ITSA – Connector sales growth escalates in Q1 of 2021

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  • Member sales increase by 15% in Q1 compared to Q4 2020
  • Distribution, Broadcast and Industrial all show double digit growth
  • Fibre sales up 57% recovering the Q4 downturn
  • Circular up 28%
  • Value add recovers by 22%

2020 was, in many ways, a year to forget with the COVID pandemic severely affecting members revenues and BREXIT just adding to the uncertainty. The third lockdown over the winter just emphasised how unpredictable the pandemic has been, however, the huge success of the vaccine roll out in the UK has brought much needed confidence back to the markets and a far greater degree of certainty for the recovery of the UK economy.

A final agreement on BREXIT was reached between the UK and the EU late in 2020 and the transition has been far from plain sailing. ITSA has carried out a survey of its membership of how it has affected their businesses and the outcome of this will be released in the next few weeks.

A positive note relates to forecasts being produced for UK GDP growth in 2021/2 with 2021 expecting to see 5.7% and 2022 5.6% and unemployment reducing to 5.8%. Economists are suggesting that these forecasts may well be exceeded and that the UK economy could see one of the strongest recoveries in Europe.

Year on year comparisons are not necessarily reflective as the market was affected globally by a pandemic that had totally unexpected impact on every aspect of our members businesses.

ITSA Members report sales up by 15% in Q1 of 2021

ITSA members sales were up an average of 15% when compared to the last quarter of 2020 but there were some big differences between each member with the range covering +7% to +25%. With members enjoying a positive book to bill of between 1.04:1 and 1.06:1 over the past two quarters this bodes well for continuing improved revenues. With improved revenues and stronger long term order books our members could well enjoy a significant  boost this year.

Industrial, Broadcast and Distribution all see significant growth

With growth of 23% in Industrial, 20% in Broadcast and 14% in Distribution, three of our most significant markets are fuelling members revenue growth, however, Mil/Aero was flat which was a surprise and it will be interesting to see how this progresses into the rest of the year.

Value Add had a very poor end to 2020 but has really bounced back in Q1 2021 with both Fibre Optic and Coax improving by 16% but Copper Assemblies outstripped this by some way with an increase of 42%, this may be partly project specific.

Both the OEM and the Distribution sectors saw double digit growth of around 15%.

At the end of 2020 members were projecting a Q1 2021 being either flat or a small negative, this has not happened and for the most part all members are in a much better position than expected.

Overall ITSA members have enjoyed and extremely positive start to 2021 and most are projecting a return to 2019 levels by 2022.

With the current estimates of the UK connector market we believe that ITSA members represent 21% of the total market.

UK Manufacturing at a decade high in March

According to figures published by  HIS MARKIT/CIPS UK Manufacturing PMI, the UK manufacturing sector continued to recover in March with a PMI of 58.9, The upturn in the UK manufacturing sector gained further momentum at the end of the first quarter. Output and new orders increased as intake improved from both domestic and overseas markets, however, the sector remained beset by severe supply chain and logistics issues..

Output increased for the tenth consecutive month and at the fastest rate since last November.

Higher output has been linked to improved order intake, the vaccine roll out and the planned removal of lockdown restrictions. New business was a key driver with levels being the highest for over 3 years. This demand is coming from both domestic and overseas customers.

Supply chain issues remained a constraint on UK manufacturers causing disruption of raw material deliveries, production schedules and onward logistics to customers all as a result of COVID 19 restrictions but also disruptions caused by post BREXIT issues at ports, carriers and low stocks.

Most manufacturers maintained a very positive outlook for the year ahead with only 6% expecting some kind of contraction.

Summary

2021 has started very well for all members and if all of the forecasts and projections are right then this year could see a significant recovery in the overall economy and markets. There is, we believe, a tremendous amount of pent up activity and with consumers having spent very little over the past 12 months we should see some significant activity in a number of areas including “Entertainment, Technology i.e. mobile phones, computing, white goods etc” and this could also be fuelled by a lot of people continuing to work remotely.

Investments by members parent companies continue and we have noted that acquisitions are being announced more frequently which is extremely positive.

As an association we continue to grow and enhance our profile and we have already gained another new Associate member in the form of Batten & Allen a component manufacturer.

opticalCON connectors ensure integrity of MediaPro International’s 15 km fiber-optic Dante™ network at Diriyah E-Prix

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NEUTRIK Ryde, Isle of Wight, 15 April 2021. Connectivity for a massive Dante™ audio network, extending over some 15 kilometers of fiber-optic cable, during the 2021 Diriyah E-Prix in Saudi Arabia, relied on the robust, field tested dependability of Neutrik opticalCON DUO connectors.

