Connector Industry Price Trends
By Ronald E. Bishop, Bishop & Associates Inc.

Connector prices have historically declined by 2% to 4% per year. However, price erosion increased to around 7% during the 2001 and 2002 recession.

Connector demand began to increase in 2003 and continued through most of 2008. During this period, lead times began to increase, raw material costs started to rise, manufacturing capacity was fully utilized, and price erosion started to decline.

Connector companies implemented price increases in 2007 and 2008, justified by rising raw material costs. This was the first time since 2000 the industry attempted to raise prices. The price increases were generally accepted by the customer base, as price erosion declined to the lowest level in recent years. In 2006, price erosion worldwide was less than 2%. In 2007, connector prices stabilized for the first time in more than a decade. Price erosion then continued in 2008 and 2009. In 2010, connector companies were able to increase prices, on average, by 3%.

The following table provides our estimate of price erosion since the turn of the century.

In 2011, connector prices were mostly stable because connector demand increased in the 7.5% to 8% range. Order lead times averaged around six weeks, and raw material prices for gold, copper, etc., stabilized after a sharp increase in 2010.

The outlook for 2012 is for stable connector prices. We do not believe there will be any significant changes from 2011 price levels.

The following analysis is based on the opinion of connector industry personnel on prices and lead times.

Price Analysis

The Price Index for November is 3.403, and will be 3.431 six months from now. Remember, an index above 3.000 means industry personnel believe prices will increase.

Industry personnel were asked, “In your opinion, what happened to connector prices in the past six months, and what will happen during the next six months?” The results of the November survey are shown in the following table:

A price index above 3.000 means industry personnel believe prices have, or will, increase. Methodology: Increase a Lot = 5; Increase a Little = 4; Stay the Same = 3; Decline a Little = 2; Decline a Lot = 1
 

The following table displays the distribution of responses on the question of prices.

The following graph provides a history of the price index since January 2009.

Connector Price Index
Prices Six Months from Now

Lead Times

Industry personnel were asked, “In your opinion, is lead time increasing, staying the same, or decreasing now and in six months from now?”

The following table provides the survey results, including the distribution of responses:

Lead times are 5.7 weeks now and forecast to be 5.6 in six months.

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