Phil Gee, vice president of EMEA sales at component distributor Nu Horizons, talks to Electronics Weekly about the European components market and the economic slowdown, the most promising geographic markets, rising fuel costs and Chinese manufacturing, and lengthening lead times on some products...
How would you characterise the European components market, particularly in the light of concerns over the global economic slowdown?
The ever changing dynamic of the global market and the doom and gloom associated with the demise of major financial institutions really point to the fact that we are now heading into completely uncharted territory.
As far as the European components market is concerned, we all read the same data and this points to the first half of the year being ahead of initial expectations. That said, there are no crystal balls out there, so the clear message is to get back to basics, continually evaluate your business model and figure out how to get more out of existing resources.As far as we are concerned I obviously see the market conditions as a major challenge, however our market share remains small therefore we are in growth mode and we continue to see our investment in European expansion paying dividends. We have to keep moving forward and our firm belief is that with a limited number of proprietary suppliers on our line card, a high ratio of engineers to sales people, our model remains robust and one which will meet market challenges head on.
Which geographic markets do you see as the most interesting and promising?Obviously we have to look at markets in terms of distribution total available market (DTAM) potential. For example, we see the UK in decline, however we also see other opportunities to grow.
In Central Europe we have assembled a new team and our market share is so small in such a huge market that again the opportunity for us to grow and make continued investments in resources ahead of the actual revenue curve remains a key strategy.
In addition, after only six months of having a team in Eastern Europe, our revenue streams are significant. We see major design opportunities in tier two and tier three OEMs and we see the major electronic manufacturing services (EMS) players continually attracting new customers.
As rising fuel costs push up transport costs to China do you see signs that Europe may become more attractive as a location for manufacturing?
Absolutely, and the reason why some OEM customers have or are looking to shift back to European manufacturing is not just an issue confined to rising transport costs. Control of approved vendor lists, control of the supply base in general and efficient supply chain solutions are each examples of why OEMs are continually re-evaluating the decision to outsource in the Far East.
We see major segments such as set top box manufacturing moving back to East Europe as well as the major influx of LCD TV producers building major factories in parts of Eastern Europe. As many regions in Europe change from being ‘manufacturers’ to more design orientated companies, there are so many smaller design based companies who will be looking for more localized manufacturing, so certainly more opportunity for low volume high mix production scenarios to be based in Europe.
Overall however, I think the market has changed forever and in terms of ’real’ volume manufacturing, it will remain in the Far East.
Which end markets are the most active in Europe right now?
As far as component distribution is concerned, new markets such as lighting have provided new opportunities in what is essentially an entirely new customer base. In terms of existing markets where we see the major opportunities for growth are in more mature markets such as the industrial and medical sectors.
Are lengthening lead times on some products an issue?
I can only comment based on the suppliers we represent. Essentially no, however what has been more of an effect and an area which has had an obvious impact on our customer base is price increases.
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