Vital signs are starting to show
08 March 2010
More encouraging signs for the electronics manufacturing industry as the IPC’s winter report indicates a strong performance in North America; still the engine room for the global electronics industry.
The IPC take further encouragement from the general economic indicators. The US economy grew by 5.7% (based on GDP) in the fourth quarter of 2009. Economic activity in the manufacturing sector expanded in December for the fifth consecutive month, and the US economy overall grew for the eighth consecutive month.
Most leading indicators of North American economic growth have been climbing since April 2009. China’s economic recovery is in full swing, with 10.7% growth in GDP in the fourth quarter of 2009. Japan’s GDP growth in that quarter was weak at 1.1%. Europe’s recovery stalled in the fourth quarter with a lower-than-expected 0.1% GDP growth, but even the disappointing growth figure at the same value in the UK was retrospectively corrected upwards to 0.3%. Year-on-year sales growth rates hit bottom for most segments of the electronic interconnect supply chain in the first and second quarters of 2009. Most supplier industries improved significantly in the second half of 2009.
The long-awaited good news is very welcome and as everybody also keeps saying it is still a tentative and cautious recovery - but there is little doubt that any of us wouldn’t trade our current position of having a fact-based recovery, rather than at any time over the last 18 months when optimism was the most useful currency. The forward visibility is still slightly blurred but improving all the time. Hopefully we are now approaching the point when the confidence has returned to such an extent that overdue investment in equipment can be put on the table. Engineers might even start suggesting that the pay rises that were skipped last year might be up for renewal.
However, there are issues in recovery that are akin to growing pains in small and successful companies. Some of these are internal, such as staffing and even access to credit, which is something that bemuses and disgusts many of us who view the bank bail-out as something that at least entitles industry to having a revitalised flow of credit.
There are broader issues that affect industry as a whole, like component supply and overall supply chain management and I would urge you to have a look at the latest column, Recovery challenges – balancing capacity and demand, from our American correspondent Susan Mucha, who examines some of these issues. Her excellent assessment of the challenges being faced by many companies also comes with some logical advice on how to approach some of them.
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