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.

ODU Connectors White paper: Rugged Connectors for the Battlefield Environment

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Manufacturers of military electronics have many options available to them for making equipment of the highest quality. In this new paper we evaluate some of the limiting factors related to the design and manufacture of equipment used by soldiers and in ground robotic systems, drawing special attention to connector selection.

Connectors are often critical to the performance of a finished system so five popular styles of threaded and twist-locking connectors are evaluated.

 

 

 

Download white paper: here

Also available is a white paper on High Speed Miniature Connectors for military use.

ODU has taken a different approach, replacing standard connectors by a ruggedized connector family of their own design, which results in a diameter as little as 11.9 mm for protocols up to 10Gbps.

This paper examines the challenges faced in designing ruggedized connectors for high speed data transfer – not only with regard to size, but also factors such as ease-of-use, performance, durability and transmission reliability.

Download white paper: here

download links

https://www.odu-uk.co.uk/fileadmin/redaktion/downloads/downloadcenter/Whitepapers/2020-10-27_ODU-threaded_WP_EN.pdf

https://www.odu-uk.co.uk/fileadmin/redaktion/downloads/downloadcenter/Whitepapers/2020-10-28_High-Speed-Connector_WP.pdf

HARTING discuss latest industrial technologies in new webinar series

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Following the success of the first Experts Camp back in May, HARTING have organised a second series of webinars to discuss the latest in industry innovations and connection technology. Below you’ll find more details of the topics HARTING’s specialists will present, including cutting-edge products, time-saving solutions and technologies for designing the future.

Modularity in Production looks at the benefits of modularisation and some of the methods used by manufacturers to achieve new levels of flexibility, including the ability to change production modules without disrupting other processes. HARTING will also present their innovative Han-Modular® connectivity solutions, which enable manufacturers to modularise their facilities and unlock economic and time saving benefits, including adaptable production methods, reduced maintenance downtimes and shortened set up times.

There are two webinars focused on Innovations in PCB Connectivity, where experts in printed circuit board design will showcase ground-breaking new products and concepts that will take PCB connectivity into the future. The first, Cutting Edge Board Solutions for Industry 4.0, will focus on miniaturised, bespoke solutions and the requirements of Industry 4.0 for printed circuit boards. The second, Board to Board Day, will highlight the new har-modular® range and present updates on the har-flex® family.

HARTING’s expertise in connector technology will come under focus with the Small Universal Connectors webinar, which looks at the Han® 1A series and the advantages of its modular system including flexibility, shortened installation times and reduced inventory. There will also be an examination of High-Quality Product Data and how it can improve efficiencies. HARTING is helping customers access product data via the relevant formats with the aim of providing complete connector configurations.

Finally, there will be an expansion of the popular Industrial Ethernet Trendsseries, which will cast a spotlight on Single Pair Ethernet (SPE), a ground-breaking new communication technology. The dedicated Single Pair Ethernet Day on December 2nd will consist of two sessions which will cover seamless connections between sensors and IIoT platforms and look at the entire SPE ecosystem.

To view the full range of on-demand and upcoming live webinars, please visit www.harting.com/UK/en-gb/web-seminar .

The UK electronics industry is facing a perfect storm according to connector suppliers’ body ITSA

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  • Member revenues down just 3% but order intake down 16%
  • Huge growth in Medical while Comms and Mil/Aero sectors holding up
  • HARTING’s Peter Hannon elected ITSA Deputy Chairman

August 4, 2020. While some aspects of the COVID 19 pandemic lockdown have been eased, the crisis continues to have a major impact on the UK electronics industry and what many describe as a perfect storm is gathering to really challenge the UK. As well as the pandemic, there’s BREXIT to consider and the potential fallout from the current tensions between the US and China.

Figures released by the Office of Budget Responsibility (OBR), state the best the UK can hope for this year is GDP down by 10.6% and at worst a figure of 14.3%.

