2015 Cable Assembly Industry Outlook

By Dave Pheteplace | January 12, 2015

The fourth quarter of 2014 showed modest growth, which may be a sign of what’s to come. Read on to learn more about Bishop & Associates’ preliminary 2015 cable assembly industry outlook.

Cable assembly demand in 2014 was high through September, with year-to-date sales up almost 10% to more than $103 billion. Cable assembly demand slowed somewhat in October, which suggested that growth in 4Q14 would be modest (low single digits). Bishop forecasted that industry sales would grow +8.2% in 2013 to $137 billion*.

So where does that put the forecast for 2015? We believe the soft demand in 4Q14 is a trend that will carry over into 2015. Although 2015 will be a growth year, the growth will be at a slower pace than 2014. A number of major trends will affect the industry.

On the negative side:

GDP growth is slowing worldwide.
- Several of Europe’s economies are flat-to-declining with no expectations for immediate improvement. Germany, Europe‘s largest economy, has been stuck around or below 1% growth for six quarters (excluding 1Q14 at 2.6%).
- China’s GDP growth is forecast to decline over the near term. Growth at or below 7% is expected.
- Japan’s economy is close to slipping into recession.
The automotive industry, which has fueled much of the cable assembly industry’s growth in the last two years, is forecast to slow over the next few years.
Consumer confidence is trending down in many of the major economies.
The manufacturing PMI index is hovering around 50% in many major countries.
Lower oil prices are hurting the economies of oil-producing countries.

On the positive side:

Interest rates are low.
The US economy is growing.
Unemployment levels are decreasing in the US.
Energy costs are low, helping the economies of oil consuming countries.
Inflation is modest and unlikely to rise any time soon.

As a result of the above, we believe cable assembly demand will slow from the high single-digit growth seen in 2014. 2015 will probably result in growth in the 3% to 5% range. We do not, at this time, believe sales demand will decline to negative levels in 2015. An updated forecast will be forthcoming in late January when the final results for 2014 are tallied.

*At the time this article was published, final numbers for Q4 and the year as a whole had not been determined.

[hr]

No part of this article may be used without the permission of Bishop & Associates Inc. If you would like to receive additional news about the connector industry, register here. You may also contact us at [email protected] or by calling 630.443.2702.

Author
Recent Posts

Dave Pheteplace

SVP and Managing Director Cable Assembly at Bishop & Associates Inc.

David Pheteplace joined Bishop & Associates Inc. in 2008, and was appointed vice president in September 2011. He is also the managing director of Bishop’s cable assembly division, which he established in 2008. Pheteplace has more than 30 years of experience in the interconnect industry, including managing divisions of Amphenol, Cinch, and Robinson Nugent.

Latest posts by Dave Pheteplace (see all)