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© Texcel Technology Plc General | March 01, 2013

UK Electronics rules, OK?

It's true that the UK electronic manufacturing market seems to be surrounded by dark clouds. According to Peter Shawyer from Texcel, this impression is - in fact - completely wrong.
I was asked the other day what I thought about the UK electronics industry. This got me thinking. I realised that, with 40 years of experience – which started back in 1973 when the first Intel 8080 started being produced - I really was in a position to provide a good perspective on the UK electronics industry.

The 1980s – when Margaret Thatcher was Prime Minister and yuppies, chunky mobile phones and BMX bikes were all rage - was a period of strength in the UK electronics sector. Do you remember trade magazines with the article number you would fill-in on the “more information” form when most supply companies were based in the UK? We also had growing employment, with many promising young things coming into the industry attracted by the wealth of apprenticeships and opportunities for university graduates.

However, this all started to change at the turn of the century. Just when the world wide web was being invented and an actor named Ronald Reagan became President of the US (that could never happen again, could it?) the Far East became the prime option for cost saving and company MD’s were berating their supply chain managers for not having yet moved supply there.

This trend had some far reaching consequences. Firstly, the amount of money spent on electronic components in the UK reduced significantly, as did manufacturing jobs, with many large players moving to the Far East.

Secondly, many component distributors upped sticks and also moved their distribution centres away from the UK. Finally, with key parts of the industry unrepresented, young people stopped seeing the sector as a potential career opportunity.

The start of the 21st century saw electronic companies in the UK become efficient and cost competitive just to hold some ground, and since the dotcom downturn in the early 2001, we have seen a slow re-emergence of the sector.

Standing where we are now in 2013, and the UK's electronics sector is more than holding its own. One of the problems is its visibility – or lack of. Despite the fact that it underpins every industry sector, it's hidden from sight. Some facts:
  • The UK's electronics industry employs, directly and indirectly, around 260'000 people involved in the design and manufacturing stages, generating some £23billion a year in revenues.
  • Manufacturing is an important part of the make up of the UK electronics industry, ranging from small contract manufacturers to a few larger players. There are some 200 contract manufacturers in the UK, and many of these are specialising in handling high value, low volume projects, providing an alternative to far Eastern companies.
  • The UK is a World leader in design and innovation and these companies need the specialised manufacturing support that medium sized CEMs can offer.

CEMs have the right attitude of ‘can do, will do'. The majority of medium sized CEMs in the UK have been in business for many years and they know how to meet customer expectations. They are also acutely aware that they are as good as the customers they supply, and choosing the right range of customers is important for growth and stability.

Yes, the last month or two has borne witness to a number of changes in the UK CEM sector. Small CEMs will be continue to be squeezed on availability of cash, large CEMs will be pressured on margin and will try to focus on smaller customers. But what is not widely known is how remarkably well the medium sized CEM company is actually doing, meeting the specific needs of their customer base for a local flexible high quality supplier. It’s something we should be shouting much more about.

What of the future? Our community is getting older and fewer people are entering the industry. We urgently need Government awareness and action on our industry’s skills shortage. The overriding concern for the UK electronics industry is to attract new blood, talented young apprentices and graduates who can drive the industry for the next 40 years. In a globalised world of business It’s that sort of investment in people that will help secure the UK’s position as a force to be reckoned with.

Author: Peter Shawyer - Commercial Director at Texcel Technology Plc.

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