Either way, according to ITSA Chairman John Biggs, the fall in the UK’s GDP will be more than a staggering 10%.  ITSA (Interconnect Technology Suppliers Association) represents many of the leading companies in the UK’s interconnection industry and is ideally placed to comment on how this key component sector sees the UK electronics industry halfway through a challenging 2020.

“As well as COVID 19, we seem to have put Brexit to one side with the possible consequences of a troublesome closure later this year. Then there’s the US trade war with China and the inevitable repercussions following the decision to remove Huawei from the UK’s 5G network.” Says John Biggs.

“Having said that, ITSA members only saw a 3% decrease in their revenues in the first half of 2020 compared to the same period in 2019, but, order intake was down by 16% with a UK Book to Bill of 0.69:1 and this will inevitably impact on the remainder of 2020 revenues.” Biggs adds.

There is a consensus amongst the members that 2020 will see a revenue decline of between 6%-12% while activity is expected to rebound by 8.7% in 2021 but remain below where it was prior to the pandemic for at least the next 3 years. Those members who report export business showed a much lower decline in orders of -3% and a Book top Bill of 0.93:1.

Some positive news

Despite the general negative impact on members UK business there are several markets which continue to be positive. Medical saw an increase of 102%, Communications up 45% (linked mainly to Data Centres capacity supporting more home working), and Mil/Aero where legacy projects continued.

Members distribution revenues dropped by 19%  but all members reported a good increase in activity throughout June and into July.

However, despite all of the above all of ITSA’s members are feeling positive about the next 12 months and are mostly looking at business levels being flat in 2021 and perhaps not returning to 2019 levels until 2022/3.

Peter Hannon elected Deputy Chairman

Peter Hannon, Managing Director of HARTING UK has been elected as Deputy Chairman with immediate effect. Commenting on Peter Hannon’s election, John Biggs said “ While I have no plans to relinquish the ITSA chair, it is really good to know that someone of Peter Hannon’s standing is available to take over. He and I have known each other for  many years and, as Managing Director of HARTING UK, he was a founding member of ITSA.”

A certified accountant, Peter left his Somerset roots behind to join Texas Instruments in 1988 and, by the time he left to join HARTING UK in 1998, he was Finance Controller for the TI company Power Innovations which is now owned by Bourns.

He joined  HARTING UK as Finance Director and became Managing Director in 2005. He has been  Vice Chair of Cynthia Spencer Hospice in Northampton since 2010. Among his many interests, Peter lists walking, hiking, travel and bird watching.

Last year he made it to Everest base camp, hiked up Kilimanjaro in 2014 and made three successful climbs of Yorkshire’s 3 peaks.

Commenting on this news, Peter said “I am delighted to take up this new role at a significant point in the Association’s development and the economic climate in general. I look forward to working closely with John and being a voice for our Interconnection members in the UK”

 

 

 

Some positives among the COVID-19 gloom cannot disguise a hugely challenging year ahead for the UK connector industry

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• T&M, Medical, Mil/Aero and Comms sectors still positive
• Commodity prices and supply chain issues are challenging
• ITSA members revenues drop by 10% in Q1

May 19th 2020. It has taken just a little under three months to turn what had the real potential to be a positive 2020 for the UK electronics industry into one that has shaken every business to the core. The shutdown in China, for example, has had a significant effect on the supply chain while the dramatic changes in commodity prices will have an obvious impact on materials and manufacturing as well as incoming costs and outgoing prices.
“The result of these and other challenges has meant that ITSA (Interconnect Technology Suppliers Association) members have faced a difficult first quarter.” Says ITSA’s Chairman John Biggs. “And there can be no doubt that the UK connector industry has a particularly challenging year ahead.
“In terms of numbers, ITSA members saw revenues drop by 10% compared to the fourth quarter of 2019 but of more significance is that orders dropped by 14% giving a negative book to bill of 0.87:1 which will inevitably lead to lower revenues later in the year. Member’s distribution revenues dropped by 20% and this is likely to follow elsewhere in the market as we progress through 2020.
“We have witnessed dramatic effects on the price of commodities such as Oil, which dropped to the lowest level for 18 years and Gold, where prices have increased by between 5-8% depending on which quarter we compare it to in 2019. Prices for Silver have fallen by more than 15% since January while Copper has been at a 52-week low.” Adds Biggs

