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High Material and Labor Costs Continue to Challenge the Electronics Manufacturing Industry

Recent information from sources such as the IPC indicate that supply chain challenges remain a major problem for manufacturers and OEMs, but that the peak may have finally been passed.

High Material & Labor Costs Continue to Challenge Electronics Manufacturing Industry

Lead times remain higher than in the past (pre-covid), updated economic data and responses from global electronics manufacturers finds that high material and labor costs are expected to continue into 2023.  Recruiting and talent acquisition difficulties remain.

The recent IPC electronics manufacturing survey (global) results indicate:

  • Approximately 90% of electronics manufacturers report rising material costs and 80% increased labor costs
  • Less than 15% of survey participants report increased inventory levels and 10% respond that supplier’s inventories are increasing.
  • Profit margins, inventory available with supplier’s have declined, and difficulty recruiting increased.
  • Growing orders, shipments, and capacity utilization, but lower available inventory availability, higher material and labor cost cut into available profit.

The future outlook indicates lower growth rates in the near term with improvement in 2023.  Global growth is forecasted to decline to 4% in 2022 (from 6.1% in the previous year) and increase to 4+% in 2023. North America to decline from 2021’s 5.1% to 3.7% in 2022 and further in 2023 to 2.6%.  European growth from 2021’s 5.0% to 2% in 2022 and 2.4% in 2023.  Asia from 6.7%, to 4.8%, and 5%, over the same periods.

(reference January 26, 2022 20:12 ET | Source: IPC -- Association Connecting Electronics Industries)