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Assembly Contracts Quarterly Report
Q4 2017
Celebrating 28 years of excellence
 
May I take this opportunity to wish you a Happy and prosperous year.

In this report we aim to inform our industry colleagues of any relevant news, component lead-time updates and market conditions that may affect the electronics industry as a whole and particularly, the making of your product.

I hope you find the following informative. Please feel free to get in touch if you have any questions or comments.
ACL factory exterior
ACL SM Line

Material Lead-Time Increases - Severity Continues.

In order to ensure the continuity of supply of your products and control of costings, it is more crucial than ever that long-term sales demand is forecast and scheduled call off manufacturing orders are placed.
We are also recommending that all our clients have a buffer of finished products.

Whilst the need to place orders out for say 12 months' supply has been an alien concept in recent years, having more product on hand is better than none at all. It is becoming clear that we all need to be risk averse!

In response ACL continues to modify our buying policy, pulling in materials earlier and modifying our software systems in response to these market changes. 

Here is why...

As the constraints on supply increase, we are witnessing all aspects of the supply chain being impacted: 

Quarter 4 saw the continuation of increases in component lead-times as many manufacturers put full lines on allocation. Some lead-times have been seen to reach 42 weeks plus. 

Component stocks in general are dwindling.

Component stocks at suppliers are disappearing within days and the full lead-time is being imposed.
Distributors are failing to deliver components on an agreed date, even when the order has been in place for many months. 

Distributors are putting up prices, on the basis that they know they are the only ones with stock. 
Whilst alternatives sources of supply may be available, they are never ideal, and incur large cost penalties.

Supply Chain & Manufacturing

The growth in the global economy, continues. Vehicle manufacture and Hi-Tech consumer products stand out. This is putting pressure on the electronics component supply chain right from the raw, mined minerals, all the way up to electronic component level. Component manufacturing capacity cannot cope with demand, with larger players seeming to get preference. Recent reports quote UK Manufacturers are opportunistic for 2018 and the sector has grown for the sixth consecutive month in October, marking the longest, uninterrupted, expansion of its kind for over 20 years.
ACL factory
Manufacturing output rose by 0.1 pc in September.

PMI increased to 58.2* in November and is now at its highest level since Aug 2013. 

The weak pound has helped contribute to this, as foreign customers take advantage - driving up orders and output. 

These figures suggest that the fourth-quarter GDP growth in Britain will be about 0.4pc quarter on quarter but much will also depend on the service sector and consumer spend over Christmas.

*anything below 50 denotes contraction and above indicates expansion.
ACL Lead Assembly

UK & Global Trends

Sterling had another difficult quarter as Brexit talks increased instability. The closing of the quarter looks more positive with the BofE holding its view that interest rates are likely to rise gradually, despite above-target inflation. The BofE also stated that the recent Brexit negotiations reduced the risk of Britain leaving the EU in a disorderly - so encouraging economic confidence.  Predictions that the economy will grow 1.6 pc next year are higher than expected by the government and most economists. 
With this comes the hope that the GBP/USD will strengthen, particularly in light of the Feds caution. The EUR has dipped recently as the ECB raised growth and inflation forecasts but remains with its policy to provide stimulus as long as is needed. USD weakened at the end of the quarter with the Fed leaving its rate outlook unchanged despite predictions that there will be a jump in economic growth following the proposed tax cuts from the Trump administration.
Please find enclosed ACL's brochure together with a component pricing and lead time breakdown

With ACL, Manchester, as your partner you receive unsurpassed manufacturing quality, delivered on time every time by our IPC trained & experienced workforce.

We offer a 3-Year workmanship warranty as standard. 

If you would like to discuss any manufacturing requirements please don't hesitate to get in touch with me.

Arthur Woode
Director
0161 947 8000
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