According to ITSA, several markets have continued to be buoyant. These include Test & Measurement, Mil/Aero and Medical. Not surprisingly, T&M and Medical have both been positively affected by the technology demands to combat COVID-19 while Mil/Aero is almost certainly due to the need to fulfil existing programmes.
The communications market is clearly being driven by 5G with members seeing 29% growth. The deployment of Fibre into networks continues at pace and ITSA members enjoyed a 45% increase in this product area with Q1 being the highest level for 8 years.

COVID-19 – ITSA member’s response

All members of ITSA have naturally had to adjust and adapt to the COVID-19 pandemic with varying degrees of severity according to John Biggs. Some members have had to furlough staff while others have taken the decision to keep their people on board either because of demand or with support from their parent company.
Many members also responded to the challenge and are involved in supporting the medical equipment needs of the NHS. This clearly shows the level of adaptability still apparent in the UK and the present urgent requirement for COVID-19 testing for example brings into sharp focus the need for localised capabilities on into the future.
“The government is predicting that the UK economy could shrink by over 5% but that it would bounce back by Q3 or Q4 2021. This seems somewhat optimistic.” Says John Biggs
“At the moment, it is common to think about the “New Norm” which will exist after the lockdown starts to be released. This will likely take many forms but for businesses it will be a case of how best to manage their activities in a World where the traditional face to face will not be the “Norm” for many months to come.” He concludes.

ITSA reports that 2019 ends well for the UK connector industry

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2019 – ITSA Members posted 5% revenue growth over previous year
• 2019 – Highest revenue year since 2014
• 13% increase in distribution revenue stream

February 20. The European electronics market had what many have described as a “difficult” 2019 with only single digit growth, while the UK market fared marginally better. One of the many sectors that make up the UK marketplace, the connector industry, saw modest growth by the end of the year after a poor first half.
The first two quarters of 2019 saw connector revenues decline reflecting the weakness of the global economy and the high levels of uncertainty caused by Brexit. This according ITSA (Interconnect Technology Suppliers Association).
“It was also a reflection of UK companies adjusting their component inventories which many had built-up as a contingency against the possible consequences of Brexit” says John Biggs, Chairman of ITSA.
“In the second half of 2019, the UK connector sector stabilised as confidence returned to the market and key infrastructure projects were released.
“Against this backdrop our member companies saw a revenue growth of 5% over 2018 and enjoyed the highest revenue year since 2014. A key driver of this growth has been the increase in the distribution revenue stream which increased by 13% and now accounts for 37% of ITSA UK revenues” John Biggs adds.

Key market performance
There are several key markets for ITSA members including MIL/Aerospace, mass transportation and communications and these continue to perform in different ways. During last year, MIL/Aerospace showed a 5% decrease at component level but this was more than offset by an increase in Value Add. Despite project deferrals and Government cutbacks, this sector has continued to grow and remains a long-term focus for ITSA members.
The communications market has shown a gradual decline in revenues at component level as more and more companies focus on offering Value Add solutions. This can be seen clearly with members reporting an overall increase of 36% over 2018 but with 2019 posting the highest revenue level for Value Add since the formation of the association. Clear winners here are Fibre Optics which posted a 63% increase and RF which grew by 31%.
The mass transportation market has also grown significantly over the past five years and although members saw flat revenues in 2019 this is a very project driven market and revenue trends will continue to fluctuate.

All the above should have meant a positive 2019, however, bookings remained very weak and posted three consecutive quarters of negative book to bill ending the year at 0.93:1. This is again a reflection of organisation adjusting their demand and inventories in line with the market uncertainty.
The level of contraction being seen by ITSA members reflects well against the overall trend in UK manufacturing which has reportedly posted its weakest year for seven years