Top 50 Update: Leadership Changes, Innovation Challenges Confront Top Distributors

Top 50 Update: Leadership Changes, Innovation Challenges Confront Top Distributors

It was not a banner year for the industry’s largest distribution companies, as they continued to navigate the tough economic climate. Still, the Top 10 distributors of electronic components maintain a positive industry outlook for 2016 and beyond.

As 2015 draws to an end, many distributors are anxious to close the books on a lackluster year. For the industry’s largest companies, 2015 saw improvement in some sectors, as automotive-related business, wearable electronics, and medical markets continued to perform well. However, a slow industrial economy continued to put a damper on overall performance.

It has been about six months since Global Purchasing published its Top 50 Electronics Distributors report, an annual list of the largest electronics distributors with a presence in North America, so it’s time for an end-of-year update on how some of the top companies are faring. Here is a look at key happenings and ongoing challenges for Global Purchasing’s Top 10:

 

  1. Avnet

Avnet finished its first fiscal quarter of 2016—ending October 3—on a good note, with increased sales and earnings and a positive outlook for the end of the year. Avnet’s Gerry Fay told Global Purchasing in late October that the company continues to perform well in a tough global economy by focusing on blending its core strengths in components distribution, information technology solutions, and embedded products and related services—expertise that benefits the company especially when it comes to meeting Internet of Things requirements.

“We were [in] IoT before it was cool,” says Fay, president of Avnet Electronics Marketing Global, pointing to Avnet’s longtime strength in sensing, processing, and IT-related solutions required to make IoT projects happen. 

A return of military- and aerospace-related business and ongoing strength in the automotive industry also helped Avnet stay the course in 2015, according to Ed Smith, president of Avnet EM Americas. Consumer and medical wearable electronics continue to perform well, too, although the slowdown in the broader industrial economy remains a concern. Despite the mixed bag, Smith says he’s upbeat about the industry overall.

“The next five to 10 years in our industry will be a great time to watch,” he says.

 

  1. Arrow Electronics

Arrow made news recently with the appointment of a new president for its global components business: Andy King succeeds Eric Schuck, who had led the group since 2013. King will report to Andrew Bryant, chief operating officer of Arrow’s global components and global enterprise computing solutions businesses. King previously served as president of Arrow’s components business in the Europe, Middle East, and Africa (EMEA) region, and prior to that was vice president of sales and vice president of semiconductor marketing and engineering in EMEA for the company.

Arrow also continued to feel the effects of the slow economy into the fall. The company failed to meet analysts’ expectations in its most recent earnings report, with flat year-over-year earnings and an overall quarterly sales increase of 1.5%. By segment, Arrow saw a 1% sales decline in its global components business, with sales falling 4% and 2% in the Americas and Asia, respectively, and sales increasing 5% in Europe. Arrow’s global computing segment fared better, with sales up nearly 7% compared to the same period a year ago.

 

  1. WPG Americas

After making its Top 50 debut in 2014, WPG Americas maintained its number three spot this year. The Taiwan-based company continues to expand in North America, opening a new facility in Schaumburg, Ill., this fall. The location houses sales, marketing, and engineering resources to serve customers in the central United States. The expansion is part of the firm’s plan to place resources closer to local customers: WPG opened a similar office in Wilmington, Mass., and plans to open a third in Phoenix, Ariz.

WPG also announced this fall a new agreement with Marvell, provider of storage, communications, and consumer silicon solutions. The distributor will sell Marvell’s complete line of products in the Americas. Key applications include high-volume storage solutions, Internet of Things, cloud infrastructure, digital entertainment, wireless, consumer, and printer products.

 

4. Future Electronics

Big news at Future this year was the departure of executive vice president Lindsley Ruth, who took the helm of Britain-based global distributor Electrocomponents plc. Future remains focused on core strengths, with an eye toward the potential of the IoT market. In a mid-year business update, company spokesman Karim Yasmine pointed to the company’s strength in wireless technology as a driver for IoT growth.

“Most of our vendors that are strong wireless vendors count on us to service and support [IoT] customers. And we see those segments growing. The IoT piece is greater than I think people realize,” Yasmine, who is corporate vice president, strategic supplier development, told Global Purchasing earlier this year.

Future Electronics emphasized that direction with two key announcements this fall: a new agreement with Link Labs, which provides low-power, wide-area network technologies for the Internet of Things; and an expanded agreement with wireless product and solutions provider Digi International.

