Despite all the doom and gloom out there I have decided that I will not go along with it and do everything I can to find positive stories to comment on. There is plenty of good news out there. Recently an article in TWST.com sheds some positive light on the connector industry.  You can trust these guys - they really know what they are talking about!

A recent interview excerpt from The Wall Street Transcript (TWST.com) asks Steven O'Brien, a J.P. Morgan analyst specializing in coverage of connector giants Amphenol (NYSE:APH), Molex (NASDAQ:MOLX) and TE Connectivity (NYSE:TEL) about the investment outlook for these companies and their respective performance in the diversified global electronics market.

In response, O'Brien elegantly breaks down the many industries supporting the continuing growth in global demand for electronics connectors, and explains why connectors are such vital components in the signal/power chain:Basically, a connector connects one piece or part, and it could be the input/output portion of an electronic device, to typically the internal controls of a machine or a device. It could be carrying electronic signals, it could be carrying electrical power.

In either case, these connectors serve a vital function. Poor connections degrade signals or degrade power, resulting in lost efficiency or worse. So an ideal connector is one that has the least interference on the electronic signal or the electric power being carried through.
In terms of specific examples, [connectors] are used in everything. They are used in your mobile phones. They are used in automobiles. They are used in aircraft. They are used in military equipment. They are used in networking equipment. They are used in appliances. They are used everywhere.

I think, broadly, connectors are about a 50 billion a year industry right now. I'd say about 30% comes from communications. That includes both communications equipment like communication service providers use, as well as communication devices like smartphones and tablets. Industrial, which is a hodgepodge, it's the industrial automation equipment.
It's any kind of product used in terms of transportation, or oil and gas industry or mining, so on and so forth. It's hard to call that a market, but it's probably the next biggest user of connectors, I'd say. It's about 22% of the market.

Automotive would be a close third place, roughly around 18%. Aerospace and defence, and data networking, which includes computer servers and so and so forth, are both about 12% of the market. What you have left is probably about 5% of the market from appliances and consumer devices.Elsewhere in the interview, by way of explaining why exactly Amphenol, Molex and TE Connectivity are successful in their dominance of the industry, O'Brien had this to say:The broad theme here is [that these are all] companies that benefit from growing electronics penetration across industries. Connectors are used in any product or any device that has electronic signals, and that's pretty much everything these days. In any given industry, electronic content is growing, there is no denying that trend. All these companies broadly benefit from that trend.

Another major positive that the connector industry has going for it is that unlike other areas, you have broad and almost agnostic exposure to success of the various OEMs in any given industry. So you don't see the success of Amphenol, Molex or TE tied to the success of any other company. That is in contrast with the electronic manufacturing services industry where the troubles of companies like Cisco and RIM have been disruptive for their supply chain. You don't see that in the connector industry.We in the connector / interconnection industry have always felt secure that our products are the cornerstone of most electronic products so there is still plenty of opportunities out there.  We just have to be smart and work along side the still growing markets such as Space, Medical & communication industries.

Do you ever check what you are paying for is what you are getting? I expect most of you to say 'Of course I do'.

Well, the reality is that you probably do check that the correct quantity of product has arrived and they are the correct type of product, but how do you know that what you are buying is legal when it comes to copper cable?

A recent programme on the BBC, Fake Britain, showed how thousands of tonnes of copper cable had been found to be illegally marked because the cable was marked as a higher AWG grade than the copper is actually on the reel.

All this is not news to us in the cable assembly business because we have seen this for years. Suppliers in the far-east only putting 6 strands instead of 7, trying to be that little bit cheaper than the competitor.

Another consequence is copper-clad aluminium (CCA) cables. We are seeing a lot of Ethernet cables being offered into the market at substantially lower prices than traditional pure copper conductors. The problem is that although they pass the specific Cat 5e & Cat 6 test their performance is poor especially if you need to rely on them for video streaming and high bandwidth applications.

The main reason for all of this I believe is our fault because we keep expecting the price to go down when commodity prices like copper and oil are going up. At some point something has go to give.  

So, my challenge for today is to go to your stores and just check those reels of copper cable you have and satisfy yourself that you have what you paid for. Most importantly what YOUR CUSTOMERS expect to receive as a finished product from you.

So the next time you go through your QA for goods in, how about just adding a simple copper conductor test? Believe me, it will save you a lot of hassle in the future.