Q3 running at 50 per cent of last year’s rate. With no end in sight for restrictions on concerts, outdoor festivals, theatres etc this market will continue to struggle.
One of the largest ITSA member market is Mil/Aero which accounts for 30 per cent of members sales and has only shrunk by 5 per cent. However, distribution, which accounts for 33 per cent of sales, is showing a drop of 20 per cent.
UK manufacturing recovered in Q3 According to fi gures published by HIS MARKIT/CIPS UK Manufacturing PMI, the UK manufacturing sector continued to recover in September with a PMI of 54.1. Output and new orders increased as intake improved from both domestic and overseas markets.
Output increased for the fourth consecutive month albeit slightly lower than August. This improvement was driven by many economies around the world reopening from lockdowns due to COVID 19 (this may well reverse very quickly in light of the alarming spike in new COVID 19 cases around the world and the introduction of new lockdowns). Increases in inbound costs are driving manufacturers to increase selling prices, the
Components in Electronics
main reasons here are higher raw material costs which saw Gold up over 21 per cent YTD. Most manufacturers maintained a positive outlook for the year ahead with 60 per cent expecting output to be higher in 12
months from now. This optimism has to be tempered in view of the escalating COVID 19 spike and further local and national lockdowns.
itsa.org.uk
www.cieonline.co.uk
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