Representor Fall 2019 - Marketing Group Digest

Fall 2019 – Marketing Group Digest

COMPONENTS – Rebound or new norm?

Bob Evans, CPMR
EK Micro
Rolling Meadows, Ill.

In my last column I observed that there was both optimism and pessimism in the marketplace when I spoke to my counterparts around the country. Looking in the press, there also seems to be a divide. In its May 2019 Survey Summary, TPC reported,“Our May 2019 Semi industry survey of over 20K electronics industry professionals showed mixed results.”

Frankly, there was more bad news than good throughout the electronic component world as tariffs started to put the hurt on a variety of companies and industries. There has been direct and indirect fallout from the tariffs. Customers are facing dramatic cost increases; suppliers are struggling with how they handle the complaints from customers, and everyone is suffering from fear of the unknown, wondering when this will end, or if in fact it will blow over. Is a “new norm” settling in?

Companies are starting to get used to this condition of doing business. Most companies have developed a way of dealing with it as tariffs become a way of life. And even though manufacturing in the U.S. is reportedly down, are we rebounding off the bottom at this point?

Let’s take a look at a couple of observations by folks we generally regard to be in the know.

In August, the IPC reported, “Year-on-year declines in orders in seven of the last 12 months are taking a toll on sales growth in the North American PCB industry,” said Sharon Starr, IPC’s director of market research. “Sales growth has slowed in recent months and dipped into negative territory in July. The slowdown is reflected in the book-to-bill ratio, which has hovered around 1.00 in the last five months. This indicates the probability of flattening sales growth in the second half of the year.” A Book to Bill of 1.0; flattening sales, sounds like the bottom of the trough.

In September, the Semiconductor Industry Association reported, “Worldwide sales of semiconductors were $33.4 billion in July 2019, 1.7 percent more than the June 2019 total of $32.8 billion …” This might support the bounce off the bottom. The new norm is represented in the part of SIA’s statement though, “but 15.5 percent less than the July 2018 total of $39.5 billion.”

From my perspective, we have found that 2019 is going to end up looking a lot like 2018 did in our little micro-economy. Our revenue this year projects to be within a few percentage points of last year’s. This has been echoed to me by many of my rep brethren as the year rolls into the 4th quarter. So, are we at a new norm, or are we about to rebound? Stay tuned.

MATERIALS, ASSEMBLY, PRODUCTION & SUPPLY – Adapting to change

Troy Gunnin
Sun Rep
Tampa, Fla.

In the Summer issue of The Representor I talked about “change.” I just read an editorial by Casey Laughman in the September issue of Food Processing that prompted me to take another look at the changes taking place around us in our personal and business lives.

When I got to the office this morning, there was an Amazon delivery at the front door. I believe we ordered it yesterday. We have come to expect that — no longer mail the order (if you are old enough to remember the Sears Roebuck catalog) and wait a week or more for delivery. Just this morning on the news, I saw that UPS has been granted permission to use drones for delivery of medical and other products weighing over 100 pounds to hospitals and remote locations in North Carolina. The impact of the internet and the ability to shop multiple locations and, thanks to Google, just punch in and search for what you are looking for, place the order and likely have it tomorrow, has decimated many brick and mortar businesses. It seems that every week we hear of well-known retailers going out of business and shopping centers struggling to stay relevant.

We see major retailers, including grocery chains, that are working feverishly to be relevant in the “online” trend. For those smaller and less able to compete in this market, the future seems uncertain. Add to that the changing tastes of consumers. Think automobile. The “big three” have virtually eliminated the sedan in favor of the SUV and truck. We now “stream” to our phones, computers or tablets rather that sit in front of the TV. We eat out rather than have the traditional “family time” at dinner.

The military/aerospace/industrial market is not exempt from change. A couple of recent announcements that made the news include L3 and Harris forming L3/Harris and United Technologies buying Raytheon. Does this make them stronger or reduce competition?

As reps, we are seeing an impact on our day-to-day operations. In talking with many of my rep friends we have shared a common concern – the difficulty of scheduling appointments. It appears that the time constraints on the buyers and engineers today dictate that unless they have a specific need that you can possibly solve, they will just “look up the specs online.” That makes it even more important to stay in contact with our key contacts by email and phone. We can keep them current with information on new products or applications. We want them to be sure that when they do have that need, we can get the appointment.

These are certainly trying times and the challenges are not likely to disappear overnight. How companies respond to these challenges will dictate their future. That includes us as reps. We can’t wave a magic wand and make it happen, but we can and will find a way to continued success.

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