ECIA 100 Year Commemorative EBook

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Electronic Component Industry Evolution 100 YEARS OF THE AUTHORIZED CHANNEL


PREFACE The Channel Celebrates 100 Years! David Loftus, ECIA President I like to tell people that we’ve been really lucky to live through the tremendous industry revolution of the first 100 years in electronics distribution. If you think about it, electronics, semiconductors and our supply chain ecosystem are responsible for what I consider to be some of the most radical and beneficial changes to the way humans work, live and play than any other industry. From the earliest days of radio, which was the first instantaneous mass communication device, to today where that smartphone in your hand has one thousand more times the technology than what actually sent men to the moon, electronics has been front and center. So, it’s incredibly important that we stop and look back at the significant milestones that got us here and to celebrate our collective accomplishments. I think it’s also our responsibility to the industry, and really, for future generations’ benefit, that we should try help people learn from it. The ECIA may be the voice of the authorized channel yet the makeup of our membership is unique. We have distributors and

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manufacturers and manufacturers’ reps all working collaboratively for the betterment of our industry. ECIA is uniquely capable of capturing the true essence of this history. We’re the only association that’s made up of such a broad swath that it spans manufacturing, distribution and sales. We are an integral part of the ecosystem. I feel privileged to be part of that and privileged that we have the opportunity to work together to capture some of the key highlights in our industry’s history. As we celebrate the milestones and innovations, please pause to remember all we have accomplished. We recognize the leaders and organizations that led to the growth of the channel as we helped technology component manufacturers make the products we all use – and cannot live without — and make a world of difference to everyday people. While our primary focus was on U.S. channel activities, be assured: overseas distributors also deserve a lot of credit. I’d like to thank all the people who have contributed to this effort – there are too many to name, but you know who you are. Everyone is so busy dealing with product shortages and all the challenges we’ve got from Covid. I want to give my heartfelt thanks to everyone that has taken a little bit of their time to contribute in such a meaningful way to our industry, and this project.

ELECTRONIC COMPONENT INDUSTRY EVOLUTION


Hundreds of people developed pieces to the puzzle in the 1800s including Guglielmo Marconi who patented the first radio in 1896. In 1920 E.W. Scripps’s WWJ in Detroit received its commercial broadcasting license and started broadcasting a schedule of programs. The vacuum tube was the technology that spurred the radio industry and the channel.

ISBN 979-8-88525-740-4

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Radio Row, Cortlandt Street, New York circa 1922.


TABLE OF CONTENTS CHAPTER 1

The Birth of Distribution............................................................................9 CHAPTER 2

Post WWII to the End of the 20th Century................................. 23 SPOTLIGHT: THE IMPACT OF NEDA/ECIA..................................................... 29

CHAPTER 3

M&A Drives National Expansion........................................................41 SPOTLIGHT: VALUE-ADDED......................................................................... 47

CHAPTER 4

Strategic Moves Overseas.......................................................................57 SPOTLIGHT: SUPPLY CHAIN SERVICES.......................................................... 65

CHAPTER 5

How OEMs and Geopolitics Shaped the Channel...................77 CHAPTER 6:

The Internet Revolution............................................................................87 SPOTLIGHT: A BRIEF HISTORY OF EDS........................................................... 95

CHAPTER 7

Environmental Sustainability Becomes a Core Value........103 SPOTLIGHT: A BRIEF HISTORY OF THE ERA................................................ 109

CHAPTER 8

Technology & the Channel’s Marketing Strategies...............119 SPOTLIGHT: EDUCATION.............................................................................. 127

CHAPTER 9

Wall Street’s View of the Channel................................................... 133 CHAPTER

10 The Future of Distribution ............................................................ 143 Publisher’s Note The content for this project is largely Americas-based as that’s where Radio Row and many of the channel’s trade associations got their start. We acknowledge there may be gaps in our coverage and we welcome input from companies and individuals we may have missed. We anticipate updating this epublication in the future. We also want to thank our sponsors who throughout these pages shared details on their history and added to our story of overall industry growth and impact.


Sager Electronics Celebrates 135 Years Distributing Confidence® since 1887 “A century ago, the distribution industry as we know it today didn’t exist. A channel that now moves hundreds of millions of electronic devices around the world every day grew from some very modest roots. Some of today’s heavy hitters began by selling surplus radio parts on New York’s now-legendary ‘Radio Row.’ A couple of others were seeded in the oil fields of Texas. Still others sprung from early research labs in California. But only one is the oldest: Sager Electronics.” - Celebrating 120 Years of Distributing

Confidence. A Look Back from the Beginning. 2007

Sager storefront, circa 1920s.

Sager Electronics began in 1887 as a single storefront in Boston that serviced the growing interest in radio technology. Under the vision and leadership of Joe Sager, the company rapidly established a statewide distribution system for home radios and related components. Despite the onset of the Great Depression, Sager continued to grow by bringing new electrical products to Massachusetts’ consumers. With the coming of WWII, Sager reacted to the critical demand for electronic components. The company refocused its operations to supply electromechanical components to the U.S. military. This move positioned the company as the leading regional electronic component distributor at the beginning of the consumer electronics market in the 1950s and 60s.

Anticipating the explosive growth in electronics, in 1977, Sager relocated from Boston to more spacious facilities in Hingham, MA and began building a national network and infrastructure. This included the prudent acquisition of smaller regional distributors and the creation of sales branches to support an expanding network of customers and suppliers. In 2012, Sager was acquired by TTI Inc., a Berkshire Hathaway Inc. company. As a wholly owned subsidiary, Sager operates independently and has made a number of acquisitions to support its business. In June 2014, Sager acquired PowerGate LLC, a North American power specialist distributor. This acquisition preceded Sager’s 2015 purchase of Norvell Electronics, a North American power products distributor with extensive design and manufacturing capabilities. Sager acquired Power Sources Unlimited Inc. in 2017, and Technical Power Systems, a custom battery solutions provider, in 2019. Today Sager is a North American electronic component distributor of interconnect, power, thermal and electromechanical products from leading suppliers worldwide, and a provider of custom solutions. Headquartered in Middleborough, MA, Sager operates a network of field sales representatives and power systems sales engineers, strategically located service centers across North America, two state-of-the-art distribution centers, and two custom solution centers focused primarily on power supplies and batteries. For 135 years, the key to Sager’s success has been its commitment to exceeding customer expectations. From traditional distribution services to custom design and manufacturing capabilities to a branded line card of authorized suppliers, Sager continues to put customers at the center of its business philosophy.

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www.sager.com | 1.800.724.8370

Sager Electronics, a TTI Inc., Berkshire Hathaway Company


1887

Emile Berliner receives the patent for the gramophone. James Blyth builds the first electricity generating wind turbine. Herman Hollerith receives a U.S. patent for his punch-card calculator. Sager opens its first location in Boston, Massachusetts.

All great things begin with a single step – or in Sager’s case a single storefront. Recognized as the first distributor in the industry, Sager opened for business one hundred thirty-five years ago in downtown Boston, Massachusetts, servicing the growing interest in radio technology. Under the vision and leadership of Joe Sager, the company established a thriving business that put the needs of its customers first. Since then Sager has grown into a North American distributor of interconnect, power, thermal and electromechanical products and a provider of custom design and manufacturing solutions. And after 135 years, Sager still operates just as Joe envisioned – based on a commitment to exceeding expectations and keeping the customer at the center of its business philosophy.

Sager Electronics, a TTI Inc., Berkshire Hathaway Company

www.sager.com | 1.800.724.8370


Avnet: 100 years of technology transformation Team Avnet is honored to celebrate its centennial year in 2021 alongside our colleagues at the Electronic Components Industry Association. Avnet’s history is intrinsically linked with the ECIA’s and rooted in what was once the famous New York City Radio Row, where 33-year-old Russian immigrant Charles Avnet began buying and selling surplus radio parts to a rapidly growing industry. The condensed history below is taken from Avnet’s 100th Anniversary commemorative book, “A Century in the Making.”

Founding: The early years Charles Avnet began buying and selling surplus radio parts in 1921, just as the first component stores opened for business on New York City’s Radio Row. Rapid advances in technology soon made radios commonplace.

prove an astute decision, he shifted his focus from retailing to wholesaling. Radio remained an inexpensive escape for many. The newest novelty, television sets, was making inroads into people’s homes. Charles dealt in parts applicable to both. Not only did he pay off all his debts, he realized a modest profit. By making good on his loans, he was building a reputation of business acumen and honesty that served his eponymous company well.

From Radio Row to the center of technology’s value chain Over the last century, Avnet supported customers and suppliers around the world to activate the transformative possibilities of technology. Along the way, Avnet leadership made many key business decisions that feed today’s continued success. The below timeline summarizes some of them: • 1921: Charles Avnet opens business on Radio Row • 1 944: Lester Avnet persuades his father, Charles, and brother to turn their attention to industrial and military connectors • 1 956: Avnet opens its first West Coast facility in Los Angeles

Radio Row in the 1920s.

As radio manufacturing grew, so did the role of parts distributors. From a small store in Manhattan, Charles sold about $85,000 in components his first year. In 1929, Galvin Manufacturing Co. introduced the first practical car radio, the Motorola, short for “motor Victrola.” Charles capitalized on this development and added automobile antenna assembly and kits to his repertoire, effectively moving from a standard distributor to a value-added distributor by putting parts together for sale to consumers. When the Great Depression hit in October 1929, Charles, like many others, found himself suddenly in debt. In what would

• 1960: Avnet completes its first acquisition, hi-fi equipment importer British Industries Corp., and is concurrently listed on the New York Stock Exchange • 1979: Hamilton/Avnet opens the U.S. distribution industry’s first Asia stocking location in Tokyo • 1988: “Genesis,” a state-of-the-industry proprietary logistics system linking 2,800 terminals in North America, goes live in Avnet’s Arizona megawarehouse • 1997: Avnet Design Services is launched to meet customers’ demand for engineering and technical assistance • 2004: Avnet Logistics is launched to further streamline the technology supply chain


• 2013: Avnet experiences record growth in the Asia region, accounting for 29% of the company’s revenue • 2020: The global COVID-19 pandemic disrupts business around the world and Avnet plays a critical role in enabling customers to respond • 2021: Avnet celebrates its 100-year anniversary Avnet enters its second century in business deeply rooted in the same principles that drove success in the first. By adapting to and harnessing the opportunities of everchanging technology markets, Avnet helps its customers and suppliers enable design and supply chain technology solutions that improve life experiences. Avnet corporate headquarters Phoenix, Arizona.

Join Avnet’s 100th celebration by visiting centennialcentral.com

One century ago…scientists discovered insulin, Charlie Chaplin starred in “The Kid,” Coco Chanel released Chanel No. 5, and Charles Avnet set up shop on radio row. Today, as we celebrate 100 years of success, we thank everyone who has helped us reach this milestone.

A CENTURY OF REACHING FURTHER

JOIN THE CELEBRATION

centennialcentral.com


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THE BIRTH OF DISTRIBUTION The early 1920s were a time of discovery and hope after the conclusion of World War I. Technology became accessible to American households and changed the way people lived. The 1920s allowed for a more urbanized American culture as people moved from farms to the cities. As urban areas grew, technology goods, including radios, became prevalent.

