Contract Manufacturing
Contract Manufacturing Index reveals effects of materials shortage
of companies that are looking to outsource manufacturing in any given month. This reflects a sample of over 4,000 companies, who have a purchasing budget of more than £3bn and a supplier base sample of over 7,000 vendors, with a verified turnover in excess of £25bn. Qimtek measures this by
Q
extracting data from the projects we receive from manufacturing purchasers who have an active need for the services of subcontract engineering suppliers. Since 2016, we have published the index quarterly and the following report is a summary of our findings for the third quarter of 2021.
Key findings ● The Index is split into three processes - Machining, Fabrication, and Others.
● 2021’s data for Quarter 3 is collected from 229 companies and 389 projects.
● The latest Index shows growth of 52 per cent against the preceding quarter; however, it was 5 per cent smaller than the comparable quarter for 2020. The third quarter of 2021 started on an overwhelmingly positive note. July and August were largely buoyant across all three indexes, with significant outsourcing activity taking place across the board. However, September put a dampener on the overall value as levels plummeted within the Fabrication and Others Index, although the Machining Index bucked the trend and ascended during the final month of the quarter. This downturn in activity can be largely attributed to a lack of resources such as materials, transport and staff. The worldwide materials shortage continues to create problems within the supply chain, meaning that many subcontract suppliers are unable to fulfil orders and are therefore hesitant to commit to undertaking new projects. These issues are likely to remain as long as the materials shortage continues, with a lack of available fuel further compounding this unfortunate situation. This means that as we move into the final quarter of the year, the trajectory of the Index is likely to continue down a similar path; however, we remain optimistic that the new year will bring relief
www.cieonline.co.uk
imtek's Contract Manufacturing Index (CMI) has been
developed to reflect the total purchasing budget
output - furthermore, this was reflected in the comparisons to 2020, with a 12 per cent drop against the corresponding quarter. ● 40 per cent of the third quarter’s projects were for fabrication processes.
● The buyers who gave us these projects have a total outsourcing value of £26,420,655, compared to £15,561,755 during quarter 2, 2021.
● The Fabrication Index grew by 71 per cent from the previous quarter, but finished 12 per cent down on the comparable quarter for 2020.
Others Index
Representing processes such as electronics, casting, toolmaking,
to the industry as it continues to strive to meet demand.
Machining Index
After some significant recuperation during the second quarter of 2021, the Machining Index continued its upwards trajectory from July to September. With growth of 120 per cent from quarter 1 to quarter 2, the latest results reinforce this trend with a further 22 per cent increase, solidifying the subcontract machining market's recovery following the COVID-19 pandemic. ● 52 per cent of the third quarter’s projects were for machining processes.
● The buyers who gave us these projects
have a total outsourcing value of £17,866,572, compared to a value of £14,658,698 in quarter 2, 2021.
● This means that the Machining Index finished 22% up on the previous quarter and 10 per cent larger than the third quarter of 2020.
Fabrication Index
Although the overall result for the third quarter was overwhelmingly positive, the Fabrication Index experienced a dramatic drop in activity during September. With the results for July and August being the strongest of the year so far, the end of the quarter was disappointing in terms of
finishing, plastics & rubber, the ‘Others’ category makes up 8 per cent of the projects generated within the third quarter and is therefore more difficult to monitor. With that being said, the Others Index underwent an extremely positive third quarter, with prominent growth of 99 per cent from quarter 2 to quarter 3. ● The buyers who gave us these projects have a total outsourcing value of £5,701,900, compared to a value of £2,891,475 in Quarter 2, 2021.
● This latest result is up by an astronomical 99 per cent on the previous quarter, but still down 6 per cent compared to the third quarter of 2020.
Top industries ● Having previously placed fourth, the Industrial Machinery sector emerged as the top purchaser of subcontract engineering services from July to September, accounting for 23 per cent of spending during this period.
● Meanwhile, the Construction industry also had a small boost in activity, rising from third place into second with a 20 per cent share of the total spend.
● The Heavy Vehicles/Construction Equipment industry rose from sixth place into third during quarter 3, with a 14 per cent share of all subcontract purchasing.
● Quarter 2's forerunner, the Electronics sector, slowed down its outsourcing activity significantly and finished the third quarter in sixth place.
To read the full Contract Manufacturing Index as well as accessing past reports, please visit
www.qimtek.co.uk/contract- manufacturing-index
Components in Electronics October 2021 19
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