Master Electronics ranked 15th on Global Purchasing’s 2014 Top 50 Electronics Distributors report with $172 million in sales. The distributor of interconnect, passive, and electromechanical components is focused on growth, having just acquired Canadian distributor Electro Sonic earlier this year. Global Purchasing asked Riad Nizam, the company’s vice president of sales, to talk about Master Electronics’ latest news and the state of the electronic components industry this spring, just after the release of our Top 50 report. What follows are excerpts from our conversation.
Global Purchasing: How is 2014 shaping up for the electronics industry in your opinion?
Overall, the first quarter of 2014 looks very much like 2013—flat to slightly up for the industry. There is no major technology driver spurring a ton of growth for us. Customers seem to be in great financial shape but tentative to make large investments or long-term commitments. At Masters we have been focusing on our execution, strategy, and our ability to fill the gaps in providing services other distributors will not offer.
GP: Are there any particular bright spots in terms of end markets that your company is homing in on?
Nizam: There are two bright spots for us. The electric vehicle market seems to be picking up where it left off in 2013, and we have seen some nice momentum in this sector and we expect it to continue. Hopefully this means electric vehicles are here to stay and will represent an industry we will be able to keep selling into.
The other bright spot is the semiconductor equipment business, which has been doing well for over two years. Manufacturers are investing in new equipment and upgrading older equipment, thanks to the increased usage of semis in cell phones and tablets. This industry always goes through major upswings and downswings. Right now we are on an upswing so it is nice to ride it.
GP: There is much talk about wearable technology, medical electronics, and lighting—particularly LED technology—as key growth areas. Are those important areas for your company?
Nizam: Medical electronics has always been an area in which we have done well. The industry always experiences steady and consistent growth. It is one of the few markets that we sell into with that type of stability and growth.
GP: What do you see as some of the greatest supply chain challenges facing your customers today, and how is Master Electronics helping to address those issues?
Nizam: One of the greatest supply chain challenges I see facing our customers today is getting inventory at their locations at the exact moment they want it. I see more and more customers that don’t want to have any inventory on their shelves until absolutely necessary. This is hard for them to accomplish because oftentimes they do not have very good demand forecasting. At Masters we are very flexible with customers’ stocking requirements and are willing to stock products for up to two years. We also always try to stock three to six months’ usage at any time so when they have an uptick in business and need to get three months’ usage in at one time we are able to deliver right away.
Another issue that is related to supply chain is keeping pricing locked for as long as possible. Most of our customers have price reductions to their customers and look for price reductions from us. This is difficult with IP&E products, where prices go up annually and sometimes twice a year. We have offered certain customers “locked in” pricing for two years so they appreciate a consistent cost point for planning.
GP: What’s new at Master Electronics these days in terms of expansion, business strategies, and so forth?
Nizam: The biggest news is our recent purchase of Electro Sonic in Canada. Electro Sonic is the only true Canadian distributor left. They have great name recognition in Canada and I think the largest IP&E-focused sales force there. Electro Sonic has three locations in Vancouver, Toronto, and Montreal and good coverage in Alberta and Winnipeg as well. We are going to invest heavily in personnel and inventory at Electro Sonic and are excited about this great acquisition for Masters.
Riad Nizam is vice president of sales at Master Electronics, based in Santa Monica, Calif.