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Radio repairs at Sager Radio in Boston.

Since its inception in 1901, the radio became a worldwide phenomenon. When first invented, radio was primarily used to contact ships at sea. Radio communication was spotty and unreliable at the time and ships often opted for Morse-code communication. Radios were rarely used until they became a necessity during World War I.

ELECTRONIC COMPONENT INDUSTRY EVOLUTION

Strategic and fast communication became crucial to the United States as it joined the war in 1914. As its military presence increased, the U.S. required more effective means for reaching its troops. Morsecode communication remain the primary method for combat communications. Once Congress had declared war, private radio use was banned and dedicated to


THE VACUUM TUBE military communications. Without radio, the U.S. could not have moved its troops as easily and effectively. Although at its inception radio ownership was rare, technology advancement made it a household item. The Consumer Electronics report suggests that in 1922, 100,000 radios were sold at an average $50 per radio. After only two years, the radio business had grown tremendously, and its value increased ten-fold to $50 million. More than 500 radio stations had been established. The need for parts had become apparent and resellers and brokers became the main source for these components. Thus, radio and electronic component distribution began and became a nationwide industry. Electronics distribution has grown immensely since its

beginning and today, 85 percent of the worldwide distributor market is dominated by fewer than 25 companies.

World War I was the turning point for American technology in warfare. After the war, military and radio technology became essential to another nascent industry. – Charles Avnet (Avnet) The popularity of radio drove consumer demand for components and “Radio Row” was established in the 1920s. “Radio Row” was the nickname for the New York district that specialized in the sale of radio equipment and parts. “City Radio,” which opened in 1921, was the first storefront. Radio Jobbers — the term that was commonly used for resellers — would carry radios and replacement parts including

The vacuum tube is an electronic device created in the early 1900s used in many older model radios, television sets, and amplifiers to control electric current flow. The cathode is heated, as in a light bulb, so it will emit electrons. This is called thermionic emission. The anode is the part that accepts the emitted electrons. The device may have other parts. Vacuum tubes must be hot to work. Most are made of glass, thus are fragile and can break.

RCA, Radio Tube c.1920.

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tubes, condensers, resistors, switches, wire, and other components. As radio became more and more popular through the years, users flocked to Radio Row to upgrade their devices. Radio Row was home to an estimated 40-50 very busy stores. By the late 1960s, Radio Row had grown and housed around 300 component resellers. Its address was the Lower West Side of Manhattan on Cortlandt Street. The street was located near the Wall Street financial district where employees had money to spend on radios and parts. New Jersey shoppers had easy access due to the easily crossed Hudson River. It was also close to the New York terminals of ferry boat lines, which generated a lot of foot traffic. Radio Row thrived for nearly four decades. In Boston, Joe Sager established a retail store in 1887— which had been selling speakers and eventually became Sager Radio. He was the first of the visionary pioneers

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Sager retail store in Boston.

to appreciate the future technology opportunities. In 1921 Avnet Radio was launched on Radio Row in New York by Russian immigrant Charles Avnet. He was known to have sung outside to attract customers to come in his store. It must have worked, he sold $85,000 in components that year. Also in 1921, Hughes-Peters was formed as a partnership between John Hughes and Henry Peters to distribute electrical construction materials and supplies to small municipalities in central Ohio. Their first location was a storefront building in

ELECTRONIC COMPONENT INDUSTRY EVOLUTION

downtown Columbus. With Avnet and HughesPeters joining Sager (and probably many others around the country who eventually failed) the channel officially begins to form in the early 20s. Sam Poncher, who would set up shop in 1927 as Midwest Radio Mart in Chicago, bought Newark Electric for $500 and renamed the company Newark Electronics. Allied Radio was established by Simon Wexler in Chicago and would eventually publish its first catalog for kit makers and individuals to make their own radios in 1932.


“It was in the winter of 1922-23 that Carding and Washington had me demonstrating radios around the Twin Cities on a commission basis. And I used to carry the set, which was about two feet long and weighed about 20 pounds. I carried that and about 40 pounds of batteries and about 10 pounds of speakers on a streetcar and would head out to different areas that we’d make appointments in for demonstrations. It was rather a greenhorn at selling. I didn’t make very much money” – Mel Foster (Foster Sales) Separately, the Galvin brothers started Galvin Manufacturing also in Chicago in 1928 with a payroll of $63 for 5 employees. Their impact would be significant as they created radios for automobiles in 1930. They rebranded the company “Motorola.” Their portable radios in WWII helped win the war.

The Great Depression was a severe worldwide economic crisis that began in the United States in August 1929 and impacted America until March 1933. Millions of people and business were financially wiped out due to the stock market crash that sent Wall Street into a panic. Although many suffered through the economic downturn, Radio Row and distributors continued to thrive as new radio sets were being manufactured and a surplus of parts were available. More and more stores began to open in the 1930s and more and more workers migrated to the United States via the Hudson River— conveniently adjacent to Radio Row.

Mass-produced radio sets evolved in the 1930s. Although full sets were being sold, demand for components declined. But when the mid-1930s hit, factory-manufactured sets began to break down and components were again required. This put these distributors in a position to supply complete radio sets as well as the repair and replacement parts. Resellers continued to thrive. Factories found themselves with a large amount of surplus due to overproduction and would take this excess to Radio Row. Many of these parts were sold at a discount.

They probably had no idea of their potential impact on the industry. Founder Sam Poncher 2nd from Right.

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“I was not a visionary. I was taken into a room in Detroit that was about 100 feet square and was filled with boxes on top of boxes from floor to ceiling. He waved at them and said, ‘These are all radio parts. I have no use for them and I need the space. I would like to sell them to anyone who comes along.’ I said, ‘I don’t know the first thing about their value.’ He said ‘How much do you have in your pocket?’ ‘Well that’s a personal question,’ I said. ‘I usually carry a lot of money.’ ‘You have as much as $500?’ he asked. I said ‘Yeah, I have that much.’ ‘You give me $500 and the whole room is yours,’ he concluded. Well it took me three or four trailer loads to get the stuff out of there. I moved it to Chicago, opened up a joint and went over to State Street, which was then called Radio Row. There, I talked to several men. I’d say ‘Look, I’ve got a bunch of radio parts here. I don’t know what their value is; I don’t know if they are worth

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anything; but I’ll make a deal with you. Come over and look at them, pick out what you want, and make me an offer.’ They were all happy to do so. The first one that came over offered me a dime for something, and I said I would take 20 cents. He said ‘sold.’ He bought enough to pay for the whole deal, plus transportation and everything else.” – A.D. Davis (Allied Radio) Specialties (later to become today’s RS Electronics) was established in Detroit, in 1929, after its founders lost their former jobs at the Detroit Electric Company. Similar companies sprang up in major cities and small towns as consumer demand grew for “electrified” devices. The 1930s were considered the golden age of radio due to its popularity and the success of distributors, including Arrow Radio, started by Murray Goldberg in New York to sell radio equipment and appliances in 1935. It would become

ELECTRONIC COMPONENT INDUSTRY EVOLUTION

the largest distributor in the world a century later. Industry organizations began to form to foster good relationships between manufacturers, distributors and sales reps. National Electronic Distributors Association (NEDA) launched in Chicago in 1937 as did the National Radio Parts Distributors Association. So did “The Peddlers,” the first national representative organization, now known as the Electronics Representative Association (ERA). The first Electronics Distribution Show (EDS) was held in Chicago – called “The Radio Parts Manufacturers National Trade Show ” – and the first industry publications covering the industry debuted. The publications were called Radio Jobber News and Parts Jobber Magazine, and these helped pave the way for others. In the years between the two world wars, technology enabled radio to significantly improve in terms of the size and utility. Radios were smaller, portable,


overseas communication became an issue for some countries that was solved quickly by the invention of the radio teletypewriter. Nations could communicate with their troops via direct transmissions by teleprinters.

A few of the earliest print event publications and an early industry magazine.

lightweight, battery-operated and were encased in metal so they could be used in combat. Not only did the footprint of radios change — but transmissions were also able to travel greater distances and radios were being used in submarines, airplanes, and tanks. It was not until the early 1940s that the radio industry began to decline due to the U.S. entry into World War II.

Radios go portable Most of the countries involved in WWII used portable radio sets, a new but extremely useful invention that enabled

communication between all military units. Every tank had at least one radio; many had more to ensure orders were heard and carried out. Multiconductor cables, first used and developed by Germany, followed by the United States and Great Britain, were also used during the war to enable multi-party communications. Telegraph communications were dated and had limited range. This prompted the creation of major telephone switchboards that had a greater capacity and, within a short period of time, were issued to help coordinate large troop movements. Long-range

100 YEARS OF THE AUTHORIZED CHANNEL

This development was taken one step further, allowing for messages to be simultaneously sent and received. Teletypewriter conferences, also known as “telecons,” allowed for a person at each end of the communication to view the message as soon as they were sent. Other technological advancements that came along during the war, mostly compiled of scrap components, included a device that combined radar and communications to perfectly land a plane with zero visibility; long and shortrange electronic navigation devices; and radio-controlled bomb guidance that would direct bombs to their targets. Not only were advanced radios useful in battle, but they were also used to keep those at home informed about rebuilding the country

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gardens. Kids’ shows included themes of saving water, gas and electricity.

President Roosevelt’s “fireside chat” consistently educated, engaged and rallied American citizens.

after the Depression and the U.S.’s war efforts. In 1933, Franklin D. Roosevelt (FDR) started his famous “fireside chats” so he could directly communicate with citizens. This level of communication had never been done before. Roosevelt set a precedent for other presidents. Distributors were again vital selling and repairing radio sets.

Early entertainment systems Entertainment had also become a primary use for the radio to provide relief from the Depression and the war. Stations also began to broadcast messages to engage the population in war efforts. Some stations would use Hollywood stars to endorse scrap metal collection or planting victory

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Most distributors’ focus was on meeting government demand for military supplies. They focused less on radio sets and more toward military products. Charles Avnet opened a manufacturing facility in New York to assemble military antennas until the war ended. The War Production Board (WPB), established in 1942 by FDR, was responsible for managing production during World War II. The board was put in charge of prioritizing the distribution or rationing of items. As of April 1942, the WPB declared the production of radio sets unnecessary. Many distribution companies shut down for lack of parts. In a catalog produced by Allied Radio, the company acknowledged the need for radio components for the war effort and said it would only distribute parts that were necessary for repairs and maintenance of existing equipment. This meant that some of the bigger names

ELECTRONIC COMPONENT INDUSTRY EVOLUTION

in the industry, those who had enough money to outpurchase parts from smaller competitors, were able to survive the war despite the scarcity of items. Others were able to survive due to a rule put in place by the head of the electronics division of the WPB. When people needed repairs on their radios or electronics, they had to bring in the old part in exchange for a new part. This allowed for the electronic component distributors to practically break even in their transactions and have parts to sell despite the lack of production. After the war ended in 1945, the military had a surplus of tanks, trucks, ships, and airplanes that it had produced thinking the war would escalate. There was also decommissioned battle tested equipment which carried a new wiring product – connectors. The military, to recoup its investment, started to sell components for onetenth of their original cost. Military surplus aided the


Al Cramer bought Harry and Young, a Boston ham radio and hi-fi retailer, to found Cramer Electronics. Leon Machiz and Seymour Schweber started Life Electronics Sales in New York. They eventually split and ran two successful companies: Time Electronics and Schweber Electronics. Pioneer Electronics started in 1946 in Cleveland, Ohio.

