Business managers must constantly adjust their strategies by adapting to what’s happened and what’s likely to happen. World economies remain difficult to gauge as governments look at changing interest rates and many other factors cloud the outlook.
The difficulty of monitoring data in a global economy prompts many managers to turn to outsiders who constantly scan market data to discern the latest trends. To some of those who follow the electronics fields that interest most IPC members, things are looking pretty good for the next several months.
“The metrics look good for the rest of 2013 and early 2014,” said Shawn Harrison, senior research analyst for the electronics and industrial technology supply chain at Longbow Research. “Most of the aspects we monitor are higher now than in the first half of 2013 and the second half of 2012.”
Inventory levels are one of those aspects. Longbow Research scrutinizes the levels of semiconductors, passives and other electronic components while also watching some of the key markets for those parts. Stockpiles have been trending downward.
“Right now, inventories are lean, which sets the stage for growth,” Harrison said.
Costs and pricing are also factors that contribute to the ups and downs of the market, as well as impacting profits. When material costs rose over the past year, rising prices created a headwind that slowed market growth and chilled profits. In recent months, material costs have declined.
“Commodity rates are much more favorable,” Harrison said. “Copper is down significantly from the fourth quarter of 2012, and gold is down. Any company that faced margin headwinds is now getting tail winds.”
Longbow also monitors the relationship between booking and billing. Though the ratios fluctuate, the overall trends are positive for most elements within the electronics supply chain. “Another key ratio is that book-to-bill ratios are positive,” Harrison said.
IPC data also shows positive ratios. In July, bookings exceeded shipments in July and the PCB book-to-bill ratio strengthened to 1.06.
“Book-to-bill ratios have been positive for more than six months,” said Sharon Starr, IPC director of market research.
Harrison will elaborate on these and other themes when he makes the keynote speech at the IPC Management Meetings September 24 in Chicago, Illinois. The meetings are in conjunction with IPC Technology Market Research Conference (TMRC), which looks at the juncture of technology and business trends.
The IPC Management Meetings feature presentations on lean manufacturing, supply chain design, the impact of health care reform, and ITAR/military spending. After these universal topics are discussed, a pair of breakout sessions will zero in on two industries. One session is designed specifically for EMS providers, while a second focuses on topics of concern to printed board manufacturers and their suppliers. These breakout sessions focus on issues such as conflict minerals, generating growth, budgeting, onshoring and the North American value proposition.
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