Representor Winter 2020 - Cover Story

2020 Industry Forecast — A review of key trends, challenges and opportunities

Neda Simeonova, Editor, The Representor

The electronics industry has been undergoing rapid changes over the past few years, and this trend is expected to continue in 2020. At the start of the new year, the industry faces what promises to be a year of moderate economic growth. Although, the GDP growth rate is expected to fall below the 2 – 3 percent ideal range, unemployment is expected to remain below 4 percent and inflation is projected to reach about 2 percent in 2020, according to The Balance report. While all indicators point toward a positive 2020, some uncertainty remains. The electronics industry has responded well to the eased threat of disruptive trade disputes with the U.S. House of Representatives passage of a new trade agreement with Mexico and Canada, and after more than a year of negotiations and billions of dollars in tariffs, the U.S. and China signed “phase one” of a trade deal. The deal will modestly open up financial services in China to U.S. companies and China will agree not to manipulate its currency.

ERA strives to stay on top of industry trends, opportunities and challenges. To keep its members up-to-date on current industry issues, ERA conducted its Industry Forecast survey for a fourth consecutive year.

However, according to Chris Mitchell, vice president of global government relations at IPC. “The deal leaves many issues unaddressed including cyber security, structural economic reforms, and the high level of tariffs that are still in place on many products that are traded in our industry.”

2020 marks the beginning of a new decade and also happens to be an election year. If there is one thing that people in the current political climate may agree on is that an election year is often filled with surprises. These surprises drive uncertainty about the economy, policy changes and global relations, to name a few.

So, what does all this mean for the electronics industry?

According to SourceToday, electronics distributors share a feeling of cautious optimism. The Internet of Things (IoT) is reinvigorating the hardware business, giving a booster shot to these companies — the middlemen in the electronics supply chain. Most distributors project double-digit percent growth over the next year and plan to add new products, services and business around the world.

ERA Industry Forecast

ERA strives to stay on top of industry trends and opportunities. To keep its members up-to-date on current industry issues, ERA put together its Industry Forecast for a fourth consecutive year.

The report was generated via an electronic survey, which was conducted online in December 2019. It offers a current assessment and 2020 outlook of the electronics industry, based on rep, distributor and manufacturer ERA member feedback.

Key highlights of the report include demographics of the surveyed respondents, business performance, operating costs and areas of importance.

Close to 75 percent of respondents identified themselves as reps, 20 percent stated that they are manufacturers, and almost 5 percent stated that they are distributors.

While business remained strong for many ERA members in 2019 — with two-thirds of survey respondents (76 percent) rated 2019 as a good, very good or excellent business year for their organizations — about 24 percent of respondents rated 2019 as a poor to mediocre business year, up from 8 percent in 2018.

ERA members also remain optimistic for 2020, with 87 percent of survey respondents expecting this year to be either a good, very good, or excellent business year for their organization — however, 13 percent of respondents anticipate that the electronics industry might face some challenges ahead.

The economy, strategic planning and business partnerships were ranked as the top three most important issues for manufacturers’ reps, distributors and manufacturers in the upcoming year. New marketing initiatives, new technologies and staffing are also of importance to ERA members in 2020.

When planning for 2020, ERA members report that the highest projected sales growth is going to come from IoT, military/defense sector and medical markets. Additional business growth drivers identified by survey respondents included: automotive, industrial and automation markets.

Despite concerns about how the upcoming presidential election outcome may tip the economy, lingering worries about trade wars and their impact on the manufacturing sector, reduced commission rates or lack of new lines, the 2020 electronics industry outlook remains optimistic.

Read on for detailed survey data of ERA’s 2020 Industry Forecast.