Love this patriotic photo of the Marsh storefront in Milwaukee, Wisconsin.

comeback of the electronic component distribution industry as it bought parts for pennies on the dollar and could still sell them at a profit. Connectors now become the catalyst to driving distributors to new heights. Bendix, Amphenol, and Cannon become familiar brands.

“In 1951, I ran a full-page ad listing AN connectors in the Search- light section of Electronics’ January issue. As a result of that ad, my little business quadrupled. I was holding all these AN connectors and didn’t know about the shortage because my

customer base was in the scientific field. The labs weren’t using them, but for manufacturers of military equipment, the connectors couldn’t be had anywhere.” – Harold Powell (Powell Electronics Inc.)

The radio manufacturing prohibition had been removed and distributors took advantage of new demand and technological advancements. The war created new inventions that required updates and repairs and things like the television and early computers were beginning to emerge. Radio

Airplane “bone yard” after WWII was center of attention of many of the tech entrepreneurs.

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stations began playing music. This led to the development of FM radio that started to overtake the regular AM stations. Radios were being put into cars as well. All these new developments made it easier for component distributors to stay in business. Repairs and adjustments were always needed, and distributors compiled parts to provide solutions. Television came next. Though the war drove many distributors out of business, the peak of the component distribution era was just starting. Radio Row rebounded after the war by selling old radios and parts, such as the ARC-5 radio. Radio Row was demolished in 1966 to make room for the World Trade Center. It remains unique in the history of U.S. business.

BUILT TO LAST In 1978, leading trade publication Electronic Buyers News listed names such as Cramer, Wyle, Schweber, Kierulff, Pioneer- Standard, Hall-Mark, Sterling and Marshall among its Top 50 Largest distributors. By 2007, those names were gone, largely through acquisition. The names Sager, Avnet and Hughes-Peters remain on trade-press rankings today, 100 years later.

Joe Sager.

Charles Avnet. Note: Hughes-Peters founders photos were unfortunately lost over the years.

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ELECTRONIC COMPONENT INDUSTRY EVOLUTION


Ohmite Impacting Technology Since 1925 Ohmite Manufacturing Company has been the leading provider of resistive products for high current, high voltage, and high energy applications for over 95 years. The company’s full complement of resistor construction includes wirewound, wire element, thick film, and ceramic composition. Ohmite Manufacturing Company started operations in a small shop on the west side of Chicago in 1925. Founded by David T. Siegel, the company’s focus was to manufacture carbon and wirewound ‘lug’ resistors for Chicago’s growing radio manufacturing industry. As the electronics industry grew and continued to develop, Ohmite continued evolving to service ever-changing design requirements. In 1953, the company moved into a newly built factory and offices in Skokie, Illinois. Through acquisition, Ohmite added the wirewound capabilities of Memcor-Truohm in 1996 and Ward Leonard Resistors in 1999. Victoreen Components, an experienced specialist in Thick Film technology for high voltage applications, was added to the Ohmite family in 1999. In 1998, Ohmite was acquired by Heico Companies LLC; a multinational, U.S. based holding company. The Skokie plant after many years of service was vacated and all operations were moved to Matamoros, Mexico while the Headquarters remained in Rolling Meadows, Illinois. 2006 saw Ohmite continue to grow and enhance its product offerings by acquiring Vishay’s Angstrohm Rheostat and Ultronix Precision Resistor divisions. Strengthened by the backing of Heico Companies LLC, Ohmite strives to maintain the flexibility needed to handle both large and small requirements. Made to order parts are always considered and new technologies are always being evaluated. Product availability in today’s market is critical to the success of our customers. Ohmite’s network of international distributors and sales representatives enables us to fulfill the requirements of an increasingly global marketplace. Still adding to our product family, Ohmite acquired ARCOL Resistor Company, Truro, UK in 2015 and then most recently the Ceramic Division of the Sandvik Company in 2018. These recent acquisitions have made Ohmite the only global manufacturer of wirewound, thick film and ceramic resistors. Rounding out the product family Ohmite also manufactures heaters, load banks, breaking resistor banks, rheostats, and filters.

Through ongoing product development, we continue to provide the latest in resistor technology required by today’s sophisticated high voltage, high current, and high energy circuit designs in the industrial, medical, military, and aerospace industries. __________________________________________________________ FACILITIES Warrenville, IL (Headquarters) Matamoros, Mexico (Manufacturing – two facilities Brownsville, TX (Distribution Center, Product Development Buffalo, NY (Engineering and Product Development) Truro, England (Manufacturing and Distribution)

The Ohmite families of resistors boast the best distribution channel globally and can and will provide its engineering strengths at every step of the way to design wins.

ohmite.com 100 YEARS OF THE AUTHORIZED CHANNEL


Hughes-Peters 100 Years Young in 2021 In 1921, Hughes-Peters was formed as a partnership between John Hughes and Henry Peters to distribute electrical construction materials and supplies to small municipalities in central Ohio. Their first location was a storefront building in downtown Columbus. The company changed ownership multiple times over the next several decades, while adding new operations to the organization. As the electronic appliance industry grew, the company became a retail dealer of radios, hi-fis and televisions. Other ventures included retail sales of records albums, HVAC systems, and electronic components to hobbyist and repair shops. It was in the late 50s and early 60s that the company’s electronic component sales grew while the record and appliance sales met heavy competition from other newly formed retailers. The company took a new direction and focused 100% on the distribution of electronic components that even included mobile retail outlets. Hughes-Peters would cover most of Ohio and sell components to repair shops from the back of a truck. During the 70s and beyond, as more and more consumer products were developed, the company supplied the needs of those manufacturers with the most recent stateof-the-art components. This quickly broadened HughesPeters’ customer base.

Experience, Trust, Integrity In September 1999, the company changed ownership for the final time. Mike Okel, Donna Hensley, and Mike Smith, who were industry veterans in electronics distribution,

purchased the company and established a business model that has proven to be successful even 22 years later. They listened to the needs of the customer and focused on high service with flexibility, inventory management programs, and value-added services for their customers. “I believe two key things have made Hughes-Peters successful,” said Mike Okel, President of Hughes-Peters. “First and foremost, our great employees. You will never have a strong, growing business without a team that is dedicated and on board with the company focus and expectations. Second, we developed a very specific business model that focuses on long-term customers we can do demand creation with.” The company also has a “Best in Class” line card with the top manufacturers of fans, sensors, switches, capacitors, power supplies and much more. Industrial, medical, food equipment, and HVAC are among the industries that the company serves. Hughes-Peters’ corporate office was relocated from Cincinnati to Dayton, Ohio in 2002. Four acquisitions have been made since then, expanding the area of coverage throughout the Eastern half of the United States. HughesPeters now has 12 office locations, covering more than 20 states, with 2 distribution centers. Acquisition history: • 2007 – Leeds Electronics (IL) • 2007 – MPAQ Electronics (TX) • 2017 – Hammond Electronics (FL) • 2020 – Tonar Industries (NJ) It took dedication and strong partnerships to get HughesPeters to where they are today. They look forward to continued growth and success with their customers, manufacturers and reps.

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www.hughespeters.com 800-590-4055

Hughes-Peters, Columbus, OH — 1921

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Allied Electronics & Automation. Since 1928. Allied Electronics & Automation is a pro-active, omni-channel authorized distributor of industrial automation & control products, electronic components, and electromechanical products serving the Americas. Allied is headquartered in Fort Worth, Texas, and is a division of the $2 billion global distributor, Electrocomponents plc (LSE:ECM), a UK-based company servicing 117 countries. Allied carries more automation and control brand names than any other distributor in North America.

Today • With 2021 sales of $660 million, Allied Electronics & Automation is the second largest operating company within Electrocomponents. • Allied employs more than 900 people throughout the entire organization, which includes corporate headquarters, a warehouse and distribution center in Fort Worth, Texas, and a local presence in 60 of the largest metropolitan markets throughout the US, Canada, Mexico, and Chile. • Our product portfolio includes more than 500+ namebrand suppliers of a wide spectrum of product technologies including automation & control, electromechanical, enclosures & fans, interconnect, passive & active, power, test & measurement, wire & cable and more. • Our website (www.alliedelec.com) lists more than 3.5 million products, with online sales making up approximately 40% of our total business.

Allied’s Fort Worth, Texas headquarters.

Our History Historical • Allied was founded in 1928 as the radio parts distribution arm of Columbia Radio Corporation, and was acquired by Radio Shack in 1970. • In 1999, Allied became the North American division of Electrocomponents plc and a recognized leader in sales of electronic components. • In 2016, Allied expanded into South America, with a fullservice office in Santiago, Chile. • In 2017, Allied expanded our sales presence throughout Mexico. • In 2018, we broke ground on a 220,000-square-foot, state-ofthe-art warehouse addition that was completed in 2020 and has the capacity to expand to more than 800,000 stocked products. • In 2020, Allied began constructing our virtual demo lab to demonstrate customer systems and solutions in real-time.

• We ship more than 6,250 parcels per day from our 520,000-square-foot warehouse and distribution center using RF technology for paperless pick and put-away processes. • Our Field Application Engineers and in-house Technical Support Team solve customer and sales issues and develop innovative solutions. Our newly completed virtual demo lab now allows Allied engineers to share live video and other content from the lab to demonstrate customer-specific applications upon request.

Connect with Us With a local presence in 60 of the largest metropolitan markets throughout North America, a focus on digital customer experience, and more than 3.5 million parts available for purchase online, today’s engineers, designers, maintainers and purchasers trust Allied to provide a wide range of solutions across the entire product lifecycle. Connect with us at www.alliedelec.com or via social media on Facebook, Twitter and LinkedIn.

7151 Jack Newell Blvd. S. Fort Worth, TX 76118 800.433.5700 | 817.595.6444 email: customerservice@alliedelec.com


Choose Allied. Get More. When you shop Allied, you get more: More purchasing solutions, from auto-ordering to personalized sales reps More complete product solutions to build out your entire project More space in our expanded warehouse means more products from more suppliers in stock and ready to ship More opportunities to save with RS Pro by Allied, our private label brand, so you never have to sacrifice quality for value

Thousands of Products Ready to Ship

1,100,000+ Datasheets

3D CAD models available for view and download

360º Product Images for a Close-Up of Features Before You Buy

Expert Advice Article that Put Knowledge and Know-How at Your Fingertips

Technical Product Support When You Need It

Low minimum order quantities (MOQ)

Easy, User-Friendly E-Commerce Site

Allied is your one-stop shop for everything you need to research, design and bring your project to life.

