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Connector price, delivery time is currently stable

3 September 2009 777 views No Comment

The worst may be over for the connector industry as connector suppliers report orders are picking up after months of weak demand, plant closings and layoffs.

For buyers, price erosion remains at the industry’s average of 3-5%. Although leadtimes are stable in the six-to-eight-week range, buyers can expect leadtimes to stretch for some connectors as demand starts to slowly increase and suppliers re-adjust their inventory levels.

“It’s been a difficult period of time starting in October 2008. We’ve had nine months of this disaster and that’s plenty of time for companies to get manufacturing and inventories in line with the reality of lower demand,” says Ron Bishop, president of Bishop & Associates Inc. in St. Charles, Ill.

Bishop says most connector companies are at least 25% smaller than they were last year, and at the midpoint for 2009, connector sales are off by 33.9%.

The market researcher projects the global connector market will shrink by 25% in 2009, tallying sales of about $33 billion, down from about $44 billion last year. The worst hit markets include automotive, industrial and transportation non-automotive, says Bishop. The best markets include military/aerospace, medical, computer and telecommunications with mobile and wireless doing much better than networking and infrastructure, he says.

Many connector suppliers also cite the alternative energy industry, particularly solar and wind as potential growth markets.

As connector suppliers start to see a slight uptick in business, they are struggling with the issue of when to increase capacity, which could lead to longer lead times as demand starts to pickup.

Dennis Renaud, vice president of global product management, communications and industrial solutions business unit, Tyco Electronics in Harrisburg, Pa., says the company is struggling to balance supply and demand and is trying to determine how much expansion it needs to do.

Before suppliers make investments in expanding, they need to determine if the current uptick in business is because of stimulus funds from governments or from replenishment due to low inventory levels in the supply chain or from long, says Renaud.

Keith Eichmann, product marketing manager for backplane connectors, for Amphenol TCS, in Nashua, N.H., says the wireless segment was strong during the first half because of infrastructure building in developing countries including China, but the segment may be down slightly in the second half as China waits for a second round of stimulus funds.

Renaud says he’s starting to see some stresses in the raw materials supply chain such as metals and plastics which could lead to longer leadtimes.

Gina Roos

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