Executives from UK-based electronic manufacturing services (EMS) companies met in London last month to share information on how they were dealing with the global economic downturn.
The mood at the meeting, organised by industry body Intellect, was subdued, but the executives refused to slip into despondency about the electronics market in this country.
For most of them this is a situation they have experienced before, during the dotcom downturn of 2000/1. As a result, there was a sense that the UK manufacturing community, though significantly smaller than it was eight years ago, is in better shape to deal with the current downturn.
This rests on a number of factors. Companies that survived the last downturn are leaner, with lower cost bases and stronger business models.
Many have invested in new skills and manufacturing technologies in the past six years and so are able to address customers across a wider range of end markets.
In 2000, for example, it was not uncommon for a manufacturer to do more than half its business in the communications sector alone. That situation has changed.
The low value of the pound is also opening opportunities for business with start-ups in mainland Europe, as favourable exchange rates make UK-based manufacturers more competitive.
What is certain is that the absence of high-volume, lower-cost manufacturing from the UK, which effectively moved to Eastern Europe and China many years ago, has left a rump of more robust small and medium volume manufacturers which more often than not specialise in particular technologies or markets.
"We have seen some projects delayed but we have not lost business and, believe it or not, there are new business opportunities – the nuclear industry for example," says Nick Mair, sales and marketing manager at Ultra Electronics, which specialises in the defence and aerospace sectors.
"The situation should be manageable," agrees Paul Deehan, chief executive of AWS Group.
Another factor is that the outsourcing of manufacturing, from which EMS providers derive their business, may become more attractive to OEM customers in a downturn. Although this has yet to be proved.
"The outsourcing option is moving fixed to variable costs. This will happen," says Deehan.
In the past 10 years, the electronics manufacturing market has been squeezed by lower-cost competition from overseas. It has come through and is stronger for it.
"Before this downturn, this was not a contracting market," says Peter Towler, business development manager at Briton EMS.
"There is some evidence that outsourcing of manufacturing services will increase in the downturn," says Fowler. "This is a leaner, more agile industry and so it is better-positioned to work though this downturn. I have no doubt this market will start growing again."
All executives agreed that the government could take a more positive approach to the manufacturing industry by investing in growth sectors like electronics, rather that prop up failing car companies.
As Deehan points out, "Why invest in failing businesses? The government should target investment where the design expertise is, and one such area is electronics."