© Allied Electronics, Inc. DBA Allied Electronics & Automation, 2021

alliedelec.com

1.800.433.5700


Chapter

02

POST WWII TO THE END OF THE 20TH CENTURY From the end of World War II to the early 2000s, the distribution industry was continually reinventing itself. This period saw the rise of the IC, PCs, outsourcing, TQM/JIT and the dot.com boom. The rate-of-change for the electronics industry has only increased over the past 20 years. With the end of World War II, a second industrial revolution emerged in the United States. The GI Bill provided returning soldiers with living expenses at colleges and trade schools as well as low-cost loans to buy homes and start businesses. Government investment in GI Bill programs reached $14.5 billion; raised the education level of the U.S. workforce; and sent industry and manufacturing soaring. Pioneer Electronics, one of the top 10 electronic and 23

Bendix connector assembly at Powell Electronics in the 1940s.

computer distributors in 2002, was founded in 1946. The same year, the first electronic vacuum tube computer was developed at ENIAC at the University of Pennsylvania. In December 1947, while working at Bell Laboratories in Murray Hill, NJ, Doctors John Bardeen, Walter Brattain and William Shockley developed the first transistor. A new era for the electronics industry began. The Marshall Plan poured millions dollars into Europe to rebuild the war-torn infrastructure and industries

ELECTRONIC COMPONENT INDUSTRY EVOLUTION

of Italy, Germany, France and Great Britain. This aided the growth of companies such as Siemens, Sporele, and VEBA (former owner of Wyle Labs and EBV) in Germany, Rolls-Royce Aircraft in Great Britain, and Thomson Microelectronics (now STMicroelectronics) in France. It was during this period of industry that Newark Electronics published its first catalog, with 100 pages showcasing electrical and electronic devices. Newark’s first catalog marked the advent of a new channel of specialty distributors.


Print product catalogs were the lead marketing tool.

The age of prosperity During the 1950s, the United States’ economy was booming. The Cold war was in full affect and the space race was on between the US and Russia. Consumer spending for goods like automobiles and televisions; services like air travel; and high levels of military and aerospace spending fostered the growth of new industrial giants Emerson, RCA, General Electric, Hughes and Boeing, plus the renewed focus of distributors. The era of value-added distribution was launched. It was also during this period that three Harvard Business School graduates (Duke Glenn, Roger Green and John Waddell) recognized the potential of the young industry and purchased New York-based

as the preferred technology in electronics design, ushering in the age of silicon-based integrated circuits. In 1956, Avnet broke the $1 million revenue barrier. During the ‘60s, as major OEMs were springing up across the Arrow Radio (renamed Arrow Electronics). This was the start of a professional rivalry between Avnet and Arrow that continues to this day.

Technology revolution

U.S., electronics distributors were pressured to maintain inventory and support closer to manufacturing sites. TI raised its distributor order limit to 50,000 units forcing additional semiconductor manufacturers to match

Toward the end of the

the strategy. At the end of

1950s a new technological

decade Allied lead the pack...

revolution emerged with the

and the industry began to see

commercial production of the

distributor consolidation.

transistor by Motorola and Texas Instruments, followed closely by the invention of the IC. By 1959, transistors had replaced vacuum tubes

100 YEARS OF THE AUTHORIZED CHANNEL

Former Sager CEO Ray Norton recalled a legendary Sager story that took place around that time between one of Sager’s employees

24


and a regular customer, Avco Everett. The customer was looking to buy a switch he’d purchased previously but couldn’t remember the brand or part number. The Sager sales representative asked the customer to click the actuator over the phone a few times, while he quietly rifled through his files to pull up the customer’s past purchases. When the customer was told he needed a Cutler Hammer 7561K2, he was floored the Sager sales rep was able to identify the part by listening to the clicking over the phone. After the $1 million barrier was breached, the industry continued a period of rapid growth until the mid-1970s when the Arab oil embargo triggered a worldwide recession. Decreased demand for electronics from car makers resulted in excess capacity throughout the electronics industry. The excess supply, combined with a significant drop in demand, resulted in an overall drop in industry shipments in excess of 18 percent.

25

Computers change everything During the ‘70s distribution entered another market segment: computer products and peripherals. Sales to commercial end users added companies like Apple, Xerox, IBM, Digital Equipment, and HP to distribution line cards. Current and former distribution executives credit the rise in computing as an enabler to national, regional and then global expansion. PCs not only generated sales – they allowed distributors to improve their internal operations. As technology became more sophisticated, so did information flow requirements. Data flow between and within manufacturer and distributor systems was crude at best. Data was exchanged through manual and/or proprietary methods, making it difficult to extract and aggregate information into any format that could be used by manufacturers’ capacity planning systems.

ELECTRONIC COMPONENT INDUSTRY EVOLUTION

Legacy enterprise resource planning (ERP) systems were not capable of providing the data elements to enable meaningful interpretation of information. “Computer systems allowed businesses to become national and move from regional purchasing to national purchasing and eventually develop ERP,” said former Arrow Electronics CEO Steve Kaufman. “Before that, inventory control was ‘do I need inventory in 35 cities or just two?’ UPS and FedEx also fueled national and then global expansion.” Prior to his tenure at Arrow, Kaufman recalled, TI had built its own ERP system and then TI offered it to distributors. “TI had decided it was too much of a nuisance,” he said, “and asked if anyone wanted it.” Arrow took TI up on its offer and then used the core technology of TI’s system until very recently. Former Marshall CEO Rob Rodin became famous for supplying his salesforce with PCs to better inform customers.


Companies such as Future Electronics and TTI developed their own systems and duplicated them as they moved across the globe. Both companies are notable for always carrying inventory and having worldwide visibility into their stock. In addition to the advent of specialty computer distribution, two other paradigms evolved in the late 1990s: commodity vs. differentiated product strategies and the influence of total quality management (TQM) and just-in-time (JIT). The combined effect of these two movements drove major reconsideration of distribution’s value in the supply chain. Suppliers were leaning on distributors for more technical support in getting their components designed into OEM products. Distributors began hiring field applications engineers (FAEs) which contributed to, but did not directly generate, sales. Compensating distributors for those efforts remains an issue today.

Cetec executives use computer as a management tool in 1984.

The second change was an active movement toward manufacturingprocess improvement. With technology sophistication growing in orders of magnitude, manufacturers’ investments in capital as well as research and development were spiraling out of control. As overall costs were compounded, manufacturers began examining the entire process for ways to deliver products to the marketplace more cost-effectively. Many OEM customers began outsourcing the manufacturing and procurement of components to contract manufacturers. This complicated distributors’

100 YEARS OF THE AUTHORIZED CHANNEL

role in the supply chain. Contract manufacturers sourced components on OEMs’ behalf but leveraged contract-price agreements to their benefit. Ownership of those components became a controversy that redefined the supply chain. By the late 1990s, internet sales had revolutionized information availability and market reach far beyond traditional boundaries. Dot. coms raised an incredible amount of capital and some began sourcing and selling components. By 2001, internet-based companies began to fail as capital investments ran out and the profits originally promised to investors failed to materialize.

26


The results were catastrophic with massive order cancellations by customers and distributors, huge stockpiles of inventory,

Top 15 Technology Distributors –1978* Hamilton/Avnet Cramer Wyle Schweber Arrow Kierulff Pioneer-Standard Newark

$ 287 $ 153 $ 103 $ 85 $ 75 $ 63 $ 58 $ 55

Hall-Mark $ 47 Jaco $ 36 Bell $ 31 Sterling $ 30 Marshall $ 29 Harvey $ 27 Wilshire $ 26

Top 15 Technology Distributors – 2004*

Everyone held their breath hoping their computer systems would not fail after Auld Lang Syne.

and revenue drops for many distributors and manufacturers that exceed 30 percent from their highs in 2000. Trying to alleviate the inventory burden created a tremendous strain on distributor profitability as well as on many customer/distributor/ manufacturer relationships as supply chain participants tried to shift inventory liabilities across the channel.

Avnet Arrow Future Bell Microproducts World Peace Memec Electrocomponents Premier Farnell

$ 10,756 $ 10,646 $ 3,500 $ 2,828 $ 2,259 $ 2,100 $ 1,443 $ 1,425

Top 15 on the Top 50 Worldwide Authorized Distributors – 2020** (from www.electronics-sourcing.com) WPG Holdings, Taiwan, Arrow Electronics, USA, Avnet (1), USA, WT Microelectronics, Taiwan, Macnica, Japan, Future Electronics, Canada, Supreme Electronics, Taiwan, Nexty Electronics (2), Japan, CECport, China, EDOM Technology, Taiwan, Techtronics 1, China, TTI Inc, USA, Digi-Key Electronics, USA, S.A.S. Drago, China, RS Components/ Allied Electronics, U.K, * in millions Source: CMP ** in billions

27

ELECTRONIC COMPONENT INDUSTRY EVOLUTION

$ 20,7 $ 20,5 $ 17,9 $ 12.0 $ 6,8 $ 5,1 $ 4,7 $ 4,3 $ 3,9 $ 3,7 $ 3,2 $ 2,9 $ 2,9 $ 2,6 $ 2.4


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7/27/21

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100 YEARS OF THE AUTHORIZED CHANNEL

28


SPOTLIGHT:

THE IMPACT OF NEDA/ECIA The Electronic Component Industry Association (ECIA), as it’s known today, dates back to 1937 when resellers of radio parts were effectively undercutting one another – and in some cases themselves -- on price. A trade organization, believed the founders of National Association of Radio Parts and Accessories Distributors, could work together in the interests of the industry’s profitability. Fast forward to today where the ECIA is tackling global industry issues, such as counterfeiting; assembling industry data; raising students’ interest distribution as a career; and establishing industry standard and practices. Like the industry it represents, ECIA’s charter evolved over the years. In 1942, NRPDA changed its name to the National Electronics Distributors

29

NEDA meeting in Philadelphia, PA in 1974 looks the same as today…except no cigarettes.

Association (NEDA). Shortly thereafter activity was suspended during World War II. In the mid-50s, NEDA became part of the Electronics Distribution Show & Conference (EDS). During the 1970s manufacturers became associate members of the

Powell Company which didn’t identify us at all. We changed the name to Powell Electronics. As a result of that meeting in New York, we became a Raytheon semiconductor distributor within three months- our first entry into semiconductors.”

organization. By 1999, NEDA had celebrated 60 years of incorporation.

– Harold H. Powell (Powell Electronics Inc.)

“After a NEDA meeting, I realized the world was changing and I immediately took steps to change the corporate name. The company name was the Harold H.

ELECTRONIC COMPONENT INDUSTRY EVOLUTION

Robin Gray, who joined NEDA as executive director in 1994, reflects on the strides ECIA made in the past 27 years. “Change, although essential in the electronics industry, is often hard. Not all distribution


members were thrilled when component makers became full-fledged members in 2011. The largest and smallest distributors, at any given time in the association’s history, frequently had different goals and agendas. The one thing that never changed at ECIA was its commitment to serving the industry and its members.” As a non-profit organization, one of ECIA’s challenges was funding its aspirations and activities. At the time Gray joined NEDA, the organization was close to going broke. Like many for-profit businesses, NEDA was renting office space, had a lot of constituents to satisfy and saw the universe – from local to national to global – expanding.

“So, there’s a new picture of the average successful distributor. In the first place, his orientation is towards profits, having

been redirected away from volume. The time is long gone when a company’s success has been measured in sales increases- too many distributors found themselves drowning in a sea of red ink and dismissed from serious investment consideration. All this is healthy- not quite as exciting as those frantic days when success often depends on several broad, bold strokes on which hung possible disaster- and represents a quantum step forward for an eternity.” – Susan Becker Tier (Electronic Buyers News) “At the time I joined we had something like $54,000 in the bank,” he said. “Currently, the association has more than $1 million in reserve. The cash flow has been positive for all those years.”