The site-wide audio, video, lighting and rigging infrastructure supplied and operated by Dubai headquartered MediaPro included their entire Middle East based stock of L-Acoustics systems, and a complete redundant Dante network.

Commenting on the choice of opticalCON DUO connectors, MediaPro International Chief Operating Officer Shaam Pudaruth says, “Connectivity solutions of the quality and ruggedness of Neutrik’s opticalCON range are an essential element in providing the technological advantages of AoIP fibre optic networking solutions.”

Smiths Interconnect flies high on F-35 aircraft

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All military programmes are valuable contracts to secure as they are typically long-term commitments that will generate stable future revenue for the businesses. The Lockheed Martin F-35 Lightning II (previously known as Joint Strike Fighter/JSF) programme falls into this category, dating back to the late 1990s when the need for a 5th Generation aircraft began to evolve.

The F-35 Lightning II is a family of single-seat, single-engine, all-weather stealth multirole combat aircraft that represent a quantum leap in air dominance capabilities. It is the first 5th generation multi role aircraft to reach service, offering significant updates over previous generation jets. Intended to perform superior air dominance, F-35 are also able to provide electronic warfare and intelligence, surveillance, and reconnaissance capabilities. Integration and interoperability between allies have also been a key driver in the technology development.

Smiths Interconnect has been involved in the programme for more than 20 years, supplying hundreds of different interconnect devices including high reliability technologies, from RF components and high-speed/power/density/filtered connectors to integrated microwave assemblies.

“We proudly supply different connectivity solutions to different customers that are destined for use in the F-35 aircraft,” said Paul Harris, President at Smiths Interconnect. “Our products and technologies are renowned to ensure the performance, reliability, safety and productivity that are paramount in this most advanced multi-role fighter in the world”.

Smiths Interconnect’s connectivity solutions for the F-35 aircraft include:
 High power circulators embedding used on the Communications, Navigation, and Identification (CNI) system and integrated microwave assemblies used on the Electronic Warfare (EW) system, both embedding TRAK technology
 Power connectors with Hypertac hyperboloid contacts used on aircraft power systems
 Custom interposers with IDI spring probes used on the radar system
 High reliability attenuators with EMC technology also used on the radar system
 Discrete filters embedding Lorch technology and used on the CNI system
 EMI/EMP filtered connectors with Sabritec technology used in power distribution, power panels and battery chargers

In addition to the above, Reflex Photonics, which was recently acquired by Smiths Interconnect and complements its product offering with the addition of core fibre optic capabilities, is developing optical transceivers for use in the programme.

Lemco, how to Choose a Screw-Machined Parts Supplier for Mil/Aero Product Development

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Interesting article from our Associate member LEMCO regarding reliable, screw-machined parts that help ensure the optimal operation of connectors employed in mission-critical applications. It’s important to select a supplier that understands the unique requirements of this market.

How to Choose a Screw-Machined Parts Supplier for Mil/Aero Product Development (connectorsupplier.com)

ITSA 2020 summary press release

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We are pleased to share our latest UK Interconnect market review for 2020 published in What’s New in Electronics.

 

https://www.electronicspecifier.com/news/latest/2020-a-tough-year-for-uk-interconnect-technology

Neutrik AG acquires Connex Gmbh headquartered in Oldenburg, Germany

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Schaan, March 5, 2021. With this most recent acquisition, the Neutrik Group strengthens its expertise in connectivity solutions.

CONNEX produces and develops high-quality components for professional event industry and demanding industrial applications. The company was founded in 1990 and is based in Oldenburg/Northern Germany. The product portfolio comprises solutions for mobile or stationary applications. These include power distribution systems, fiber optic solutions, video products, ethernet components, splitters, patching systems, stage boxes, cabling and measuring devices.

CONNEX focuses not only on standardized products, but also develops individual solutions and delivers comprehensive consulting services and support in the implementation of projects.

“We are very excited about the growth of our Group. Connex Gmbh is going to enable us to expand our activities to further areas of application and to strengthen our leading position in the market”, says Chad Trevithick, CEO at Neutrik Group.

Neutrik UK appointments David Morbey to new product marketing role

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Ryde, Isle of Wight, 19 February 2021. Neutrik UK has announced the appointment of David Morbey to the newly created position of Product Marketing Manager; creating a full marketing role at management level for the first time within the company.

