(Provided by CRU)
This article reviews developments in global markets for wire and cable used by OEMs (Original Equipment Manu-facturers), addressing the two main relevant sectors of the OEM market: (a) Automotive, and (b) Electrical Appliances and Electronic Products. By far the most important current development in this sector of the cable market is the impact of the global financial crisis. A limited downturn in some OEM markets began in 2007 and the situation has further deteriorated during 2008, but it became clear in the later months of the year that the scale of the downturn is likely to be severe, especially in the automotive sector. The financial crisis deepened during September and October 2008, and the malaise that began as a limited problem in the banking sector has spread from financial services to manufacturing businesses. Production in some key manufacturing industries has already fallen sharply.
In assessing the impact of the financial crisis that broke in 2008, there have been two main sectors where there has already been a clear adverse effect on demand. The construction sector was directly and almost immediately affected. In many countries over-heating of property markets, especially the market for residential property, was a key factor that had been driving growth in the construction sector. Once construction activity faltered, demand for cable began to fall. The US was the first country to experience the downturn in the construction sector, but during 2007 and 2008 some other countries have been through similar slumps as lenders became much more cautious in their assessment of credit risk.
The other major market sector that was quickly affected by the financial crisis is the OEM sector. As consumers lost confidence in the wake of the crisis (falling stock markets and some well-publicised rescues of major financial institutions), purchasing of many non-essential items fell, with an immediate effect on cable demand. The OEM sector covers wires and cables that are included in equipment sold to consumers: this definition covers autos, domestic electrical appliances and electronic items. The types of cable used by OEMs includes LV energy cable in the form of equipment wire used internally in appliances, flexible cables for power cords, winding wire used in motors and small transformers, and automotive wire and cable. Many OEM cables are used in the form of a complex harness: wiring harnesses consist of several wires cut-to length, fitted with connectors, then bundled together before installation. Though some parts of this assembly process can be automated (e.g. cutting to length), some elements of harness construction are much more labour intensive.
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