100 YEARS OF THE AUTHORIZED CHANNEL

NEDA/ECIA leader Robin Gray with Patty Moorman of Bourns.

Distribution’s M&A frenzy of the 1990s had established a handful of large, international members and hundreds of local, regional and specialty companies. NEDA encouraged its largest distributors to become more active members. In 1978, NEDA held its first Management Conference, the predecessor to the Executive Conference. The conference has since become the industry’s premier networking event and a forum for sharing information, strategies for the future and “gut checks” on issues such as

30


counterfeiting and hacking. Electronics distribution has some unique practices – design-win registration and ship-from-stock-and-debit to name a few – that have largely operated without guidelines. NEDA/ECIA has established its point-ofsale (POS) reporting form, design win registration form, model distribution agreement and several packaging and handling guidelines. It also funded first ever study, with Texas A&M, to quantify the value of distribution. Two of the association’s most notable achievements

are linked by an issue that’s plagued the industry since its inception. For decades, counterfeiters have stolen, re-marked, salvaged and even manufactured electronic components. Most of those counterfeits enter the industry through brokers or the gray market – distributors that don’t have franchise agreements with component suppliers and/or buy excess inventory for resale. NEDA/ECIA has led the channel’s anti-counterfeiting efforts, chaired SAE committees developing standards to certify authorized distributors and

The NEDA/ECIA networking and educational programs have been significant benefits at local, regional and national events for decades. Fred Bell/Molex, the bottom photo is Mark Pierce/ebm-papst Jim Bruorton/KEMET (R) and PJ Murphy with Sager (L)

31

ELECTRONIC COMPONENT INDUSTRY EVOLUTION

The NEDA Electronic Distribution Information Network allowing distributors and manufacturers computers to exchange information was groundbreaking in 1983.

worked with the SIA to make the federal government aware of the danger of counterfeit electronics. ECIA’s many international members are also advancing the channel. The UK’s Electrocomponents alerted the industry to new EU internet privacy laws. Asiabased WPG is committed to a digital transformation. Germany’s VEBA reshaped the Americas through several large acquisitions. ECIA has not expanded overseas but regional associations have formed: In China there’s CIITA; in Taiwan, Tesca; and in Europe, DMASS Ltd.


In 2010, ECIA launched an inventory-search website, now TrustedParts.com, which listed parts only from franchised distributors. Around the same time, the association campaigned to change the industry image from “franchised distributor” to “authorized distributor.” Not all unauthorized distributors warranted the broker or gray market moniker. Some had been franchised by suppliers, adopted stringent QC and inspection standards, and vetted their sources of supply. “There was never an effort to drive independent distributors out of business,” said Gray. “We wanted to

raise the awareness of the risks associated with buying from non-authorized sources. Our efforts actually raised the game for the well-established independents that wanted to separate the good from the bad. They improved their standards and practices and the industry as a whole has benefited from these efforts.” ECIA is now comprised of component manufacturers, distributors and manufacturers’ representatives from the Electronics Representative’s Association (ERA). EDS is managed through the joint efforts of ECIA, ERA and the Global Electronics Distributor’s Association (GEDA). What started as an effort to ensure a profitable radio-parts industry is now global in scope, spans the electronics supply chain and has a track record of bringing competing interests together for the benefit of all.

NEDA Executive Vice Presidents 1940-1942​ 1942-1944​

Arthur Moss George Barbey

(NEDA President 1940-1946) acted as “Executive Secretary”

1944-1957​

Louis B. Calamaras

(1st office full-time executive officer)

1957-1958​ Herbert V. Heeden 1958-1973​ Gail S. Carter 1973-1977 ​Bill Englehaupt 1977-1989 ​Toby Mack 1990-1994​ Mary Sue Lyon 1994-2011​ Robin B. Gray, Jr.

Gail Carter.

ECIA President and CEO 2013 - 2017 John Denslinger 2018 - 2020 Bill Bradford 2020 - present David Loftus

For a complete list of Members and Awards go to page 157. Ed Walter created a variety of technology and distributor oriented publications including Electronics Distributor that featured the NEDA Journal.

100 YEARS OF THE AUTHORIZED CHANNEL

32


100 YEARS OF INDUSTRY HIGHLIGH 1918 – U .S. government lifts its WWI ban on amateur radio stations 1920 – F irst boxing match on radio starring Jack Dempsey 1921 – F irst radio broadcasted baseball game- Phillies at Pittsburgh 1921 – Sager Electrical Supply which had a retail store starting in 1887 in Boston sells radio components 1921 – H ughes-Peters opens in Dayton, Ohio 1921 – C harles Avnet begins selling radio parts on Radio Row, New York City 1923 – 5 00 radio shows established

1937 – Radio parts manufacturing National Trade Show in Chicago- forerunner of EDS 1937 – NEDA launched in Chicago 1938 – 50 million radio sets in U.S. up from 33 million two years prior 1938 – Orson Welles causes a panic with War of the Worlds broadcast 1939 – WWII begins in September 1939 1941 – George D. Barbey Electronics established in Reading, PA

1924 – C onsumers respond as 500,000 radio are made

1942 – Avnet manufactures radio antennas as part of the War Effort

1927 – L indbergh flies across the Atlantic

1942 – Electronic computer developed

1927 – S am Poncher starts Newark in Chicago

––––––

1928 – A llied Radio Founded

1945 – WWII ends in September 1945, military surplus available – especially connectors

1929 – Galvin Manufacturing introduces the first practical car radio, the Motorola

1946 – Pioneer Electronics Founded

1929 – G reat Depression begins October 1929

1946 – PEI-Genesis Founded

1929 – R adio Specialties Electronics (today’s RS Electronics) founded in Detroit

1947 – Bell Labs invents transistor and launch modern electronics revolution

1932 – C athode Ray tubes replace crystals as technology of choice for advanced radios

1947 – The start of “The Cold War”

1932 – S tandard Radio (later Pioneer-Standard) founded in Cleveland, Ohio 1933 – F irst aircraft launched in U.S. 1933 – P resident Roosevelt institutes his Fireside Chats 1935 – M arsh Radio and Supply incorporated

33

1935 – Arrow Radio opens on Cortland Street in New York

1948 – Newark Electronics publishes its first parts catalog at 100 pages 1950 – Korean Conflict 1950 – Nakamats invents the floppy disk 1950s – The Age of Prosperity and the growth of Regional Distribution

ELECTRONIC COMPONENT INDUSTRY EVOLUTION


HTS 1951 – C olor TV introduced 1952 – Previous partners; Seymour Schweber starts Schweber Electronics and Leon Machiz Time Electronic Sales

1967 – B. Duke Glenn, Jr., Roger E. Green, and John C. Waddell purchase a controlling interest in Arrow Electronics and distribution on a national scale 1967 – EDS is sponsored by the ERA, NEDA and EIA

1953 – V arian first resident of Stanford Industrial Park, the genesis of Silicon Valley

1968 – Newark Electronics purchased by Premiere Industrial Corporation of Cleveland, Ohio

1954 – R CA first color TV

1968 – Future Electronics founded by Robert Miller

1954 – Gordon Marshall incorporates Marshall Electronics to serve the electronics and instrumentation markets

––––––

1955 – Avnet begins Value Added assembly of Bendix connectors as the first authorized connector distributor 1956 – A vnet and Arrow hit $1 million in sales 1957 – S emiconductor industry surpasses $100 million in sales 1957 – S oviet Union launches Sputnik; the space race is the catalyst for many breakthroughs in technology 1957 – Tony Hamilton founds Hamilton Electro Sales 1958 – T exas Instruments’ Jack Kirby invents integrated circuit, Robert Noyce refines it. 1959 – The first distributor goes public on the American Stock Exchange as Avnet Electronics Corp. 1959 – T ransistors replace vacuum tubes in electronics design 1960s – The second “Industrial Revolution” and the Age of the Transistor 1961 – B erlin Wall was constructed

1970s – The beginning of the Microprocessor Age 1970 – Intel introduces the first DRAM 1970 – Avnet becomes the first Intel Authorized Distributor 1971 – Tex-Tronics, Inc. (later to be named TTI) was founded by Paul Andrews in Fort Worth, Texas as a specialty passive electronics distributor. The firm started exclusively with resistors and later expanded to capacitors and connectors. 1971 – Invention of the 4 bit Microprocessor and the EPROM at Intel 1971 – Intel’s Ted Hoff succeeded in creating a “computer on a chip” that could perform 60,000 interactions per second 1971 – FedEx begins operations 1972 – Digi-Key founded in River Falls, MN 1972 – Electronics Buyers News launched by CMP Media 1973 – Reptron founded by Michael L. Musto in Detroit, Michigan 1973 – Kent Electronics founded in Sugarland, Texas

1964 – M ouser founded in El Cajon, CA 1969 – N eil Armstrong walks on the moon – Woodstock

1973 – The first cellular telephone call is made 1974 – Intel introduces the first 8-bit Microprocessor, the i8080

100 YEARS OF THE AUTHORIZED CHANNEL

34


100 YEARS OF INDUSTRY HIGHLIGH 1974 – Barcode scanners for inventory become popular in supermarkets 1974 – T I introduces the TMS1000, a small 4-bit single chip computer for consumer and industrial applications that becomes the most popular microcontroller due to its small size 2019 - and low cost 1975 – Zilog introduces the Z80 a high speed 8-bit microprocessor designed for PCs and the electronic games industry 1975 – V ietnam War ends 1975 – E conomic recession and inflation hit 1976 – I ndustry recovers; the top 25 distributors account for $1b in sales

1987 – World stock market crash 1987 – National distributors go through a major centralization project to increase economies of scale and reduce costs 1991 – Operation Desert Storm 1993 – First web browser created 1993 – Avnet acquires Hall-Mark Electronics the 3rd largest distributor of electronic components in the U.S. Avnet becomes the first multi-tier computer distributor with its Hamilton/Hall-Mark division selling to resellers and its Avnet Computer division selling to end-users. Also, included the acquisition is Allied Electronics, the 3rd largest catalog distributor.

