Assembly Contracts Quarterly Report
Q1 2021
 
 
   
ACL factoryWelcome to our Spring Quarterly review, we hope you are all well and looking forward to some brighter evenings and milder weather.

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.

ACL is open for business as normal and working at full capacity to make sure we meet all our customers' requirements.

We hope you find the following information valuable and informative, please feel free to contact us with any enquiries or questions.


ACL News
ACL buildingACL are proud to be contributors to NASA's Luna mission.

We now have a new clean area facility meeting ISO 8 (class 100,000) standard.

ACL are also happy to be supporting our client base as the world migrate towards a cleaner energy mix. This covers a wide range of our services including design, support and manufacturing for the growing UK Green Industry including Electric Vehicle Charge Point Manufacturers, Renewable Energy Sector and other Green Industry Applications.

We are pleased to welcome our new Sales Manager Martin Baker to ACL.
Martin has many years experience working within the Electronics Manufacturing Industry as well as other Engineering Industries, and will be covering, mainly the South. He brings a wealth of experience and knowledge to ACL.
Supply Chain & Manufacturing
Supply chain management *Urgent Announcement*

Due to the delays caused by recent events in the Suez Canal we are strongly advising all customers looking for manufacturing within the next 8 months to place orders now.

This will help us secure current stock on a reasonable lead-time avoiding the inevitable price increases that will be sure to happen over the next week or so as impacts are felt on the UK, European and Global Supply Chains.

Although the ship blocking the canal has been removed, it is likely to take many weeks to clear the backlog of vessels through the canal and at the subsequent ports. At this time, we would expect lead-times to increase on some items by up to 6 weeks.

Other Supply Issues
  • Impact of Brexit on transit systems.
  • Increased raw material costs. In the last quarter Tin up 25% and Copper up 15%.
  • Distributors are reporting that in February / March turnover doubled. We are seeing incorrect items being delivered and short shipping, because of this strain. Delivery of stock items, for some distributors, has gone from 2 to 14 days. Stock levels are being consumed at an alarming rate.
  • Fire at a Semiconductor Manufacturing Plant in Japan causing global shortages.
  • Limited global shipping capacity is leading to increased component cost.
  • Water shortages in Taiwan impacting manufacturing capacity.
  • STMicroelectronics. Their order book is currently 1.5 times its normal annual capacity. Distributors have been asked to cleanse their order books of all speculative orders. A new warehousing model means UK parts are now being shipped from South East Asia.
ACL Services
  • Constant engagement with supply chain. Live pricing.
  • Material purchasing 8 weeks in advance of requirements.
  • Obsolescence Management / BoM Scrubbing.
  • Supply scheduling recommendations.
  • Rapid prototyping through to mass manufacture.
  • Testing, Jig manufacture & final assembly.
  • Product distribution to end users.
  • Estate management. Repairs, upgrades and refurb.
  • 3-Year workmanship warranty as standard.
  • Free tooling & setup for first builds.
UK & Global Trends
Supply chain managementThe start of the quarter and the New Year saw the UK plunged into another lockdown resulting in Sterling starting lower than its peers. Even the optimism of the last-minute Brexit trade deal was overshadowed by the announcement. As the quarter progressed, however, the pound made some gains. The BofE announcing it was too soon to cut interest rates allowed it to rally against both USD and EUR. Further support for the pound was found in the efficiency of the vaccine rollout suggesting a faster economic recovery on the horizon. Furthermore, was the stronger than expected inflation numbers which, whilst still below target, offered some comfort and positive impact on the pound. Sterling closed the quarter surging to a 13-month high against the Euro as well as holding strong against the Dollar. The optimism from lockdown easing and reports that over half the UK population have now had their first dose of the vaccine was hard to miss and resulted in expectations of further strengthening in the near future.

GDP data was positive at the end of the quarter showing a gain of 1.3pc beating the estimations of 1pc. PMI* also beat expectations with readings of 57.9** in March versus the expected 55.0. This was a 40-month high and the fastest growth pace since November 2020, serving to offer extra zest to the pound's strength against the Dollar positioning it at 1.375.

The USD began the first quarter on a dovish note as it waited to see who would win the US Senate. As the Democratic Senate victory was announced the Dollar fell to three-year lows.
It made some gains as the US vaccine rollout strengthened its position and gained strength from the factory orders rise of 1pc beating the expected 0.7pc.

The single currency had a positive start to the quarter having made trade deals with both China and the UK. It struggled against the USD following their factory orders rise, above expectations. Its strength against the pound struggled as Germany's PMI data, whilst better than expected, still showed contraction at 47.1. The UKs vaccination programme and approval of a third vaccine further inhibited any potential gains being made. The single currency closed on its lowest level against USD since early November.

*a measure of manufacturing sectors order book
**Anything below 50 denotes contraction and above denotes expansion
Benefits of UK Manufacturing
Quality is key, standards are implemented to ensure UK suppliers manufacture to approved industry standards. Within other geographical regions regulations governing the quality of a product can differ greatly.

Access to suppliers' facilities for communication, audit and progress understanding is much easier when manufacturing in the UK, this reduces the Carbon Footprint compared to off-shore supply chain, making UK manufacturing a more Environmentally Friendly option.

Unit cost price is often a main driver for offshore manufacturing, however once shipping, handling, import tariffs are all considered along with product life cycle costs due to sub-standard quality, many clients are seeing the benefits of re-shoring their manufacturing back to the UK.

Also, many UK suppliers are willing to work with its client base on much smaller order quantities. This reduces financial exposure and business risk for many clients allowing for clients to work in an agile manner. This helps reduce cost of delivery and lead times

Utilising the UK supply chain ensures products are manufactured to a high and ethical standard, ensuring responsible sourcing and manufacturing of sustainable products

As a UK manufacturer, ACL can offer guaranteed quality, reduced cost for deliveries, reduced Carbon Footprint, UK based customer services, no customs or shipping issues and UK based quality and engineering support.

While offshore manufacturing will always have certain benefits over UK manufacturing, there's never been a better time to 'keep it local' and support our own economy and enjoy the benefits.
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.

Graham Baker
Commercial Director
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