Q5 interview - Steve Rawlins, Anglia

Steve Rawlins, CEO of semiconductors, passives and e-mech distributor Anglia gives his view of the components market as it faces up to the challenges of an economic slowdown.

1. How would you characterise the UK components market, particularly in the light of concerns over the global economic slowdown?

The UK components market is not in the greatest of shape right now - it's widely reported that billings are down. The country operates in a global marketplace and is subject to the same external influences as any other. It's tough - the industry data already predicts a shrinkage in DTAM [distributor total available market] for 2008 of -5%, personally I think the final score could be even greater. Component lead times are very short now and prices have probably already reached their lowest level.

For sure there has been a decline in electronic product manufacture in the UK, but it's a decline that is not unique and has been felt by many other sectors of manufacturing. From our own perspective, we are seeing gains however, as direct accounts are transferred from component manufacturer to distributor, as manufacturers move to leaner operations. We have an advantage in this respect by investing in strong local inventory and design-in support. And despite the doom and gloom, there are still new and emerging technology areas that continue to create new business opportunities for demand creation distributors like us.

2. Will the recent M&A activity in the UK market raise challenges or opportunities?

When any UK distributor is swallowed up by a global distributor customer choice in the country is to some extent being eroded and as a result, it's often the case that we benefit from such acquisition activity. The bigger question to answer perhaps is that in a broadly declining European market, can large pan-European distributor business models continue to sustain themselves?

Certainly, in the pursuit of growth, further consolidation may well happen, but against this backdrop I do see the role of the strong local distributor growing in importance. The relevance of the pan-European is waning - it's got to be either local or global.

3. As rising fuel costs push up transport costs to China do you see signs that Europe may become more attractive as a location for manufacturing?

We are already seeing manufacturing moving to Eastern Europe and while it's true that transport costs are a consideration in the decision making process, it's clear that labour cost, time zone and general accessibility are significant factors too. Plus there still remains a question mark over product quality control in the Far East, which also needs to be considered.

Fuel costs will undoubtedly have an increasing influence on manufacturing location as major OEMs begin to think seriously about reducing their carbon footprints, however I do suspect that it'll be legislation rather than 'green conscience' that'll produce the biggest impact.

4. Which end markets are the most active right now?

Lighting is an end market that's very active for us right now. The migration of traditional electrical lighting design to high brightness LED based solutions has created a whole new customer base and it needs the right design-in support to achieve the reliability and efficiency goals. Wireless connectivity - GSM, Zigbee, Bluetooth - in a wide range of industrial M2M end uses, is another area that's very buoyant, as applications add new levels of supervision, control and data acquisition. We are also seeing a lot of activity in power supply design, there's a lot of initiatives coming out designed to encourage manufacturers to improve efficiency, such as Energy Star V2 and the European Code of Conduct V3 and we are seeing a continual move away from linear supplies in favour of switched mode.

5. Are lengthening lead times on some products an issue?

No, we're not seeing any extension in lead times from our suppliers, and as said, lead times are actually very short right now, which is great for customers. Lead times are very stable and the indications are that this will continue until the end of Q2 next year.
 
See also: Q5 - Interviews with electronics industry leaders
Read all the Electronics Weekly Q5 interviews. From ARM's chairman, Sir Robin Saxby, to touchscreen technology firm Zytronic's MD, Mark Cambridge, the business leaders share their particular insights on the UK electronics industry.

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