Morbey brings more than 22 years experience of pro-audio product marketing, across a wide range of sectors and applications to the new position.. He comes to Neutrik having held UK, European and international marketing and product management roles with leading industry brands, including Allen & Heath, Denon Pro, Marantz Pro, Rane Contractor and Martin Audio, and across DJ, live sound, commercial AV, Custom Install and broadcast installation applications.

Managing Director Mark Perrins states, “We are delighted to have the opportunity to appoint David to this key strategic role within Neutrik UK and I am personally delighted to be working with him once again,” Perrins previously worked with Morbey for a number of years during his tenure as General Manager at D&M Professional.

“I am truly excited to be joining a talented team at Neutrik UK,” says Morbey. “Neutrik has a long history as a market leader and innovator in the field of connectivity, and I am looking forward to helping shape brand strategy and sales growth in new and non traditional market sectors for the company’s expanding range of connectivity solutions.”

ITSA member summary 2020

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As we all know 2020 was one of the most challenging years many of us can remember and this is reflected in the results of our membership.

Year on year comparisons are not necessarily reflective as the market was affected globally by a pandemic that had totally unexpected impact on every aspect of our members businesses.

In the background of all of this we also had BREXIT which had added to the uncertainty and there appeared to be a degree of “contingency stocking” taking place across many industries to protect against a no deal, in the end an 11th hour deal was reached so we all moved back from the cliff face but the true impact is still unknown. ITSA membership will be producing a report on the BREXIT deal and how it has impacted their businesses shortly.

Overall in 2020 our membership saw a UK revenue decline of around 10% but orders were down 14%, interestingly the Export data reported was very similar to this. Members revenues for 2020 had dropped back to 2017 levels.

Despite the reduction in sales for 2020 the feedback in the industry is that profitability was maintained or only minimally impacted due to short term cost savings in travel, exhibitions etc.

For obvious reasons certain market sectors saw huge negative impact, consumer was down 88% but this sector only represents a fraction of our members sales, broadcast was down 45% which is no surprise and the likelihood of this returning any time soon is virtually zero.

Distribution was also badly affected to the extent of a 15% reduction and this had a particularly noticeable impact on member sales.

There were some positives in the market with communications up 29%, probably due to investments to ensure increased demand for broadband width for home working could be supported and medical which was up 86% for obvious reasons. I would expect medical to feature heavily for the foreseeable future.

Value Add, which is a significant portion of members revenues, declined by 19% in 2020 with Fibre Optic down by 41% and Hybrid by 78%. Some of the Hybrid reduction can be attributed to members moving manufacturing elsewhere within their corporation.

For 2021 our members are looking at a possible small negative or flat first half and then potentially a stronger second half and he Government are expected to announce more infrastructure projects and incentives in the  March budget to help economy to recover. Most members are projecting that they will return to 2019 levels by the end of 2022, however, some analysts are predicting a 4 year recovery.

According to the latest data on  UK GDP the economy shrunk by 9.9% in 2020 and our members performance reflected this fairly closely. The ONS forecasts a 5.4% growth in GDP in 2021 which we feel is ambitious. Unemployment has risen to 5.9% and PSNB to £381 billion!!

For 2021 the ONS are forecasting unemployment to continue to rise to 6.7% but PSNB reducing to £202 billion. The huge debt the UK has built up due to the pandemic has to be recovered some how even though the government are talking about high net borrowing for the next decade!!

All things considered it goes without saying that there is a long road ahead for us to come out of this pandemic and for us to see markets recover.

HIS Markit/CIPS report

According to the final Markit/CIPS report of 2020 the UK manufacturing sector had a mixed end to 2020. Orders were positive mainly due to demand being brought forward to beat the BREXIT deadline and some recovery in global markets. There has been some notable impact on port delays and other logistical disruptions resulting in lengthening lead times.

The PMI index rose to 57.5 in December which was a 3 year high, however, this is mainly due to longer lead times and a substantial increase in stocks.

Manufacturing output rose for the seventh consecutive month but job cuts continued to increase for the eleventh consecutive month.

As with our membership there was a surge in orders at the end of last year but this mainly reflected customers bringing forward orders to guard against potential disruption due to the end of the BREXIT transition period.

It was reported that manufacturers experience substantial disruption to supply chains in December. Raw material shortages, port delays, freight capacity issues (air, sea and land) and BREXIT concerns all created the perfect storm.

Input costs rose at the quickest rate in two and half years reflecting shortages, vendor price rises, increased transportation costs, BREXIT uncertainty and exchange rate factors all leading to manufacturers increasing their prices.

