Worldwide switch market to post modest growth

By Jim Carbone -- Purchasing, 3/6/2008 6:38:00 AM

The global electromechanical switch market should remain stable over the next year, but buyers can expect some marginal price increases for some types of switches because of higher materials and transportation costs. However, prices for switches used in the automotive industry will fall.

Switch suppliers say pricing in general has remained stable despite increased materials and transportation costs. However, expect average prices to rise less than 1% for all switch products, says market research firm Venture Development Corp in Natick, Mass.

Tactile switches, for instance, are becoming a commodity so at the bare minimum pricing covers factory costs, says Glenn Tarnawa, product manager of switches at Omron Electronics Components in Schaumburg, Ill. There will probably be price increases rather than decreases this year, primarily because of rising materials costs in general coupled with the cost of transportation, he says.

The auto industry is another story. The Big Three automakers usually seek 2-5% cost reductions from suppliers, but switch price erosion could be more this year.

"We're seeing prices being eroded pretty quickly especially as the Big Three struggle to compete against the Chinese and Japanese. GM is being very aggressive and is looking for a 10-15% cost down this year as they look to be more competitive against Toyota and Honda," says Robert Seubert, product manager for automotive and snap-action switches at Omron.

Even if there is price erosion for switches in the automotive sector, the global switch market will still post modest growth. Switch revenue will grow from $4.1 billion in 2007 to $4.2 billion in 2007, according to Venture Development Corp in Natick, Mass. The Asia-Pacific region will show the most growth due to its manufacturing capabilities and many North American and European companies transitioning their production manufacturing to the region, according to Venture Development.

Venture also reports Asian markets, especially China, will experience greater growth in regional share at the expense of the Americas and Europe.