Gary Marsh, managing director of distributor Solid State Supplies talks to Electronics Weekly about how the downturn is really impacting business and new design opportunities which still exist...
1. What impact is the downturn having on your markets?
We 
focus on three main markets aerospace and defence, power management and embedded solutions. Our defence and embedded businesses are holding up well but we are beginning to see the effects of the downturn at several of our power management customers. Customers are making better utilisation of their stock and delaying order placement. Scheduled orders are becoming shorter but they are still placing business.
Whilst we increased sales in 2008 by 3% against an 
AFDEC average of -6% and our open order book is strong, we are mindful of the fact that market conditions are going to be difficult for most of us this year and we will continue to monitor our business on a month by month basis.
2. How is design activity in your OEM customers being affected?
We continue to see a strong level of design activity in all three of our focus markets. We invested in new software during 2008 to improve our tracking of design activity and provide better reporting of our design funnel and this is beginning to pay dividends. However, we have noticed design activity has become more targeted with speculative product launches being dropped in favour of products with a predetermined backlog. In order to obtain that critical competitive advantage, especially in these market conditions new designs are now more important than ever for both our customers and ourselves.
3. Can you identify any positives or opportunities in the current climate?
The rapid devaluation of the pound has certainly given distributors some headaches over the past six months. Hopefully we are through the worst of it and a devalued currency will mean UK manufacturing will now be much more competitive. We are already seeing some evidence of this from our CEM customers. This alone should give the supply chain some grounds for optimism in 2009. Component distribution is always battling against the menace of average selling price erosion. Again the currency devaluation will reverse some of this trend as it is unlikely we will see the two dollar pound again for sometime to come.
| The A - Z of Q5 interviews |
| A | ARM chairman, Robin Saxby |
| B | BSI manager, Simon Bircham |
| C | CamSemi CEO, David Baillie |
| D | Design LED, James Gourlay |
| E | Ensilica, Kevin Edwards |
| F | Future MD, Danny Miller |
| G | GSPK Design CEO, P. Marsh |
| I | Icera CEO, Stan Boland |
| J | Jennic CEO, Jim Lindop |
| L | Lumileds, Steve Landau |
| M | Mentor CEO, Walden Rhines |
| N | NI president, J. Truchard |
| O | OLED-T CTO, P.K. Nathan |
| P | ProVision CEO, David Sykes |
| Q | QinetiQ, Stephen Lake |
| R | Rambus CEO, Harold Hughes |
| S | SETsquared, Simon Bond |
| T | TI CEO, Rich Templeton |
| U | University of Southampton |
| W | Wolfson CEO, Dave Shrigley |
| X | XMOS CEO, James Foster |
| Z | Zetex CEO, Hans Rohrer |
| The alpha and omega of electronics industry interviews |
4. How are you adapting to the changing economic climate?
The company was established in 1971 so it has seen tough times before. Like all businesses it's a case of placing more emphasis on the basics, we're keeping tight control on our overhead budgets, closely monitoring our debtor days and stock is being made to work harder. "Cash is reality" as the saying goes and during times of economic downturn those customers who have maintained a broad supplier base will find cash flow management easier.
5. Do you see any end-markets with growth prospects?
The aerospace and defence market has always been a strong market for the UK. Having been established in this market for many years and with a large number of supplier approvals we stand to benefit from the continuing placement of defence contracts in this important UK industry. RF and Zigbee based solutions continue to provide new business opportunities and we also see growth in embedded modular platforms with multiple modes of connectivity. The pressing need for power conservation through new greener technologies has given us a raft of new design opportunities to develop this business in a new and exciting direction.
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.
See also: Credit Crunch: Semiconductor light amid economic gloom, in which Electronics Weekly highlights some recent stories that run counter to the prevailing industrial outlook.
See also: Credit Crunch: Semiconductor gloom amid economic gloom, in which Electronics Weekly highlights some recent stories that detail the effect of the economic downturn on the electronics industry.