UK electronic components market to grow in 2014

14 January 2014

The UK and Ireland electronic component market is set to return to growth in 2014, according to a cautiously optimistic forecast.

The forecast was released by the Manufacturers’ Authorised Distributor (afdec) group within the Electronic Components Supply Network (ecsn).

It believes that the market will return to growth in the range 3.5%-to-8.2% with a mid-point of 5.8% in 2014, but cautioned that the recovery is likely to be gradual and in-line with improvements in the macroeconomic environment.

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.

Aubrey Dunford, ecsn Market Analyst confirmed 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: “The year ended at the lower end of our guidance, with Authorised Distributors maintaining but not increasing their share of the TAM” said Dunford. “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, 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,” Dunford said, “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 well-publicised 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. “
Unfortunately the Industrial market sector on which the bulk of the UK and Ireland electronic components market is reliant, tends to lag rather than lead,” said Fletcher “But we will get to the party and contribute having a good time in 2014,” he concluded

ecsn / afdec chairman Adam Fletcher notes that the recovery from the current recession is unprecedented in recent times, “The previous recessions in the electronics industry have been either regional or sectorial, 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.” Fletcher concluded.

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