ACL - celebrating 23 years of Electronics, Design and Manufacturing
Welcome to the ACL quarterly report

The ACL quarterly report brings you up to date on the current state of the electronics manufacturing sector including component lead times and market conditions. With ACL as your partner, not only do you receive quality manufacturing of your products, delivered on time every time, we work hard behind the scenes to ensure there are no component supply issues
ACL Factory Image ACL is the longest established contract electronics manufacturer in the UK. All our clients benefit from the highest quality production standards from our highly trained and experienced workforce. Our record of zero rejects is something we pride ourselves on and continue to maintain. With accounts with hundreds of suppliers worldwide we are able to source components, where others may struggle. Our sophisticated bespoke in-house written purchasing and production control software is continuously modified in response to market changes. Materials are always purchased well in advance of a client's delivery date giving you peace of mind.

The Supply Chain

Chinese manufacturing has continued to drop this quarter. Preliminary data released by HSBC indicates a seven month low and the fastest decline since March 2009. The slow down of the US economy, the recession being felt throughout Europe and the the rising value of the yuan in recent months are all factors which have reduced the competitiveness of China as a manufacturing hub. These conditions are likely to impact component supply, lead-times and pricing. The introduction of a minimum wage in Thailand in April has proved a positive step for its people in terms of increasing the standards of living, and many countries, including Vietnam and Indonesia, have followed suit. In an attempt to ensure workers earn salaries above the poverty mark, Malaysia is also set to introduce a minimum wage. Where the increase in Thailand has been opposed by many, the Asia New Network survey revealed 9% of companies are considering relocating some lines to nearby countries; the view is the same in Malaysia. The introduction could spell problems for those who rely on the low export and labour costs. The current labour unrest in Indonesia is also a product of debates regarding the level of the minimum wage. At least one major component manufacturer has consequently moved its production elsewhere in an attempt to reduce the extended lead-times it has been suffering. Floods in Thailand have also impacted the market, although the majority of manufacturers have stabilised their lead-times to pre-flood levels with very few reporting issues. Toshiba in particular has been affected by the floods, so orders were diverted to NXP and TI , resulting in some parts from these manufacturers going on allocation. Pricing on the whole is stable at this time. TI has seen some price reductions for some Analog parts, ST has also decreased pricing for their TVS but Atmel's Eeproms have suffered from a circa 40% increase. Changes in consumer attitudes towards the ethical sourcing of raw materials and labour have forced some large US product manufactures to audit their supply chain. The effect of this has been a massive reduction in the sourcing of gold, cobalt and the "three T's" - tungsten, tin and tantalum - from conflict areas and those companies using child labour. The production of tantalum from the Democratic Republic of the Congo has fallen by 75%. The medium term effect will be the rise of some component prices and almost certainly the lead times of these as well.

Currency

Since the start of the year yuan/dollar has fallen by 0.9 per cent. The Wall Street Journal reports over the next year the expected fall is a further 0.8 per cent. In the last quarter sterling has significantly strengthened against the euro but has weakened against the dollar.
I hope you find this report informative. Please find enclosed ACL's brochure together with a component pricing and lead time breakdown.
If you would like to discuss any manufacturing requirements please don't hesitate to get in touch with me.
Arthur Woode
Director
 
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