The UK and Ireland electronic component market is set to return to growth in 2014, according to a new forecast released by the Manufacturers’ Authorised Distributor (afdec) group within the Electronic Components Supply Network (ecsn). Taking a ‘cautiously optimistic’ view it believes that the market will see growth in the range of 3.5% to 8.2% with a mid-point of 5.8% in 2014. However it did caution that any recovery would be gradual and would be influenced by the broader economic trends of the UK economy. This week’s Autumn Statement suggested growth of 2.4 per cent for the UK economy in 2014.
Analysis of the consolidated returns from the association’s membership indicate that the overall UK / Ireland Distributor Total Available Market (DTAM) in 2013 is likely to have remained “flat” (no growth or decline) when compared to the previous year. In 2013 DTAM is expected to be around £1.01bn, with the Total Available Market (TAM) likely to remain flat at £2.6bn. “
Aubrey Dunford, ecsn Market Analyst, said that in 2013 the UK/Ireland electronic components markets performed within the range of guidance in the association’s forecast, but that growth in the second half of the year and into the final quarter remained below expectations.
According to Dunford, “The year ended at the lower end of our guidance, with Authorised Distributors maintaining but not increasing their share of the TAM. Returns from our members forecast that the UK/Eire electronic components markets will continue to improve gradually throughout 2014. We’re likely to see a very slight increase in the TAM (up by 5% to £2.8bn), however the DTAM share will remain around the same and for the first time in several years reflecting growth at a few directly supported customers in automotive markets”.
Dunford confirmed that the ‘Book to Bill ratio’ an important industry indicator, whilst being generally positive has not consistently been above 1.1:1 a ‘magic number’ that heralds a return to stronger long term growth: “Our members customers forecasts are limited and as a result they continue to place very short term order cover, which the generally good availability of components and low lead-times enables them to do. The lead-times for modest volumes of most electronic components is currently less than four weeks but with many manufacturers reducing their production capacity it will take some time to bring this capacity back on-line as demand increases”.
According to ecsn/afdec chairman Adam Fletcher the improvement in macro-economic conditions in the Eurozone and beyond have contributed to an improvement in both consumer and business confidence. However the improvement in the Construction, Services, Automotive and Aerospace sectors have yet to be realised in the Industrial Market sector, resulting in limited supply network visibility.
Commenting on the forecast Ben Green, Technical & Marketing Communications Manager at Harwin said, “The predictions are in line with our expectations. Our customers are now seeing healthy orders and the distribution network has responded by increasing their stock profiles to meet this increased demand. We are encouraged by the number of new projects that are starting and the success that we are having with the new products that we launched in the last two years.”
Graham Maggs, Director Marketing EMEA Mouser added, “Although recovery is patchy and generally slow, there are good signs. One of the most positive indicators is the growth in our business – we have enjoyed best ever-sales performance this year with EMEA remaining Mouser’s top performing region with better than 28% growth on the back of similar growth last year. Since our primary business is to support development activities we can conclude that design is alive and well in Europe – which must point to better times ahead.”
Adam Fletcher noted that the recession and the slow recovery of the past five years has been unprecedented. “Previous recessions in the electronics industry have been either regional or sector specific, this is the first global event, if ‘global economies all rise on a tide of economic recovery’ it will have a profound impact on availability in the global electronic components supply network as manufacturers scramble to keep up with demand.”