OL3.OCT–pm
Switches and relays have diverging market outlooks
The effects of military budget cuts are permeating every aspect of the
electronics industry. From the highest to the lowest ends of the spectrum,
no one is escaping unscathed. While the cuts may well be severe for some
companies, the electronics industry as a whole is looking to a recent
upswing in the commercial end to offset losses in the military market.
This upswing is evidenced in recent figures from Venture Development Corp.
(Natick, MA).
VDC reports that the North American market for switches and relays–two
facets of the electronics industry at the nuts-and-bolts level–are both
going through a major shake up. While switches overall look good, relays
will be the harder hit of the two by the cutbacks. In the study, VDC
groups military, aerospace, and rail applications together as a single
category. For this category, the North American relay market outlook is
dismal, with a possible -3.9% compound annual growth rate (CAGR). To see
how one relay manufacturer is going about off-setting this slump, see page
37. On the upswing, the automotive relay market will rise to $1,071
million worldwide in 1997 from its 1992 figure of $581 million. This is
attributable to the increased proliferation of electronic systems as
standard and optional features on motor vehicles. Here, applications
include safety, convenience, and engine-control features. For relays
overall, VDC predicts the world market will rise from its 1992 figure of
$4 billion, to $5 billion in 1997, realizing a CAGR of 5.2%. As a whole,
switches appear to be on the steadier ground of the two industries (see
charts). North American consumption is forecast by VDC to increase at a
CAGR of 4.5% from over $1 billion in 1991. This supports supplier and user
expectations that the market will rebound from two years of recession. The
sheer diversification of switching products and applications available
(see Product Update on page 55) should form a cushion for companies
affected by military cutbacks. The military end is forecast to experience
a less-than-average percentage growth rate in switch consumption. With
respect to switch technology itself, VDC predicts that electromechanical
types will maintain their market share. However, solid-state technologies,
switch-pad assemblies, and software will continue to gain ground.
–Patrick Mannion
CAPTION: The diversification of switching products and
applications in the commercial market will go a long way toward offsetting
the effects of military cutbacks.
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