Supply Chain Reaction

It's day two here at EDS and, as expected, the economy is one of the main issues being discussed.

Arrow president Bill Mitchell kicked off the electronics supply chain event here in Las Vegas Monday afternoon to a standing room only crowd. In his presentation, much of which focused on opportunity in Asia-Pac, he said, "I'm absolutely certain that the media is talking us into a recession," when discussing the total US economy.

Mitchell, who noted distributors may not be seeing boom time sales growth, said business and revenues are still healthy and growing for many of the distributors attending the keynote in the Paris hotel convention center.

"This feels nothing like 2001," he said, putting many anxious attendees at ease, "but what's going to happen, I don't know."

NEDA (National Electronic Distributors Association) executive VP Robin Gray echoed Mitchell's statements at this morning's annual NEDA trends breakfast. Gray, who made it clear that his presentation was not a forecast but a report on industry trends, noted recent numbers from the ECA (Electronics Components Association) that showed flat sales, but no hard and true signs of a downturn for distribution.

"We really don't see a downturn in the industry. In fact, I talked to one mid-sized distributor who said they just had the best quarter they ever had in the last quarter. We talk to other distributors and they say that sales are flat, but they don't really see a downturn. But who knows where it's going? I don't, as Mitchell said, he doesn't, and I'm sure you don't. Don't believe the mass media—there isn't a recession going on in our industry, yet."

Both Mitchell and Gray made their statements noting distributor opportunities for growth, like those in the military and lighting markets.

Many of the folks I spoke with post keynote and breakfast were energized by Mitchell's and Gray's words. But aren't we always energized when we are told what we want to hear?

It was extremely wise of Mitchell and Gray to point out that while distribution is not trending downward now, it could in the near future. While we are not in a recession, I continue to maintain that the economy is in a recession-like state, where consumer dollars are being squeezed more and more.

That, of course, means less consumer spending. New construction starts, a potentially large avenue for the lighting market, are also down. While the military market is working hard now to keep up with the war, who knows what our situation will be after November's election. And while business loans are low, getting them isn't so easy, pinching business investment in IT.