A view on component distribution - how a year can change the business outlook! - 4 April 2007

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A view on component distribution - how a year can change the business outlook!

4 April 2007 News

Albert Kopp, Avnet Kopp

After the global downturn in the components business in early 2001, the market in South Africa showed a reasonable recovery in 2006, and if we look at the overall economic growth prospects in South Africa for the next few years, we have good reason to be optimistic about the electronic component distribution business.

Albert Kopp

The driving forces in the South African economy include massive infrastructure investments by the central government and the provinces.

The large 'Gautrain' project is now well under way and all of us living in Gauteng have to deal with the road re-routings on a daily basis. Next of course is the Football World Cup in 2010, and all the stadiums and support structures that need to be built. Already underway as well, is a massive refurbishment of railway locomotives by the South African Railways. Add to this some mining investments, and you have drivers of a robust economy for the years ahead, according to the financial press.

The electronics industry, as an enabling technology, should reap good spin-offs from all these projects, and this is probably a key reason for the better market conditions we are experiencing.

Offshoring of production to the Far East has been seen on a relatively small scale, with some companies bringing production back to South Africa for various reasons.

The volatile Rand is always a factor, and the weakening of some 15% against major currencies over the past six to eight months has had a beneficial effect on local manufacturers - imported products are more expensive, and locally-manufactured products for export are more competitive.

Our parent company, Avnet, made two major acquisitions in the past two years, acquiring the Memec group and integrating the business into Avnet Electronics Marketing, and the acquisition of Access from GE and integrating it into our enterprise computing business, Avnet Technology Solutions.

For us at Avnet Kopp these events have had a positive effect. We have focused our attention on business fundamentals. We have a great team and an excellent line-card of key suppliers, both of which allow us to give our customers good service and a comprehensive product offering. Our focus is fixed on our customer relationships, our logistics and technical design-in support, and maintaining product availability for our customers. We are able to take advantage of being a part of Avnet, with its global scale and scope, the benefits of which we pass on to our customers.

We expect to grow at least at the rate of growth of our economy, and with the effective execution of our business plans, hope to exceed that rate.

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A view on component distribution - how a year can change the business outlook!

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