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Automotive, Industrial Markets Strong in Europe

Europe continues to drive growth in the electronics supply channel, as leading distributors of electronic components cite strong results across the region.

Electronic components distributors doing business in Europe reported strong results in 2015 that are continuing into 2016, as business investment across the region continues to pay off.

Reporting on its fiscal third quarter earlier this spring, Avnet Inc. said its electronic components business in Europe, the Middle East, and Africa (EMEA) grew for the 12th straight quarter, with strong sales in automotive and industrial business leading the way, according to Gerry Fay, global president of Avnet Electronics Marketing, the company’s electronic components business unit.

“Our strategy around demand creation and automotive continues to pay off,” Fay explains. “The region continues to perform quite well.”

Business in Europe continues to do “quite well” for Avnet Electronics Marketing, says Global President, Electronics Marketing Gerry Fay.

​Avnet has a focus on lighting and the Internet of Things in Europe as well, Fay adds, which also contributed to strong growth early this year. Avnet EM grew 17% sequentially in Europe in the three months ended April 2, 2016, and saw more than 9% growth compared to the same period in 2015.

Fay also credits a smooth leadership transition at Avnet EM EMEA last year. Miguel Fernandez was tapped to lead the business in January 2015, taking over for Patrick Zammit, who was promoted to global president of Avnet’s Technology Solutions business.

“We had a solid leader running Europe, and we replaced him with another solid leader and he hasn’t missed a beat,” Fay says.

The industry’s other mega-distributor, Arrow Electronics, is reporting strong growth in Europe this year as well. In May, the company reported global sales growth of 4% in its electronic components business, with Europe growing 9% year-over-year. Europe showed the strongest growth, although Arrow reported growth in all regions for the first three months of 2016.

“Europe has delivered six straight quarters of strong growth, and Americas returned to growth as we anticipated. In Asia, growth by our core small-to-medium-sized manufacturing customers was better than we anticipated,” Arrow’s chairman, president, and CEO Michal Long said in a statement announcing the results.

Long attributes the growth to the firm’s investments in “customer-facing talent and resources, as well as our focus on design and value-added services” for its global components business.

The industry’s two largest players are not alone in their European success stories. Distribution leaders attending the recent Electronics Distribution Show in Las Vegas also said Europe continues to lead the way in growth as tough conditions persist in the Americas and growth slows in Asia. Many distributors in attendance at the show—held May 10-13—pointed to flat conditions in the Americas offset by growth elsewhere in the world.

Investment Pays Off

Electronic components distributor TTI saw its strongest growth in 2015 in Europe, with sales up 6%; the company is projecting another 6% growth in the region this year, and as of early May was ahead of plan, company President Mike Morton told attendees at a TTI-sponsored meeting May 11 during EDS.

Industrial business is leading the way for TTI in Europe, and Morton says the company continues to invest in that business. As one example, the company continues to expand its sales team in Europe, with plans to add 15 people this year.

TTI’s sister company Mouser Electronics experienced record sales in 2015, growing 3.3% and projecting another 8% growth this year, company President Glenn Smith reported during the same Las Vegas meeting. Like TTI, Mouser saw the most strength outside of the Americas, with business in Europe and Asia driving the company’s strong performance—Smith noted that the first quarter of 2016 saw record sales as well. What’s more, the company projects that sales in Europe and Asia combined are likely to eclipse sales in the Americas in the next few years—a first for this Texas-based distributor. In the first quarter of 2016, 51% of Mouser’s sales came from the Americas, with 20% from Asia Pacific, and 28.5% from Europe.

“The Americas is not growing the way Europe and Asia have,” Hayne Shumate, Mouser’s vice president of Internet Business, said in a separate interview at EDS, adding that the company is close to the Americas comprising less than 50% of global sales.

“It’s already that way on the web,” Shumate explains, noting that website orders comprise 53% of Mouser’s business today, with the majority of those coming from Europe and Asia.

A Bright Future

In EMEA, a new leadership team and expanded sales and service network are driving strong results for Future Electronics, says Karim Yasmine, corporate vice president, strategic supplier development.

Another distributor that has seen positive change in Europe is Montreal-based Future Electronics. A new management team, deep technical knowledge, and a strong segmentation strategy helped drive growth in 2015 that is continuing this year, says Karim Yasmine, corporate vice president, strategic supplier development. Future hired Karim Khebere as its managing director for Future EMEA late last year, a change that also included the hiring of more sales and customer service associates and a new regional leadership team. Yasmine calls Khebere “a phenomenal addition” to Future—one that has brought balance to the corporation and helped create a hub in Europe.

“Europe was quite strong all of last year, and is driving very nice growth for us,” Yasmine adds. “Asia is still the fastest-growing area for us, and the Americas is holding its own … [But] EMEA keeps on rolling, thanks to the new team we’ve brought in.” 

Future’s segmentation strategy in Europe has the company focused on key areas such as lighting, display solutions, and connectivity, Yasmine adds. Looking ahead, he says the plan is to develop segment teams to deepen the company’s penetration into markets such as transportation, health care, and industrial markets.

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