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Why recession leads to components shortages

The Western World breathed a collective sigh of relief as the economic downturn started to ease up earlier this year. Consumers started spending again and job vacancies are gradually increasing. Yet we are still riding the recession’s tail and effects are still evident, and an increasing concern is the lack of components available on the market today which threatens many electronic companies.

As the recession took hold of the economy, demand for electrical goods plummeted causing larger manufacturers such as Hynix, Murata and Toshiba to name but a few to lay off vast numbers of workers and sell their capital. Smaller manufacturers were made redundant due to the lack of demand.

Now we're climbing out of the recession, demand has once again skyrocketed. The producers of components are finding it difficult to deal with the demand and orders are being backlogged by weeks and months. Companies are more reluctant to increase staff and buy back capital in case this surge in demand drops as suddenly as it arrived, leaving manufacturers with a bigger recession on their hands.

The public are demanding more phones, laptops and communication devices than ever before, yet telecommunications components have been hit hardest. Smaller electronics manufacturers are finding it hard to keep up with orders as they don’t have the parts and finding them is increasingly difficult. Larger companies, such as Dell, Hewlett Packard and Apple have far more success at getting their hands on the components they need as they have more money and a better platform for negotiation. Yet even Apple is starting to feel the strain as they can’t produce enough iPhone 4’s or Ipads to satisfy demand. Of millions per month!

The components shortage is expected to lead into next year and some commentators believe further. As the major components manufacturers are wary about expanding their production lines, it is left only for new factories to be set up, yet this requires no short amount of time; a semi-conductor fabrication plant takes about a year to build. Malcolm Penn, chief executive at market analyst firm Future Horizons says “this is a total failure of corporate leadership. No one had the courage to take a long-term decision.”

Semiconductors, resistors, smartphone screens and PC motherboard components are finding their way onto everyone’s “most wanted” list as they become rarer. Speculators believe it won’t be long until prices begin to rise for these coveted components, definitely in the industrial sector, and it could be just a matter of time before the rising prices are felt by consumers in the public sector as they will have to pay more for their phones, laptops and electrical products.

Oracle Components has been helping their customers through the good times and the bad. Increasingly, we have been receiving desperate calls from customers whose normal suppliers have ‘no bidded’, or have been unable or unwilling to deliver urgently needed components due to crazy leadtimes. Our solutions have extended to purchasing from another continent, but even then we can sometimes deliver in days rather than weeks or even months!

Oracle offers buyers the ability to download a part search tool bar for quick location of parts, to download the toolbar click the link HERE and the following box will appear “Download Toolbar (EXE) and follow the instructions displayed. Once complete close out of all Internet Explorer screens and re-open one The Search Bar will appear under the Internet Explorer Toolbar as shown below: and just like flicking on a light bulb you are now in business to source what others have long let you down on! Oh and gain a competitive advantage in terms of your own personal productivity.

To experience the OC advantage give us a shout on 08450 22-23-24..

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