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This article is part of the 2012 Distribution Trends Report, an annual update for MDM Premium subscribers. Access the full distribution trends report here.
1. Manufacturing returning to North America? Distributors of electronics components are starting to see signs that manufacturers are considering a return to North American soil after operating for several years in Asia. “It’s hasn’t happened a lot yet, but we’re starting to see signs of a resurgence,” says Barbara Jorgensen, community editor for ebn, an online community focusing on the electronics supply chain.
This trend is being driven by a number of factors: higher freight costs, shipping and labor problems, concerns about counterfeit products (and the liability that can go with that), and theft of intellectual property.
Mexico is currently the focal point for this return, but that may shift as well.
2. Brazil a hot spot for growth. While Arrow Electronics and Avnet have both had a Brazilian presence for some time, other electronics distributors are seeing it as having a lot of opportunity for growth. Look for more expansion in the country, Jorgensen says.
3. Increased focus on reverse logistics & aftermarket services. “Historically, distribution has been one-way,” Jorgensen says. Distributors deliver the product from the manufacturer to their customers. But due to increased environmental regulations and counterfeiting, more distributors are paying closer attention to what’s happening after the sale.
Electronics distributors are becoming more involved in reclamation, recycling and disposal services to better control where the product ends up after it has left the distributors’ warehouse.
For a more in-depth report on trends in electronics distribution, read Electronic Engineering Times’ special report Top 25 Distributors: Sellers Without Borders, available from eetimes.com.
In general, the electronics distribution sector in North America is already among the most consolidated. The Top 5 companies account for more than 90 percent of all sector sales, with the two largest – Avnet and Arrow Electronics – accounting for most of that. That said, some moves are still being made in North America.
TTI Electronics, a Berkshire Hathaway company, acquired Sager Electronics. Sager had more than $200 million in sales in 2011.
Average growth for companies on the electronics Market Leaders list: 14.1%