1978 – Intel and Motorola introduce the i8086 and the MC68000 16-bit processors designed for 32-bit applications

1994 – Allied Electronics publishes first catalog on a CD-Rom

1979 – Avnet reports $1b in sales

1994 – Amazon

1979 – C ramer goes out of business

––––––

1979 – A rrow goes public on NYSE

1995 – CRM systems begin to enter business world

1979 – C omdex opens

1996 – Supply chain services begin

1980 – P rojections unlimited- PUI founded

1997 – Wyle launched the first design services

1981 – R ochester Electronics opens

1998 – Google

1981 – D istribution Industry consolidation begins. Schweber acquired by LEXPC

2000 – Dot.com begins bubble burst

1981 – I BM release first PC

2000 – Despite the hype, a programming glitch (Y2K) thought to cause computers to crash worldwide doesn’t materialize

1984 – A pple releases personal PC with mouse 1984 – S emiconductor oversupply causes a downturn 1985 – N ational Semiconductor introduces the first true 32-bit processor, the NS32032

35

1985 – Centralized inventory and facilities trend begins

2000 – First camera phones introduced by Motorola 2001 – 9/11 2001 – China becomes member of WTO

ELECTRONIC COMPONENT INDUSTRY EVOLUTION


HTS 2002 – C onsulting firm Gartner estimates 1 billion PCs have been shipped worldwide since the mid1970’s 2003 – Tech industry free fall comes to an end 2004 – Facebook created 2005 – Green Initiative begins due European Union laws 2005 – Y ouTube launched 2005 – W PG Holdings founded

2014 – Smart home products boom with the release of iRobot’s cleaning robot Scooba, voice recognition 2019 – TI limits dependence on distribution. 2019 – beyond is all about digital ... this industry is still struggling to catch up. Sophistication of supply chain and design digital tools are paramount in sustaining business models for all….ecommerce, e-stores, and of course the ability to buy direct from manufactures is becoming main stream. ––––––

2006 – T he IoT fitness industry takes off with introduction of Nike+, a small transmitter system in a shoe capable of syncing with a variety of devices 2007 – First iPhone launched 2007 – Amazon Kindle 2009 – Uber 2009 – B itcoin software is released as open source code under the pseudonym Satoshi Nakamoto, allowing the creation of network distributed digital currency 2010 – A I takes hold 2010 – A sia begins to take center stage in the electronics industry, and companies start seeking global terms and pricing to suit new multiple-location consumption models. 2011 – E lectronic vehicles are on the road 2012 – Oculus Rift, the first virtual reality platform, is unveiled at the E3 video game trade show, heralding a new industry for gamers, trainers, artists and media consumers

2020 – Covid impacts the world 2021 – NASA’s Mars 2020 mission (containing the Perseverance rover and Ingenuity helicopter drone) lands on Mars at Jezero Crater, after seven months of travel 2020 – Semiconductor manufacturers scramble to produce product after factories shot down due to pandemic 2021 – The Semiconductor Industry Association reported record-high worldwide sales of semiconductors in Q3’21 of $144.8 billion, an increase of 27.6% over Q3’20 and 7.4% more than Q2’21 2021 – Supply chains are disrupted by lack of semiconductors and shipping issues 2021 – More than 100 container ships carrying over a half-million containers with hundreds of millions of dollars worth of toys, electronics, clothing and furniture were anchored, berthed or “loitering” while awaiting dock space at the terminals at the Ports of Los Angeles and Long Beach, California.

2012 – S ince 2012, at least 41 states and D.C. have considered legislation related to autonomous vehicles.

100 YEARS OF THE AUTHORIZED CHANNEL

36


Mouser’s Recipe for Success: Just Listen An unyielding philosophy

Mouser’s Recipe for Success: Just Listen

Over the last two decades, Mouser Electronics has grown faster than any other electronic component distributor on the planet, expanding its global footprint, customer base and revenue by following a basic motto: Listen to customers. Mouser is laser focused on serving the needs of electronic design engineers and buyers with the newest products and best-in-class service. This unyielding philosophy has driven the company forward since its humble beginnings over fifty years ago.

Texas Instruments, and Vishay Intertechnology, and the list of manufacturers and manufacturer awards keeps growing.

“It’s incredibly rewarding to have seen our small business grow into an international, multi-billion-dollar corporation.”

Today, Mouser has 27 offices on four continents, offering localized service for more than 630,000 customers in 21 languages and 35 currencies. The website, mouser.com, welcomes 232,000 users on a typical day with over 1.7 million page views. Inside Mouser’s vast Global Distribution Center, you’ll find the industry’s widest selection of products from over 1,100 manufacturer brands.

President & CEO, Glenn Smith.

Corporate Headquarters in Mansfield, Texas.

The company intentionally flags near-obsolete parts as not recommended for new design (NRND). Differentiating itself from the competition, Mouser’s operation is uniquely tailored to meet this special niche for design engineers and buyers, and as a result the company is attracting new customers and suppliers worldwide as they discover Mouser’s unique capabilities. To date, Mouser supplies authorized components from all of the major brands, including Analog Devices, Amphenol, Intel, KEMET, Microchip, Molex, Murata, TE Connectivity,

At the helm of this Berkshire Hathaway-owned success story is the hard-working visionary Glenn Smith, who climbed his way up Mouser through the ranks, starting in the warehouse shipping department more than 48 years ago when there were only 11 employees. Mouser and its parent company, Fort Worth-based TTI Inc., got the attention of Warren Buffett in 2007 when the billionaire investor snapped up the two companies with the acquisition by his investment group Berkshire Hathaway Inc. While TTI concentrates on large volume sales in IP&E for mass production of consumer and industrial electronic devices, Mouser specifically caters to electronic engineers in the early product design phase and specializes in the rapid introduction of the newest semiconductors and emerging technologies. Starting at Mouser in 1973 during college, Smith serves as CEO and President, and his corner office door remains open for employees to share concerns or ideas. He remains involved in the day-to-day operations and is often seen around the building. Mouser is his passion.


The Global Distribution Center, located on the 78-acre campus of its corporate headquarters in the Dallas-Fort Worth Metroplex, handles a massive inventory of more than 1.1 million unique SKUs for products. Processing tens of thousands of orders weekly, most within 15 minutes, and combined with a strong commitment to customer service, Mouser employees are handling the technological advancements with great success. (It’s a long way from taking catalog orders over the phone.)

State-of-the-Art Vertical Lift Modules. (VLMs).

“It’s incredibly rewarding to have seen our small business grow into an international, multi-billion-dollar corporation. We certainly have a lot more customers, a ton more components and many more employees today than we did 45 years ago, but the model has stuck,” Smith explains. “Our mission continues to be the most preferred source for electronic components by design engineers, buyers, innovators, instructors and students. Whether it’s via internet, phone or email, we strive to make it easy for customers to do business with us.”

Smith credits a talented and dedicated workforce, leadingedge products from its manufacturer partners, timely distribution and delivery from logistics providers, and the unwavering focus on customer satisfaction as the main ingredients in Mouser’s recipe for success. The company’s guiding customer service principle was borrowed from an inscription written by Mark Twain: “Always do right; this will gratify some people and astonish the rest.”

Modern operations To that end, Mouser has made substantial investments in automation at its state-of-the-art Global Distribution Center over the last decade to process orders with exceptional efficiency and accuracy. For example, Mouser employees now operate 102 vertical lift modules (VLMs), the most at any company in the Western Hemisphere (and fourthlargest installation in the world). VLMs — essentially giant vertical filing cabinets, complete with shelves and an automated elevator — store tens of thousands of electronic components. The VLMs deliver the parts directly to the employee workstation, vastly increasing efficiency and floor space. In addition, Mouser also boasts multiple I-Pack machines, a sophisticated automated packing and boxing system that can process up to 14 orders per minute, and the distributor is adding the OPEX Perfect Pick system and an AutoStore.

State-of-the-Art Vertical Lift Modules (VLMs).

________________________________________________________

Stay up to date on the newest electronic components with mouser.com


A New Concept in Electronic Distribution In 1946 our President, Harold H. Powell, fresh from a full year of intensive electronic training, started a one-man elec­tronic parts distributorship. The employee turnover of Powell Electronics is practically non­ existent, which provides you with an organization of person­nel with “know-how”. The ad­vantages to you are:

2. Our salesmen have more product knowledge to provide you better technical assistance; 3. Our stock, which is maintained by a perpetual inventory, has more depth, and more breadth to guarantee you immediate delivery of any one of our manufacturers’ products.

1. the people with whom you are dealing become old friends; 2. as the years pass, each per­son’s knowledge of their jobs and products increases;

Harold Powell.

3. thus combining to provide you with the friendly rela­tionship and product knowl­edge which mean ever im­proving service for you.

Inventory control.

Desire… The desire of everyone in the Powell Electronics organization to provide the best possible service is based pri­marily upon one outstanding feature. The only shareholders of Powell Electronics, Inc. are the employees themselves. The fact that everyone, from the shipping clerk to the President, owns stock contributes to the extra conscientious effort put forth to provide you with outstanding friendly service. Early supply chain photo.

Powell Electronics, unlike most electronic distributors, stocks the products of only 20 manufacturers. This makes us “specialists” with product knowledge that offers these distinct advantages to you: 1. Our catalog provides more product information to enable you to select the item or items needed;

____________________________________________________________

200 Commodore Drive Logan Township, NJ 08085-1270 856-241-8000 www.powell.com


The Same Values and Commitment Since 1946

Aerospace & Defense

Space Exploration

Healthcare and IT

Emerging Technology

YOU DON’T GET TO 75 WITHOUT... EXPERIENCE:

We’ve been around long enough to know how to handle almost any challenge.

QUALITY:

Mission critical systems and components when failure is not an option.

CONFIDENCE:

Industry leaders count on us to provide cradle to grave support.

Whether you are servicing and supporting a legacy program or developing next generation cutting edge technology – Powell has what you need. We provide high performance electronic solutions for all of the major industries.

Want to learn more? Reach out to us toll free at (800) 235-7880, by email at connectorhelp@powell.com, or visit our website at www.powell.com

DESIGN • PROTOTYPE • VALUE ADDED SERVICES • SUPPLY CHAIN AND BONDED INVENTORY


Chapter

03

M&A FUELS NATIONAL EXPANSION The 1980s were the decade that spawned the phrase “greed is good.” In distribution, life seemed to imitate art, with the 1980s and ‘90s as a time for the industry to play a real-life game of Pac-Man. Companies moved to cover new ground at a fiendishly fast rate and gobbled up competitors along the way – taking them from regional players to the national stage. Arrow Electronics kicked off the movement in 1979 with its acquisition of Cramer Electronics. The 1980s saw distribution expand thanks to the explosive growth of the mainframe and then PC market (the computer was Time magazine’s Machine of the Year in 1981) and its need for semiconductors and related components.

41

Inventory in local offices was vital to the success of a distributor. Photo courtesy of Avnet

At the time, Pioneer-Standard estimated sales of computer electronics accounted for nearly 20 percent of distribution revenue. With businesses and consumers buying PCs in ever-larger numbers, the computer segment of distribution market enjoyed great growth throughout the ‘80s and ‘90s.

ELECTRONIC COMPONENT INDUSTRY EVOLUTION

This meant distribution had to expand—and fast. Michael Rohleder, former president of semiconductor specialist, Insight Electronics, said one of the main issues of that time was getting your company to the right scale and scope.


“How do you scale profitably? You couldn’t have one location in Fort Worth, Texas, and provide service in Boston, at the same level that you could provide service in Fort Worth,” Rohleder said. “You just couldn’t – you had to have a branch somewhere nearby. How do you open all these branches? How do you maintain profitability? How do you get your line card to follow you into these locations? I think Insight made it look easy, but it was super hard to do.”

“If you look at any distributor organization that grew in that period of time, convincing suppliers to come with the line card and grow — that was, I think, our biggest challenge,“ said Rohleder.

To avoid intense price competition and overdistribution, component makers granted franchises regionally. As customers became national enterprises, they expected to be serviced that way. But giving every distributor authorization in every region was what suppliers were trying to avoid.

Rohleder joined Insight in 1990 and was hired to start its Bay Area branch. At the time, the company was on an $8 million run rate. Four months after he joined, the Bay Area branch alone had 20 lines and was bringing in $1million a month in sales. Insight finished that year at about $12 million in sales. Five years later, the

Computing was a largely coastal race. IBM, Prime, DEC and Wang were in the East; Apple, HP, Compaq and Sun Microsystems on the West. Then there was Texas-based Dell. These OEMs drove partners toward nationalization.

