Bookend of a four-year cycle

Sager Electronics’ senior vice president marketing, Faris Aruri

Sager Electronics’ senior vice president marketing, Faris Aruri, encourages industry to extend its planning out at least a decade where the direction is decidedly up

Demand has reached historic heights and is growing across markets including industrial, automation, robotics, medical, 5G and EV. It is important to note that business cycles rarely last one year. While US business closes out the year and moves with a clean slate to the next, the underlying drivers have no connection to the calendar.

We find ourselves in a four-year cycle no one has seen before. The pandemic’s 2020 start led to an economic shutdown for at least two and a half quarters and a somewhat flat year. That shutdown left us unprepared for a drastic increase in demand, with the supply chain crisis dominating 2021/2022 and leading to 20 per cent annual growth and ever-rising backlogs.

The next dominoes to fall were inflation and a federal reserve determined to slow the economy at almost any cost. Next year will likely closeout this four-year period. We should see cost, transportation, material shortages and labor all settle. The earlier upward demand for electronics will battle against adjustments to an unsustainable order trend, high inventory levels and an economic slowdown.

The uneven growth numbers we find troublesome now will average 10 to 12 per cent annually when smoothed across the four years, a result most would take and run with.

While some are already planning for a downturn next year, we must realize the horizon is much longer and we should be planning for the next 10-years where the direction is decidedly up.