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Exploring The Technologies Under Electronic Engineering Segment

James McGregor, Director of Supplier Management, Newark Element14
James McGregor, Director of Supplier Management, Newark Element14

James McGregor, Director of Supplier Management, Newark Element14

What significant changes did your industry segment witness in 2013? What did these changes mean to vendors and customers?
There have been some interesting trends in the engineering and distribution industry segment, with more industrial original equipment manufacturer (OEM) customers accelerating their spending over the past quarter. We have seen contract manufacturing increase as well. As we close out 2013 and begin planning for the year ahead, Newark element14 has noticed many customers reducing their on-hand inventory of electronic components. While we have yet to see widespread lead times expand, it will only take a mild increase in demand for us to see that stretch in the first quarter.

We saw in 2013 some high profile examples of re-shoring, like Motorola partnering with Flextronics to manufacture the first USA-built smartphone. This is a trend that will continue as manufacturing becomes more efficient and high-tech, and as labor costs continue to increase in China.

What are some of the changes you had anticipated would happen in 2013 but did not happen?
Industrial OEM growth has occurred not across the board, but in pockets that are hard to identify as particular trends. Semiconductor products and electronic test equipment have seen a particular pickup in demand, but most product areas saw an increase in demand in the second half of 2013. Dynamic random-access memory (DRAM) will remain in short supply in 2014, but the feared disruption that was expected within the random-access memory market after the fire at SK Hynix’s facility in South Koreahas not been as major as expected.

Can you paint a picture for us of how the landscape for your industry segment will change in 2014? What are some of the broader trends you are closely watching?
I’m hopeful about the potential for on-shoring and re-shoring. A variety of large organizations are bringing electronics manufacturing to the United States. I don’t see high volume products shifting to the U.S. from a low-cost region. I think high mix low volume (HMLV) manufacturing is where the U.S. will win. Also, as mentioned above, Newark element14 has seen growth in industrial OEM customers, and that will continue into the first half of 2014.

How will vendors and customers change the way they spendfor your industry segment in 2014? What makes you think customers will be buying more/less?
Increased demand for products with smaller on-hand inventory may translate into extended lead times for some electronics components. Research and engineering organizations are facing government funding cuts, which may impact emerging technologies and programs. I’m hopeful, though the government side of manufacturing and distribution may disrupt the industry. Also bet on display technologies seeing continued price decreases in 2014 and the volume of users to continue to explode as a result.

What's in store for your company in 2014?
Although re-shoring has had some high profile examples in 2013, there are still questions being raised as to how quickly and on what scale the impact will be relative to the sizeable manufacturing base that already exists. The supply chain has grown to support massive manufacturing capacities in low-cost regionsand is very complicated and extensive as a result. Replicating that in North America is possible, but requires some detailed planning. I see the distribution segment of the supply chain playing a key part in supporting that migration, just as it currently supports domestic manufacturing. The distribution sector has the infrastructure to support that trend.

With the New Year there are additional trends to watch as they relate to the domestic manufacturing base, such as 3D printing. Newark element14 will continue to partner with manufacturers to provide emerging components and technologies to engineers around the world. We will be watching those trends in order to be a better design partner from end-to-end, while growing our 200,000-member element14 onlinecommunity to reach an increasingly prolific generation of engineers.

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