How the UK Electronics Sector is Thriving Amidst Global Challenges

After the various shocks of the last 3 years, having a “stable” business environment has been a bit of a surprise. The shocks of Covid, Ukraine war, Red Sea etc still leave ripples that the electronics sector is still having to manage. Initially we had a lot of stock unwinding, followed by labour shortages, which pushed up costs and lead-times for unique items. In addition, we now see many component manufactures making parts obsolete so they can focus upon new, more profitable components.

Texcel Technology’s customer base is very diverse, with all sectors are showing high demand, which contrary to the general media is great news for UK manufacturing, as I am sure many CEMs are in the same situation. Now OEMs are looking for manufacturing partners that have stock holding capabilities, and a flexible service approach. This is making life for the smaller or the less financially stable CEM very difficult, and I can see the Contract Electronic Manufacturing supply base splitting into two main camps by the end of the year, the profitable and the loss making groups.

There is still a lot of potential shocks sitting out there, and many OEMs are now looking to shorten supply chains, with more local content, coupled with reduced environmental impacts. This reshoring has continued to grow, mainly from the Far East, with an increase now from the old eastern Bloc Countries. Mitigation also includes additional finished assemblies, and extended component commitments, but with flexible scheduled deliveries. Securing components whilst maintaining cash flow.

By the end of 2024, I expect the UK’s CEM sector to grow when compared to the end of 2023, but the number of suppliers will reduce in quantity whilst growing in turnover.

Hopefully we will not see any shocks in the near future but it would be prudent to plan for the possible of one.