100 YEARS OF THE AUTHORIZED CHANNEL

company was a 250 million dollar distributor.

If you build it, make sure they come To grow organically at the time, distributors had a few options, primarily choosing to house inventory near their biggest customers and open new sales branches. “In the old days—when dinosaurs roamed the earth—you had to have local inventory since transportation logistics was still emerging,” TTI founder Paul Andrews said in an interview. “We began branching out with no particular [geographic] strategy in mind. You opened a branch with someone who knew what they were doing.” As the company expanded, TTI had to get suppliers’

42


blessings for each new site on the franchise. “Not only did you need to deliver regionally, you received your franchises location by location often times state by state,” Andrews explained.

“Suppliers take many different approaches to the channel, with some using them as an extension of their sales force, to help design their products into the systems of end customers, while others leverage their fulfillment and logistics capabilities. Because of the wave of consolidation of both suppliers and distributors, there tend to be fewer, but deeper relationships between suppliers and their channel partners. That being said, there is no one size fits all. Suppliers may choose a global partner for broad coverage, regional partners for specific geographic focus, catalog distributors for design support and pre-production, and obsolescence specialists to cater to the tail end of the life cycle.” –B ill Bradford, President, Flip Electronics 43

This phenomenon was a common dance with suppliers and distributors as the channel expanded across the nation, with most distributors having to ask first – and possibly negotiate for — the franchise in a given location. There were no guarantees although some suppliers had strategic relationships with their distribution partners. “What we did at Insight was unique in the sense that we partnered with Xilinx in a way where we helped inform their channel strategy, and they helped

build Insight Electronics. Certainly, Insight Electronics wouldn’t have been what it was without Xilinx as our lead line,” said Rohleder. “Whenever we moved into a new market, we moved in with Xilinx first — it wasn’t a ‘maybe,’ which was really important to distributors. “ “At the time,” he added, “it wasn’t guaranteed that you would get the franchise for your major lines just because you want to open an office in Boston. You had to compete for that. But we had a special relationship such that we knew that if we were going to open a

Wyle branding led with their engineering support capabilities.

ELECTRONIC COMPONENT INDUSTRY EVOLUTION


branch in Boston, we were going to do it with Xilinx on the line card from the get-go. And that that meant a lot in terms of Insight’s ability to grow.”

When sharing is not OK The beginnings of great business relationships between component manufacturers and distributors go back to the early days of the electronics industry and the formation of the semiconductor industry itself. In 1957, Avnet scored its first franchise, with the Bendix connector franchise. That same year, Tony Hamilton formed Hamilton Electro Sales and became a franchised distributor for GE tantalytic capacitors, soon adding Fairchild Semiconductor, Motorola and Philco. Supplier relationships would shape distribution in myriad ways, notably the concept of shelf sharing – the unwritten but clear rule defining what type of products you carried. If you were a semiconductor distributor,

you either carried the American semiconductor lines (TI, Intel, AMD, National Semiconductor, Motorola) or the Asian IC lines (Samsung, Hitachi, Toshiba) on your linecard – but attempting to franchise both was not OK with manufacturers. These unwritten rules barring “shelf sharing” were firm – and remained firmly in place for decades. Shelf sharing restrictions could be tough on the industry. Former Marshall Industries CEO Rob Rodin noted he explored a number of alliances, third party options – multiple avenues to try to get around this rule. To no avail. “We could not overcome this mindset of shelf-sharing, which limited Marshall’s ability to compete at size because Arrow and Avnet were buying everything. And there was nothing left for Marshall to buy but the smaller companies — all the ones that had Japanese lines.” Rodin did get creative. “One of the fascinating little-known things at the time was that in the ‘70s, Marshall bought a license to

100 YEARS OF THE AUTHORIZED CHANNEL

Wyle’s ERP platform. And, at some point, we put in a new ERP platform, so we had to migrate from the Wyle distribution platform.” “Fast forward a bit — Ralph [Ozorkiewitz, Wyle CEO] and I would meet regularly and say if we don’t create a third distributor of size, then it’s really a Coke and Pepsi duopoly kind of world,” said Rodin. The executives started talking. “Can we put our two companies together? It would be the biggest line card in the world … and we [Marshall] already know how to migrate you onto our ERP system because we’ve done it. It would be a great alternative to the great work Arrow and Avnet are doing. Well, Motorola and some others said, ‘If you do that, we don’t need another distributor,” said Rodin. “The suppliers blocked us, and we decided to create ‘Accord Contract Services,’ a legal entity that was going to serve as the marketplace for the big bills of materials, that we could manage 44


together. And then VEBA came in and bought Wyle. And that’s when I realized that the best thing we could do then was to let Avnet buy Marshall.”

The theme of the publication is an example how distributors fought hard to be successful on a local and regional level.

See the list of channel mergers and acquisitions on page 163

45

GOING AGAINST THE TIDE In 1996, national distributor Sterling Electronics Corp. acquired midwestern Marsh Electronics in a deal typical of the era. Less than a year later, Marshall Industries acquired Sterling. Normally these would be footnotes in the history books, but that’s not the case here. As notable radio broadcaster Paul Harvey would say, “the rest of the story” for Marsh was just beginning. Founded in 1937, Milwaukee-based Marsh was a regional distributor with approximately $50 million in sales in 1996, led by President Jim Banovich Sr. Its linecard included suppliers including Hitachi, Molex, Vishay and Toshiba. Current President Jim Banovich Jr., his son, noted that in the early- to mid-1990s, the company grappled with the issues of the day including distributor consolidation and supplier line card consolidation. “We started seeing some of those semiconductor guys trying to consolidate or weed down the number of distributors. That really put us in a position where we James W. Banovich. had to merge with somebody — otherwise, we ran the risk of seeing a lot of business move away. Dad was

ELECTRONIC COMPONENT INDUSTRY EVOLUTION


trying to grow the company. He needed to be growing to maintain some of the supplier relationships. We felt — he felt — Marsh could be in jeopardy,” said Banovich Jr. It was. Marsh merged with Sterling Electronics and found itself swept up in the Marshall-Sterling acquisition not long after. Not one to stand still, Banovich the elder started crunching numbers and came up with an unusual idea to relaunch the company as a smaller, niche company that focused on passive, electromechanical and power semiconductors. “We thought, well, maybe there is an opportunity for us to buy ourselves out. I remember helping dad put a business plan together, and he presented to the Marshall Industry folks. “It took about six months and in the summer of ’98, we were able to carve ourselves out and get our independence back. We figured we’d be about an $18 million to $20 million distributor with 40-45 employees, and go from there,” Banovich said. “We’re very fortunate we did that, because about three or four months later, Marshall was acquired by Avnet — and we would have been part of that. I’m quite certain Marsh would have gone by the wayside.”

Instead, the company continued to grow. It benefitted from Avnet’s acquisition of Kent Electronics, adding a few more branches in the Midwest and growing its employee roster. By the mid-2000s the company had branches in Wisconsin, Illinois, Indiana, Ohio and Minnesota. Today’s Marsh is doing well thanks to the groundwork laid by Jim Banovich Sr., his foresight, good timing in striking the company’s independence and the relationships he built. “When we were part of Sterling, we were at a supplier meeting, one of the gentlemen from a supplier turned to one of the guys at Sterling, and said, ‘I wish you guys would be more like Marsh.’ That made my dad feel really, really good,” said Banovich Jr. “That says a lot about how important the relationships are. He would stress you want to make sure you have good strong relationships (with suppliers) that you were working together in concert, and as partners could talk openly, share the bad things, talk about the good things, and work together to help be successful and help satisfy our joint customers. He really took a lot of a lot of pride in building those relationships.”

100 YEARS OF THE AUTHORIZED CHANNEL

46


SPOTLIGHT:

VALUE-ADDED SERVICES Value-added services spared the electronics component distribution market the cruel fate suffered by other wholesale distributors. The exaggeration, if any, is minimal. Today’s distributors are vastly different in operations, offerings and size than they were a mere decade ago. Consolidation decimated the ranks of the industry players starting in the 1980s but the companies that were gobbled up became vulnerable partly because of their size, future potential and the inability to swiftly respond to the market’s changing realities. One of the critical steps adopted by survivors was the introduction of value-added services that helped to turn them into critical players in the entire electronics industry. Semiconductor programming first opened the door for distributor services, said Steve Kaufman, former CEO of Arrow Electronics

47

Kitting was an early value add when a variety of products would be organized in a box for future operations. Healthcare Packing source of photo.

Inc., which increased “stickiness” with supplies and customers. “It provided us an opportunity to become part of their supply chain,” he said. “Relationships became longer-lasting and tight.” Starting just before the end of the last century distributors began moving beyond just warehousing products to programming, kitting and cable-assembly services. Executives at leading distributors realized ahead of the competition that they needed a new way to address the market and pushed for changes that eventually trickled down to everyone.

ELECTRONIC COMPONENT INDUSTRY EVOLUTION

Michael Long, currently CEO and chairman of Arrow, for example, embraced changes began by his predecessors but quietly expanded these throughout the organization. “Distributors often move in lockstep, and I didn’t want to alert the entire industry to what we were planning,” Long said in a 2017 interview, years after he realigned Arrow to become a provider of a suite of integrated valueadded services to customers. In 2018, Andy King, then president of the global components division at Arrow, drove that point home in an interview, noting: “Arrow has


transitioned into a technology company. It is no longer about the individual parts of what we offer. Hardware is no longer the name of the game; it’s about the business process. We are a technology company able to offer the services customers need to leverage digital technology, irrespective of what we used to do traditionally.” Early on, Kaufman had established providing services came at a cost to distributors and challenged suppliers and OEMs/EMS providers to compensate them for value-added. He didn’t always succeed and once chided customers and competitors alike for not doing more to raise distribution margins. Intel, he explained, “asked” distributors to hire fieldapplications engineers – a fixed expense in a sales-driven industry. “[Suppliers] were offloading the cost of engineering

on to distributors with no additional revenue so we didn’t like it,” Kaufman said. The value-added evolution was necessary for survival but painful. It was welcomed by suppliers and OEMs but there was a snag. Who would pay for the value-added services? The dilemma remains today although distributors have convinced some of their suppliers to compensate them for design activity.