 

  1. Macnica Inc.

This Japan-based company made its Top 50 debut this year. A global distributor of electronic components and related technologies and services, the firm officially launched its Macnica Americas division in 2012 with the purchase of OSI Solutions. A year later, the company launched its Mpression technology solutions brand worldwide, combining components, related technology, and services to help engineering customers design and develop complex products—and get them to market faster. Among its most recent moves, the distributor announced the launch of new IP core technology that supports Sony’s IP Live production system, allowing for real-time transmission of video, audio, and metadata via standard IP networks.

 

6. Electrocomponents plc/Allied Electronics

This UK-based company saw a leadership change early in the year when former Future Electronics executive Lindsley Ruth was named CEO. Ruth spoke to members of the Electronic Components Industry Association in late October about his first seven months in the UK, pointing to the distributor’s focus on building a digital culture and ongoing efforts to harmonize its global inventory as key issues. Electrocomponents has two trading groups: Allied Electronics in the United States and Britain-based RS Components.

The company reported disappointing financial results for the six months ending September 30, as profit fell 20% compared to the same period a year earlier. Sales rose nearly 4%, with growth reported in Continental Europe and flat conditions in North America and Asia. Here at home, Allied Electronics continues to chug along, still feeling the effects of the slow industrial economy. Key recent moves include the addition of same-day shipping within the Dallas/Fort Worth area. Local customers can choose to receive their order within three to six hours after it is placed—a first-of-its-kind industry service, the company said this summer.

 

7. TTI Inc.

TTI’s Lew LaFornara characterizes 2015 as a challenging year, pointing to mixed conditions across the many markets the distributor serves throughout North America. A plentiful amount of inventory in the channel has compounded the situation, leading buyers to exercise leverage on pricing and relaxing the urgency to order—especially when it comes to long-term commitments. LaFornara, TTI’s vice president of supplier marketing and product management, says conditions are similar to what the industry saw in 2013, and he notes that he doesn’t anticipate any big bubbles or crashes on the economic horizon.

“We’ve been through these cycles before, and we’re taking the long-term view,” he says of TTI, adding that the company is expanding capacity across the board, having just broken ground on a new warehouse set to come online in 2017. “We’re primed to support customers when things expand.”

 

8. Digi-Key Corp.

The major news emanating from Digi-Key is its leadership change, as longtime company president Mark Larson stepped down this summer and handed the reins to Dave Doherty, who previously served as executive vice president of operations. The long-planned transition was smooth, Doherty said in late October, noting that the company is committed to continuing on the path Larson set over his 39-year tenure at Digi-Key’s helm.

“We’re going to continue our model,” Doherty explains, noting that the only thing likely to change is the pace of business and the distributor’s service and resource offering on the web. “We will listen to our customers and integrate their requests. Revenue follows good, healthy demand creation.”

Digi-Key continues its role as a leading catalog distributor, specializing in high-mix, low-volume business to design engineering customers, although the company also serves production business, especially as it expands globally. Doherty characterized 2015 as a challenging year, but said he is “bullish on 2016.”

 

9. Newark element14

The latest from Newark element14 includes a new avenue to serving original equipment manufacturing (OEM) customers—through its Raspberry Pi offering. The two organizations announced in October that element14 will offer design and manufacturing services to OEMs for custom designs based on the Raspberry Pi technology platform. Since 2012, element14 has distributed the low-cost, credit-card-sized programming computer and its accessories. The expanded agreement is in response to customer demand for more advanced, customized boards based on the Raspberry Pi platform, according to the company.

The design and manufacturing services, which will be done through element14’s Embest and AVID Technology businesses, are predominantly for OEMs with production runs of between 3,000 and 5,000 parts. Customers will be able to customize Raspberry Pi solutions for a range of applications and industries, including the Internet of Things, energy management, industrial projects, and consumer devices.

“To take this to the next level—from engineering to supply chain and manufacturing—we’re very excited to see where it ends up,” says Claire Doyle, element14’s global head of Raspberry Pi.

 

10. Mouser Electronics

In the six months since we released our Top 50 report, Mouser has enjoyed solid business performance, anticipating between 9% and 11% growth this year, according to company leaders. In late October, vice president of technical marketing Kevin Hess pointed to a strong start and a slower finish to the year, but noted overall steady conditions for this catalog distributor that has seen strong international expansion over the last few years.

Among Mouser’s latest marketing efforts is a driverless-car online video series hosted by celebrity engineer Grant Imahara. The series is part of Mouser’s Empowering Innovation Together program, available on mouser.com. The series follows earlier programs on home automation, robotics, and space exploration. Mouser also updated its Applications & Technologies resources pages on the web, revamping its power-supply site and launching a robotics site early in the year.

Global Purchasing’s annual Top 50 Electronics Distributors report will next appear in May 2016.

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