2009 Year in Review

03.08.2010 // Posted by: Ron Bishop // Posted in: Articles, Connectors

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It’s over! That’s the best thing we can say about 2009.

Industry bookings and billings set historical lows, with January 2009 the low point in the downturn. The good news is that connector demand is recovering and we enter into 2010 with a substantial order backlog that continues to grow.

Performance by Region

The full year 2009 ended with bookings down -18.2 percent, and sales down -21.8 percent. The following table provides order and sales performance by region.

Full Year 2009 Performance by Region

The worst performing region was Europe, and China was the performance leader once again.

The following table shows 2009 connector sales by region.

2009 Connector Sales by Region

Performance by Quarter and Year

The downturn started in 4Q08 with sales down -18.4 percent year-over-year. We then recorded four consecutive quarters of double-digit declines in sales.

Industry Sales by Quarter

First quarter 2009 was the bottom of the downturn. The industry recorded only $7,363 million in sales, approximately the amount of sales in 3Q03, twenty-one quarters ago.

Full year 2009 sales of $34, 390 million is the equivalent of industry sales in 2004, five years ago.

Industry Sales by Quarter

The industry shipped $9.6 billion less in 2009 than 2008. Assuming $150,000 sales per employee, the connector industry had to shed 64,000 employees in order to match demand to capacity. It was a tough year.

Performance by Market Sector

The automotive, transportation and industrial markets were hit the hardest. The following table shows 2009 connector industry sales performance by market sector.

2009 World Sales Performance by Market Sector

All sectors declined with mil/aero, medical and instrumentation declining less than the others.

2010 Outlook

We believe 2010 will result in a double-digit increase of +11.3 percent. Our connector forecast by region is as follows.

2009 World Sales Performance by Market Sector

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We base this forecast on the following assumptions.

• World GDPs are improving.
• Easy comparisons for the first three quarters of 2010.
• Backlog is building. The book-to-bill ratio has been 1.04 or higher for six consecutive months.
• 1Q10 should result in high double-digit sales increases because of easy comparisons, and a large order backlog. The 1Q10 combined outlook of Tyco Electronics, Amphenol and Molex is a year-over-year sales growth of +38.9 percent.

There are some significant concerns about 2010.

• Unemployment is high and companies have not started adding people back on the payroll.
• The housing market continues to flounder, with existing home values continuing to shrink. There has never been a sustained recovery when the housing market is weak.
• Western governments have increased debt to historical highs as a percentage of GDP. Eventually, this will force either increased taxes or reduced government spending. Neither is good for business.

If 1Q10 results in high double-digit growth in the 25 percent range, and World GDPs continue to grow, our +11.3 percent forecast is conservative. In our opinion, we will be deep into 2Q10 before we feel comfortable about the direction of 2010.

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