From my corner of the world, the outlook for the end of the year is weak at best and dismal at worst. Euro-zone nations and the United States are stuck in a financial and economic mess, Japan is still mired in a pattern of lackluster decade-long growth, and recently, oil prices have turned down and fears are rising that even the fast-growing Asian economies could catch the cold drifting over from developed nations.
All these things tell me that electronics manufacturers need to be very wary as they plan for end-of-year sales. The response so far to a poll question on the subject on EBN reflects the concern many have about how the market will perform in the second half of the year. (See: Business Environment.) So far, almost 60 percent of the respondents have said they expect sales in the second half of 2011 would be either weak or fair: About 32 percent of the 73 respondents said they expect weak sales, while 27 percent are expecting sales to be fair. Approximately 29 percent of the respondents are forecasting strong sales, while more than 12 percent were unsure.
I am in the fair-to-weak camp. Sales for the fourth quarter will likely lag expectations, but the first quarter of 2012 will be horrendous if the current economic malaise persists. There are already indications consumers aren't too comfortable with their financial and employment prospects. But the greatest indicator of a likely dismal sales environment is coming from a traditionally reliable corner of the economy. Weak energy prices have been a reliable predictor of economic conditions three to six months ahead and current trends do not bode well for the market.
Crude oil prices jumped in the last several months as the dollar weakened, but prices have started weakening again. This may be good news for motorists, but it is also pointing to the likelihood of below-expectation or even dismal demand in the holiday season, a period many manufacturers use to beef up annual sales.
The danger is that many companies won't believe a derailed train could be heading their way. Production for end-of-year sales is either in full swing or getting cranked up. The current production schedule might be based on forecasts generated in June or even earlier when conditions were rosier and the global economic environment was less turbulent. The forecasts aren't likely to be completely off the mark, but even a few percentage point swing in the wrong direction could cause untold headaches.
Anna, I think crude oil pricing is only one of the factors for global slowdown, there are other ‘n’ numbers of factors and among them the weaker trade value of US currency is important. Adding to the fuel, recent happenings in Libya, tsunami in Japan are also key factors.
Crude oil prices jumped in the last several months as the dollar weakened, but prices have started weakening again. This may be good news for motorists
@Anna, weakening oil prices is very good news for developing nations like India. Compared to other countries India is one of the biggest importers of Oil. Weakening oil prices means this will push down the inflation which is good news from industry point of view.
The new government rules and regulations may prove to be a double-edged sword: achieving some positive goals but costing organizations a great amount of money and work and, perhaps, lost sales as well.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.