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Assembly Contracts Quarterly Report
Q3 2019
Celebrating 29 years of excellence
 
ACL factory 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.
Component Lead-Times & Brexit
ACL SM LineThis quarter saw availability improvements with some lead-times reducing. Prices seemed to have stabilised across the board, however the instability of sterling is bound to filter through.

ACL stand ready for what ever Brexit has to throw at us. We have trading accounts with over a 100 suppliers world-wide.
Supply Chain & Manufacturing
Supply chain managementFollowing the sharpest contraction in over six year in PMI* last quarter, Q3 saw further contraction posting today at 47** making it the fastest contraction in 7 years. Brexit uncertainty coupled with the economic downturn are at the forefront of the blame. US Manufacturing is also trending downwards whilst the EU and Chinas numbers are beginning to stabilise.

*a measure of manufacturing sectors order book
**Anything below 50 denotes contraction and above denotes expansion
UK & Global Trends
ACL SM LineAgain, the main driver behind Sterling in Q3 was Brexit and initially the appointment of Boris Johnson as PM following May's resignation. Sterling suffered as Johnson expressed his willingness to allow a "no deal" Brexit whilst insisting the EU would compromise in the end. The closer we get to this the more pressure Sterling is put under. The National Institute of Economic and Social Research advised there was a 25pc chance the country is entering into a recession following stalled growth. This was rebuffed as economic output in July showed the biggest rise since January increasing by 0.3pc from where it was in June and blowing predictions of a modest 0.1pc out of the water.

This week was particularly volatile for Sterling but offered some respite to the lows of earlier in the month. It suffering initially with three-year lows as market concerns grew over the possibility of a Corbyn government. As probability grew in the latter half of the week that a no deal Brexit will be off the table with British lawmakers seizing control of the parliamentary timetable Sterling rallied with a five-week high at the start of this month.

Following the Supreme Court ruling that the suspension of Parliament in August was unlawful Sterling strengthened further as it suggested weakened chances of a no-deal Brexit. This changed last week, however, as weaknesses were beginning to take hold and this morning saw Sterling sink to one-month lows. With arguing in Parliament stepping up a notch, following its return, investors questioned the likelihood of Brussels finally signing the divorce deal with the UK, particularly if PM Johnson is to keep his promise of an exit by Oct 31st, no ifs no buts. Plans regarding the Irish backstop are to be outlined today by the PM. They have already been outlined to the Irish government receiving less than positive responses. It is clear any future strength in Sterling is to be considered short-term, at least until Brexit is resolved.

USD rallied as trade talks with China looked set to resume. With the rest of its peers having more economic issues to deal with than themselves it remained buoyant despite its, first since 2008, interest rate cut on July 31st. It in fact moved to two-year highs immediately following the news when it was confirmed it did not mark the start of a rate cutting cycle.

Despite the EUR not being the main focus of the quarter, it did suffer following disappointing data. PMI in Germany and France did not meet expectations and the Eurozone economy was reported at the end of July to have expanded only 0.2pc in the second quarter, down from 0.4pc in the first. It made some gains as reports that Germany may boost fiscal stimulus circulated.
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
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