ACL Contract Electronics Manufacture

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Welcome to the Assembly Contracts Quarterly Report
With this we aim to inform our industry colleagues of any relevant news, component lead-time updates or market conditions that may affect the manufacture of your product, or the electronics industry in general.
With ACL, in Manchester, as your manufacturing partner you receive unsurpassed manufacturing quality, delivered on time every time by our IPC trained, experienced workforce. We have hundreds of accounts with suppliers worldwide giving us the ability to source components where others may struggle.

Our sophisticated bespoke, in-house written, purchasing, QA, and production control software is continuously modified in response to market changes. Materials are always purchased well in advance of delivery dates, giving you peace of mind.
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I hope you find the following informative. Please feel free to get in touch if you have any questions or comments.
Supply Chain & Manufacturing
This quarter brings supply chain issues, with price and lead-time increases - some going out to 20 weeks plus. It is very important that you consider your future requirements immediately. Our recommendation is to place long term schedules allowing us to purchase materials now.
The first week of October is a national holiday in China, which will add further pressure.
The semiconductor sector has been experiencing poor market conditions since the first quarter, and their response has been to throttle back production and investment. The recent manufacturing market upturn is leading to pressure on these suppliers. It also has to be said that the higher prices suites the manufacturers.
There has been a major fire at memory manufacturer Hynix, responsible for production of 15% of the worlds DRAM requirement. Price hikes are being felt as panic sets in, and Samsung is currently on order entry stop as a result. Hynix declare production will be back to normal by November, but this seems unlikely given the news footage I have seen.
Microchip is experiencing growing pains after its acquisition of a number of smaller companies. This is having a significant affect on their lead-times.
In contrast to the comments made last quarter there are inflationary pressures as a result of rising raw materials cost. The price of oil spiked in August impacting the cost of logistics and transportation.
UK & Global Trends
UK manufacturing had its strongest activity in two and half years in August. Last May the PMI rose to 51.3 and this August it has jumped further to 57.2, the highest for two years. This marks the fifth consecutive month of expansion.
Much of this can be attributed to returning growth in the Eurozone where factory activity rose at its fastest pace in two years. The EEF chief economist stated "conditions are tight for manufacturers to see continued expansion in the remainder of this year with growth accelerating in 2014".
Manufacturing accounts for one-tenth of British GDP.
UK unemployment fell from 7.8 to 7.7pc which is the lowest since this time last year.

Sterling has hit an eight month high against the euro and a two month high against the US Dollar ahead of UK unemployment data, which has now become crucial to BofE monetary policy. USD weakened recently after a leading candidate (Larry Summers) for head of the US Federal Reserve withdrew. Janet Yellen is now favourite who is seen as less inclined to rapidly reduce quantitative easing in the US, the dollar has felt the bite.

The Euro has suffered a three and a half month low, with concerns over Syria, along with German and Greek unemployment data missing forecasts at the end of August.

With the fall in government spending public finances saw some improvement in August. Speculation about the banks interests rates and their role in the recovering economy has been rife. Some believed rates could be increased ahead of schedule due to inflation sticking above the Bank's 2pc target and improvements in unemployment data. The Bank plans to keep rates at 0.5pc until unemployment falls to 7 pc (not expected until 2016).With this months latest review declaring rates will indeed remain at a record low, the fears are that Mark Carney's erring on the side of caution will in fact lead him to wait too long to raise rates having a detrimental impact long term.

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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