The Electronic Components Supply Network (ecsn) is forecasting a ‘modest’ decline in the distribution business in the UK and Ireland in the second half of the year.
The first half of the year saw a decline of 10 percent when compared to the same period last year. The association’s forecast for the second half of the year suggests that the market decline will slow and reveal a second half decline between 9 and 3 percent, with a mid-point decline of 6 percent.
This will bring the year to a total decline of 8 percent over 2019.
“The sharp decline in growth in 2020 is primarily the result of a global economic slowdown caused by the COVID-19 pandemic, which was not a forecastable event in 2019”, said Aubrey Dunford, Market Analyst at ecsn. “However, the ongoing trade war between China and the US had already reduced demand in Q4’19 and enabled customers to de-stock based on increased availability due to tumbling component lead-times and because of their weakening customer order book”.
“We think the market will improve a little but not a lot,” said Adam Fletcher, chairman of ecsn. “May was the absolute bottom of the cycle. We are assuming the situation gradually gets better. We’ll look to see where Europe sits in the next few weeks. My gut feel is they will be doing slightly better as we have had to factor in Brexit.”
The UK has not been as badly hit by the collapse in the automotive market as car factories shut down, he says. “It’s much higher in Germany where they are supplying Tier 2 suppliers for infotainment and climate control. In the UK I don’t think we have as much exposure,” he said.
“The area with the worst exposure is commercial avionics as we are quite a strong layer in that for cockpit instrumentation and all the other computer systems and that will be hit. That’s going