New data from global electronics manufacturing industry association IPC show that high material and labor costs are expected to continue for the foreseeable future while recruiting and retaining skilled talent continues to be a challenge.
IPC’s March economic update and global electronics manufacturing supply chain sentiment reports has found that more than nine in 10 manufacturers have experienced an increase in lead times for parts and components since the start of the COVID-19 pandemic, with approximately half indicating an increase of one to three months. The overall global economic picture is also complicated by the emerging Russia-Ukraine conflict, IPC reported.
“Any disruption to an already stressed supply chain can have an outsized impact,” said Shawn DuBravac, IPC chief economist. “Until recently, there was a general feeling in Europe that the economy was set to accelerate and leave COVID in its rear-view mirror. The Russia-Ukraine conflict changes this somewhat.”
IPC says it surveyed hundreds of companies from around the world spanning the electronics manufacturing value chain. Among other conclusions, the survey results showed:
- More than three-quarters of electronics manufacturers are currently experiencing rising material and labour costs, and most expect to see this trend continue for the next six months.
- Ease of recruitment, inventory available from suppliers, and profit margins are all declining.
- Sentiment improved slightly this month, suggesting that supply chain constraints are continuing to ease.
- Firms operating globally are seeing a quicker rate of improvement in terms of inventory available from suppliers compared to those operated only in North America
“Per the economic report, the economy is holding up well in the western hemisphere,” IPC said. “Economic activity in the first quarter could be negatively impacted by the lingering impact of the omicron variant, as it was by the delta variant in the third quarter. But because the spread of the virus is slowing, U.S. GDP growth looks positive over the coming months, advancing in the range of 3 to 4 percent, a notable increase from 1 percent in the second half of 2021. The picture is less clear in Europe, where the Russia-Ukraine conflict will have more direct impacts.”
