Falling distribution sales do not reflect design strength in UK
There will be little or no growth in components sales through distribution next year, according to Afdec, the authorised distributor industry group.
This follows a difficult 2012 when distributors saw their total available market in the UK and Ireland shrink by 14%.
According to the Afdec, which is part of the Electronic Components Supply Network (ECSN), the 2012 distribution total available market (DTAM) is expected to be £1.01bn.
The total market in UK and Ireland is predicted to be £2.6bn, a 16% fall on last year.
Despite sliding revenues, there is some positive news for the market. The book to bill ratio, an important industry indicator, has been slowly improving since March.
“The book to bill became positive in July ‘12 confirming an improving trend in overall demand and suggesting that there is momentum towards a recovery,” said Aubrey Dunford, ECSN market analyst.
Indeed the UK’s book-to-bill numbers are more positive than those in Germany and France.
There is also the under-lying strength of design activity in the UK, which is not always visible in the market sales figures.
Global and indigenous product companies have design teams operating in the UK.
While they are targets for distributors and component suppliers to secure design-ins, the eventual manufacturing sales will be seen outside the UK.
The growing importance of the design activity to the health of the UK market is being recognised by ECSN chairman, Adam Fletcher, who said his intention is to make design activities more visible in the forecasts in the future.
“It is not all doom and gloom,” said Fletcher.
According Graham Maggs, director marketing EMEA at Mouser: “Although the market overall is indeed flat, the UK has always been a powerhouse of design which is why we see business growing here.”
“In common with the rest of Europe (and the USA) we have become a ‘design centre’ for manufacturing operations in the low cost Eastern economies and the Design Win revenue generated in the UK & Ireland in 2013 will probably be worth more than twice the actual sales revenue” said Nigel Watts, managing director, Ismosys.
“The somewhat lack lustre market-growth forecast by afdec members must encourage our industry to accept what’s become the true role of the UK and Ireland in the global electronics market place,” said Watts.
“Distributors have the processes in place to track UK design-ins as the go off-shore,” said Chris Shipway, country director, Avnet MEMEC UK.
Ben Green, technical marketing and communications manager at Harwin said that despite the flat forecast “electronics is vital in many emerging sectors – such as UAVs, robotics, oil & gas exploration and alternative energy.”
“Though the ecsn forecast shows that the market in 2013 will be little different from 2012, Omron is seeing much more encouraging interest from our focus markets,” said Alex Grout, distribution manager EMEA, Omron Electronic Components Europe.
“In our opinion there still are strong growth elements to the electronics business to be exploited in the UK and rest of world over the next year and beyond,” Nick Lidington, managing director, Sequoia Technology Group.
Yet sales in the UK market are being hit by local and global economic uncertainty.
“We have been witnessing an extended period of weak demand resulting in a continued inventory correction right across all global electronic components markets,” said Dunford.
“The lead-times for modest volumes of most electronic components is currently less than four weeks with many manufacturers reducing spare production capacity, which will take time to bring back on-line as demand increases,” said Dunford.