Source: Harness World
Bishop&Associates shared sales figures for connectors and insights into the factors that led to an unusual year.
Bishop&Associates has been closely monitoring the connector industry since 1985. This market research company, led by its founder Ron Bishop, tracked and reported on the expansion of interconnect products, the emergence of revolutionary technologies, and the performance and activities of the underlying connector companies. Along the way, the connector industry has gone through boom and bust years. This year will bring the second largest sales growth in industry history. The connector supplier team had a conversation with Bishop to gain a detailed understanding of why 2021 will become the year of the record book.
What is the sales revenue of the industry in 2021 as of October?
Orders increased by 40.8%. Sales increased by 26.2%. These are astronomical figures. The ratio of bill to bill (BTB) is 1.14. Historically, the annual book to bill ratio has been 1.0, 1.01, or 1.02. The 1.14 BTB is unheard of in the connector industry.
In another example that illustrates the business situation in 2021, the backlog of orders in 2019 was only $8 billion or 6.5 weeks of delivery time. In 2021, the backlog of orders increased to $19.5 billion, equivalent to a delivery time of 13.1 weeks. The industry has increased its backlog of orders from $8 billion in 2019 to $19.5 billion in 2021. An increase of 140% is simply unbelievable.
Backlog in the connector industry
What factors are causing this growth?
In 2020, the economy basically stagnated and many enterprises went bankrupt. Due to the government's plan to ensure that people continue to receive compensation, expenditures have decreased while savings have increased. This has led to the accumulation of cash. With the global economy reopening, there is enough cash to meet pent up demand.
Will this demand stabilize?
Sales in 2021 may increase by approximately 24-25% by the end of the year. Currently, connector sales have increased by 26.2%. We expect to achieve growth in 2022, but at a much slower pace. The slowdown in growth will be the result of a slowdown in world GDP (the US GDP is expected to grow by only 2% in 2022) and a shortage of semiconductors and other components. We predict that the growth rate of the connector industry will be between 7-8% in 2022. From a historical perspective, this is still a good growth, but compared to the sales growth of 24-25% in 2021, this is moderate.
Has the connector price increased?
The industry has experienced a significant increase in the prices of raw materials used for connectors - gold, plastic, copper, brass, and steel. By October, the cost of these materials had increased by 42.5%. Rising raw material costs and strong demand for connectors have led to connections