Summary

We have just exited a year like no other, however, looking at our members data it seems we may have weathered the initial storm reasonably well. Whilst we have hope on the horizon with the vaccine roll out we are still looking at 2021 being a flat or minimal growth year for the UK interconnect market. A very positive aspect is that members parent companies continue to  plan investments, developments etc and it is really heartening that they seem to be taking this difficult period to look to the future and plan ahead.

We reamin confident that our members and their parent companies will come through this strongly and maybe with a different type of focus on “business” in the future.

As an association we have also weathered the storm, we continued to produce PR articles that have been very well received by the press and has given our association a definite profile lift, we continue to support the umbrella project for RoSH exemptions into the EU, a number of which directly affect connector manufacturers and are currently in the consultation period.

We gained another associate member in the form of ASTEC precision during 2020.

I think we should be pleased with how the association has continued to be promoted and the fact that we remain with a very solid footing for 2021 and beyond.

ITSA – Connector sales growth in some sectors belies a tough year ahead

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  • Member sales down 9% YTD compared to 2019
  • Medical sector remains “healthy”
  • Fibre sales down 37%

ITSA represents UK connector and component companies supplying into the UK electronics industry. Since connectors of all types and formats are fundamental to virtually every technology-based product or system, what ITSA’s members are experiencing is a pretty accurate barometer of how the UK electronics industry is doing in these unprecedented times.

John Biggs – ITSA Chairman

November 13, 2020. Back in August we reported that, while the easing of the COVID 19 lockdown had many positive benefits, the pandemic would continue to have an ongoing and negative impact on the UK electronics industry. Just over three months later, the numbers reported by ITSA members for the third quarter clearly demonstrate how significant the impact has been. News that a vaccine could be available by the end of the year was a single major plus in these difficult times.

The other issues creating concern in August were BREXIT and the tensions between the US and China. Either a deal or a no-deal BREXIT still remains possible but we are hopeful that the US election result will be a positive step towards improving the relationship between Washington and Beijing. Hopefully, there will be some positive news from these developments.

On a less than positive note, forecasts compiled by the Government show the average prediction for this year’s UK GDP is now -10.1% with unemployment expected to hit 8.3% by the end of the year and only improving to 6.6% by the close of next year. The figures also show that the UK economy is expected to rebound by only 6.5% in 2021.

ITSA Members report sales down 9% YTD

According to ITSA Chairman John Biggs, its members sales were down 9% YTD when compared to 2019. “Of bigger concern is the fact that orders are down 19% and book to bill is down at 0.83:1.” Says John Biggs. “This will inevitably lead to lower revenues in Q4 and beyond and also reflects the fact that members are not enjoying long term order schedules. Member’s export revenues are only down by 5% but orders are down a huge 22%.” Adds Biggs.

Medical and Value Add Solutions grow

Sectors that have shown good billings include medical with members reporting an 83% increase, while value added solutions have shown positive signs during the last quarter at 7% growth. According to ITSA, this  should be looked at in conjunction with pure product sales as there is a definite trend of moving from component sales to solution sales.

The communications sector was up by 37% which, in ITSA’s opinion, reflects the need for more bandwidth for home and remote working. Test and Measurement, which links very closely, to communications and medical was up by 51%.

Broadcast really suffered in Q3 running at 50% of last year’s rate. With no end in sight for restrictions on concerts, outdoor festivals, theatres etc this market will continue to struggle.

One of the largest ITSA member market is Mil/Aero which accounts for 30% of members sales and  has only shrunk by 5%. However, distribution, which accounts for 33% of sales, is showing a drop of 20%.

UK Manufacturing recovered in Q3

According to figures published by  HIS MARKIT/CIPS UK Manufacturing PMI, the UK manufacturing sector continued to recover in September with a PMI of 54.1. Output and new orders increased as intake improved from both domestic and overseas markets.

Output increased for the fourth consecutive month albeit slightly lower than August.

This improvement was driven by many economies around the world reopening from lockdowns due to COVID 19 (this may well reverse very quickly in light of the alarming spike in new COVID 19 cases around the world and the introduction of new lockdowns).

Increases in inbound costs are driving manufacturers to increase selling prices, the main reasons here are higher raw material costs which saw Gold up over 21% YTD.

Most manufacturers maintained a positive outlook for the year ahead with 60% expecting output to be higher in 12 months from now. This optimism has to be tempered in view of the escalating COVID 19 spike and further local and national lockdowns.