2019 ends well for UK connector industry

20 February 2020

ITSA logo_580x280
ITSA logo_580x280

In 2019, ITSA (Interconnect Technology Suppliers Association) members posted 5% revenue growth over 2018 – making it the highest revenue year for the sector since 2014 – fuelled by a 13% increase in the distribution revenue stream.

The European electronics market had what many have described as a “difficult” 2019, with only single digit reveue growth, while the UK market fared marginally better. One of the many sectors that make up the UK marketplace, the connector industry, saw modest growth by the end of the year, after a poor first half.

The first two quarters of 2019 saw connector revenues decline, reflecting the weakness of the global economy and the high levels of uncertainty caused by Brexit, according to ITSA (Interconnect Technology Suppliers Association).

“It was also a reflection of UK companies adjusting their component inventories, which many had built-up as a contingency against the possible consequences of Brexit,” says John Biggs, Chairman of ITSA.

“In the second half of 2019, the UK connector sector stabilised as confidence returned to the market and key infrastructure projects were released.

“Against this backdrop, our member companies saw a revenue growth of 5% over 2018 and enjoyed the highest revenue year since 2014. A key driver of this growth has been the increase in the distribution revenue stream, which increased by 13% and now accounts for 37% of ITSA UK revenues,” John Biggs adds.

Key market performance
There are several key markets for ITSA members, including military & aerospace, mass transportation and communications, and these continue to perform in different ways. During last year, mil/aero showed a 5% decrease at component level, but this was more than offset by an increase in value add. Despite project deferrals and Government cutbacks, this sector has continued to grow and remains a long-term focus for ITSA members.

The communications market has shown a gradual decline in revenues at component level, as more and more companies focus on offering value add solutions. This can be seen clearly with members reporting an overall increase of 36% over 2018, but with 2019 posting the highest revenue level for value add since the formation of the association. Clear winners here are fibre optics, which posted a 63% increase, and RF, which grew by 31%.

The mass transportation market has also grown significantly over the past five years, and although members saw flat revenues in 2019, this is a very project driven market and revenue trends will continue to fluctuate.

All the above should have meant a positive 2019; however, bookings remained very weak and posted three consecutive quarters of negative book to bill ending the year at 0.93:1. This is again a reflection of organisation adjusting their demand and inventories in line with market uncertainty.

The level of contraction being seen by ITSA members reflects well against the overall trend in UK manufacturing, which has reportedly posted its weakest year for seven years.

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