Certainly 2001 was an extremely challenging year, and there is no doubt that the South African market did not escape the massive melt-down experienced in the electronics arena globally, with many manufacturers and distributors downsizing.
Surplus inventories and excess capacities brought about major price decreases, and allocations were almost negligible (hard to believe after the previous year where many products were either on allocation, or a booking moratorium was in place!) However, for many South African companies these cost reductions were largely offset by the drastic devaluation in the rand, but easily accessible global inventory nevertheless did enable customers to reduce their inventories to good effect.
Towards the backend of 2001 we saw a recovery and have seen this trend continue into the start of 2002. We are encouraged by the upturn and believe that we are now out of the trough and predictions are that we can expect to see a much more buoyant market, despite the volatility of the rand.
We are predicting a solid year, but must caution customers that we are also seeing an upturn in the global arena and lead-times are starting to push out in certain product lines. If this trend continues then prices will move upwards and we can expect allocation and moratoriums to re-appear, probably as we move into the second quarter of this calendar year.
Contract manufacturing seems to be gaining momentum and this is in line with Europe, where customers are concentrating on their core business. For distribution this brings about exciting challenges in the value added chain, as we look at bringing logistics expertise to the contract manufacturing arena.
For further information contact EBV-Electrolink, (021) 421 5350, or see www.ebv.com
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