UPS said its annual “Change in the (Supply) Chain” survey of executives in the U.S. high-tech and electronics industry are more confident about the future of global trade and U.S. exports than two years ago.
"Citing legislative changes and rising labor rates abroad as factors, 85 percent of U.S. high-tech executives believe the Obama administration’s National Export Initiative goal to double exports by 2014 is either 'very likely' or 'somewhat likely' to be achieved versus 40 percent who believed so just after the goal was set two years ago," UPS said.
Among executives who believe the export goal is achievable, nearly one in three attributed this to the steady increase in disposable income in emerging markets. Another third cited rising labor rates in traditional low-cost manufacturing countries as a primary factor, and about one in five cited legislative changes such as recent free trade agreements in Asia. A large majority, 81 percent, of U.S. high-tech executives anticipate recent free trade agreements in Asia will increase their company’s imports and exports to and from the region.
Although North America is expected to remain the largest high-tech consumer market over the next three to five years, demand for high-tech products is expected to decrease by 7 percent in the region while demand in other markets is expected to increase, in some regions by double-digit percentages.
Executives report plans to increase sales/fulfillment in India, the Middle East and Africa by 22 percent each and in Brazil by 18 percent. Sales/fulfillment in other South American regions is expected to increase 19 percent, and in Eastern Europe by 15 percent, South Korea by 13 percent, China by 8 percent, with other Asian nations reaching 8 percent.
Ken Rankin, high-tech marketing director at UPS, said "global demand will continue to grow in new and existing markets, causing supply chain executives to shift not only their fulfillment operations but also their sourcing strategies to serve those markets. We have already begun to see such a shift as companies look to India and Brazil as key markets not only for fulfillment but for production as well.”
When asked why they anticipate global trade growth, 81 percent of U.S. executives cited free trade agreements in Asia as a key factor. Respondents also cited emerging market economies and their growing middle classes with an ever increasing appetite for technology products.
Executives said supply chain costs (72 percent), lead times (40 percent) and responsiveness (18 percent) rank as the top three drivers of change in the high-tech supply chain in the next three to five years.
IDC Manufacturing Insights surveyed about 125 senior-level decision-makers responsible for supply chain and logistics in the semiconductor, consumer electronics, electronic components/accessories and communications equipment industries for UPS from May through July 2012. - Chris Dupin