Exchange Rate Status - October 2016
Thatcham, UK - as we have all seen, due to June's Brexit vote, the current sterling exchange rates are extremely volatile. This volatility introduces a number of challenges in the fast moving Contract Electronic Assembly (CEM) market.
Manufacturers generally sell in US dollars or Euro's, or if not will purchase raw materials in affected by these currencies. Of course in today's global economy everything is connected and related in some way, but ultimately it leads to the possibility of cost increases.
GBP / USD - November 2015 to October 2016
Each manufacturer and supplier is affected by the exchanges changes differently depending upon;
- Business model.
- Stock holding.
- Exposure to exchange rates.
To EMS the impact can also be seen in different ways, including;
- PCB price variance, as many PCBs are manufactured offshore the exchange rate changes are most apparent on these, given the time that can elapse from quote to purchase.
- Increases in suppliers price, even once a PO has been placed, due to sudden fluctuations.
- Regular, in some cases daily, supplier reviews which can lead to the imposition of cost increases.
EMS attempts to protect and shield customers from these increases after receipt of an order, but there can be circumstances where the weight of the increase imposed cannot be covered by EMS alone. As standard all of EMS' quote state;
We hope we do not have to imposed these changes, after receipt of an order, but this is not always possible. As there is more potentially further uncertainty to come with the related knock impact on exchange rates, further changes could follow.