“Price in this particular problem was no object; delivery was the important factor. This is another thing we tried to sell our accounts- the most important thing in our business is service, or delivery. If you don’t get what you want when you need it, what’s the difference whether it costs you 10 cents or 10 dollars? So, if the price was $1.25. That’s all there was to it.” — Sam Poncher (Newark Electronics)

100 YEARS OF THE AUTHORIZED CHANNEL

“Thirty percent of Avnet’s overall business is still tied to demand creation even with supplier line losses,” said Avnet’s current CEO Phil Gallagher. “I’d say semiconductor companies are still dependent on the channel and nobody is looking away. There will always be line card adjustments.” Supplier adjustments have been a constant in the distribution industry and Gallagher doesn’t expect that will abate. “There’s no question there’s going to be something else happening out there,” he said, adding Avnet is in its 100th year of business. “To be around 100 years, you just got to adapt and move on, and that’s what we’re doing with this one.” Specialty distributors such as Insight Electronics, Memec and Wyle were built around the design chain model. With FAEs on staff, the companies went to market with niche lines to get higher design

48


wins and the profits that came along with them. “If you’re super technically competent, you want lines that value it and will pay you margin to be able to provide that support,” said Michael Rohleder, former CEO of both Insight Electronics and Wyle Electronics after its purchase by VEBA. “There was nothing I had to do when we went into Wyle, in terms of remaking the sales focus or value proposition. “Some companies, such as Master Electronics and Waldom Electronics, specialize in serving other distributors, providing EOL, hard-to-find, excess and other types of authorized inventory. They also buy surplus from distributors, providing some return on otherwise devalued stock. Warehouse automation played its part in increasing efficiency, speed, cost savings, order accuracy and a host of other tasks. Orders that had previously been hand-picked by personnel can be scanned and assembled by robots. At

49

least one distributor had a poster of components on its warehouse wall so workers could select the correct part. Total Quality Management (TQM) in part drove the supply chain toward automation. Established by the Japanese, TQM called for reducing errors; ensuring the form, fit and function of components; and continuously pursuing excellence. U.S. companies embraced this process through the Malcolm S. Baldrige Award which established a framework for continuous process improvement. Value-added now includes everything from product design and prototype to assisting customers with product introduction, accelerating their time-tomarket and enhancing their overall competitiveness. Engineering assistance comes in the form of online chats, turnkey logic designs, reference designs and product designs. Digi-Key, for example, added a unique flavor that includes dispensing information and

ELECTRONIC COMPONENT INDUSTRY EVOLUTION

best-practices on its website. The company regularly publishes technical papers and articles by industry experts pontificating on supplier management strategies, regulatory issues and environmental compliance. “Digi-Key was disruptive right from the start -- we had no outside sales force. Our presence was always virtual: initially a printed catalog and later a website,” said Vice Chairman Mark Larson, who also served as president and COO of Digi-Key for nearly 40 years. “First, the United States was our ‘territory.’ Then the world was our ‘territory.’ Even as a catalog distributor we marketed to a national audience into which we had no physical presence.” When Digi-Key adopted internet marketing and implemented websites for countries in Europe and Asia, manufacturers had to determine how to deal with channel conflict, Larson explained. “They wanted to maintain their traditional distributor network based


on physical presence in geographic territories. But they also realized that not to develop a strong virtual presence would negatively impact their market share.”

The unique challenge of IP&E Interconnect, passive and electromechanical (IP&E) components are ubiquitous in electronics products but don’t make the kind of technology leaps common to the semiconductor market. Carving out a value-added niche in IP&E still requires a deep understanding of the products; carrying inventory; and a profitable business model. Following its acquisition by TTI Inc., Sager Electronics doubled down on services in IP&E. “[TTI founder Paul Andrews] encouraged us to grow our emerging power business while retaining our commitment to the electromechanical and interconnect products that drove our growth and success,” said current Sager CEO Frank Flynn. “Paul

Assembly of connectors are still key valued added service of wire, cable, and flexible circuitry.

understood what Sager was doing in the marketplace was different, bringing an engineering focus into the IP&E space, and felt strongly we should capitalize on that specialization.” “Looking backward or forward, we’ve been able to

100 YEARS OF THE AUTHORIZED CHANNEL

carry what our customers require at an acceptable level of profitability,” said current TTI CEO Mike Morton. “That is something the industry has come to grips with. Publicly traded companies look at top-line sales which often comes at the expense of margins. You can’t reinvest in

50


the company with low levels of return. The industry sees supply chain companies have to reinvest in their business.” For the TTI companies, that investment -- in large part — takes the form of carrying inventory. TTI sells the same IP&E products as its competitors, Morton pointed out. Its success is catering to buyers. “[Paul Andrews] wanted to build a company buyers want to do business with. That’s been our motto for 50 years.” Distributors are now noted for creating and sponsoring robust environments for engineers to exchange design ideas, solicit or

offer advice and discuss contemporary issues. In the last decade most leading component distributors have extended their services to the “Maker Community” in recognition of the realization that ideas for new products now spring up from across the wider economy rather than just from the electronics engineering community. The payoff for the industry has been immense. Electronics have become the lifeblood of today’s global economy. Semiconductors that used to go primarily into PCs, TVs, phones, radios and a handful of medical devices and industrial products have infiltrated the entire

photo courtesy of Avnet Prom programming is an important service for clients by distributors.

51

ELECTRONIC COMPONENT INDUSTRY EVOLUTION

economy. Products and applications from lighting, wood processing equipment to aviation, transportation and food processing devices, weather equipment and even clothing are getting infused with electronics, resulting in growing sales for all industry players. With this massive injection of semiconductors into all economic segments has come further penetration of distribution value-added services. Many of the new enterprise buyers and developers lack design expertise, production, sourcing, and other supply management skills. These companies are increasingly reliant upon component distributors for engineering support, new product development programs, logistics and even warranty fulfillment support. As a result, it’s not just the public profile of the distributor that has changed. The workforce at component distributors has also undergone a complete overhaul. Engineering


substantially in hard-toget nonstandard inventory, you were entitled, and expected in Leon’s view, to be paid handsomely for that product.”

1985 Hawk Electronics’ Chuck Poncher is proud that his firm is only one of few that can terminate fiber optic cables in house.

professionals, supply chain management experts, logistics fulfillment, regulatory compliance experts and a swarm of other professions have become regular employees at distributors such as TTI, Mouser Electronics, Future Electronics, RS Components and the larger rivals. In fact, companies such as Arrow, Avnet, Future, WPG, Electrocomponents, etc., boast regularly about the growing size of their engineering teams. They regularly partner with customers to bring new products to market and work on product updates, compliance with international regulations and other areas of operation. In the new environment, the dreams once harbored by pioneering executives who hoped to establish new

– Harley Feldberg, Time and Avnet executive

revenue streams for their businesses are being realized albeit at varying speeds. The larger distributors that have the business clout to showcase their offerings and widen their global presence have benefited more from the introduction of new services. More important, they are also getting compensated for the value-added services.

“Time Electronics and it’s Airline Industry specialist ElectroAir had a very strong focus on maximizing gross margin from its founding. This strategy and discipline were driven aggressively by its founder and future Avnet CEO Leon Machiz. It was fueled by a very strong belief that if you were wise enough and bold enough to invest

100 YEARS OF THE AUTHORIZED CHANNEL

Two men who started together became industry leaders when they went to run their own distribution businesses. Both were successful and philanthropic. Leon Machiz (top) - Time Electronics and Seymour Schweber (bottom) Schweber Electronics.

52


TTI Celebrates 50 Years of Connecting People and Parts The year was 1971, and the “Me Decade” had started off as turbulent as it would end ten years later. Protests, activism, political and social movements dominated the American landscape. Cultural change and technological innovation were taking hold and the country was thrust into an upheaval of growth. In a small corner of the world in Fort Worth, Texas, another type of movement was taking place; one powered by a young 28-year-old named Paul Andrews, a bona fide selfstarter and entrepreneur, was kicking up dust in Cowtown and taking a risk that would forever change the course of his life as well as many others. Having been laid off from General Dynamics after the F-111 bomber project was grounded, Andrews’s bad luck turned out to be a fortunate turn of events. As an experienced military components buyer, he knew the difficulty of procuring certain types of electronic components. Laying the groundwork for the future, he vowed to provide better service and delivery on those hard to come by parts than the established distributors. Armed with a head full of knowledge, a fire-engine red rotary-dial phone, a Rolodex, and paper bags for parts, Andrews began hustling resistor business at the kitchen table in his 400-square-foot garage apartment. Newly married, he knew he had to do what he could to make a living. He named his new venture Tex-Tronics; later, the name changed to the company known today as TTI.

A cannonball of grit and determination, Andrews affirmed, “TTI’s business isn’t rocket science, it’s simply doing what you say you’re going to do.” To this day, this philosophy carries TTI through as it has for the past 50 years. Andrews’s passing earlier this year left a palpable void not only within the TTI family but also within the electronics distribution community. Falling in step to preserve and secure Andrews’s legacy, TTI and industry veteran, Mike Morton, now sits at the helm as CEO to guide the global company into the future by staying the course and preserving the company’s mission established early on by Andrews himself. Respecting our history and looking toward the future, TTI is set to thrive through evolution and slow organic growth that has fueled the company to become the fifth largest distributor in North America and the seventh largest distributor globally. Today, TTI is home to 7,300 Specialists around the globe in more than 130 locations. The company maintains more than two million square feet of warehouse space housing over 850,000 component part numbers. Known in our infancy as the “Best Little Warehouse in Texas,” TTI has grown up; not to be the biggest, but to be the best. As a Specialist among distributors, TTI remains true to its roots, grounded by the mission established five decades ago to provide exceptional service to our long-time customers and supplier partners. By doing so, we humbly honor the legacy of our founder, mentor and friend, Paul Andrews. To the many distributors celebrating a milestone year, from the TTI Family of Specialists: TTI, Mouser Electronics, Sager Electronics and the Exponential Technologies Group, it is our honor to be among these industry crusaders who continue to bring innovation and technology to the world.

Paul Andrews expands the vision for TTI as a resistors only company into capacitors and more.

CHEERS to ALL!


Circa 1986, early group of TTI Specialists and Paul Andrews

Paul Andrews, TTI founder

Mike Morton, Chief Executive Officer

In 2017, TTI opened Americas Distribution Center, near its headquarters in Fort Worth, Texas


Bud Industries has grown alongside ECIA since the early days of electronics How a car breakdown shaped the industry In 1928, Max Haas sat in a car repair shop, unaware that his life was about to change. An immigrant and an electronics salesman for RCA, Max was on a sales trip when his car broke down in Oberlin, Ohio. While it was being fixed, someone suggested he visit with a professor at Oberlin College. In their discussions, Max learned that the professor had just designed a product that would eliminate the need for home radios to have a rooftop antenna. Max bought the rights to the invention on the spot. He named his new company Bud Radio for his 10-year-old son, Alvin, whose nickname was Bud.

depression, a time when people could not afford radios. This evolved into components for radios focusing on ham radio parts (such as coils and condensers) and the metal boxes used inside the radios. By the mid-1930s, Bud Industries was producing small hand-held boxes, mid-size cabinets, and 19inch relay racks used in the telephone industry.

Meeting with distributors on honeymoon From the beginning, Bud relied on industrial electronic distribution as a crucial part of its sales efforts. By selling through some of the early distributors such as Newark Electronics, Allied Radio, Arrow, and hundreds of distributors across North America, the Bud brand became an established part of the electronics industry. Max attended the first distribution show in the late 1930s, an event known today as EDS. Max’s son joined the business in 1939 and helped carry on the company’s legacy. Family lore notes that when Bud Haas married in 1947, he and his bride went to North Carolina for their honeymoon and took advantage of the drive south to stop at distributors along the way.

Evolving from radios to IoT Through 93 years of its history, Bud Industries has continually evolved with what has become the industrial electronics industry, phasing out radio parts and expanding its focus on enclosures and related products. In the 1950s, Bud introduced large welded cabinets that

Bud’s first product was a radio antenna eliminator, a device that avoided the need for a rooftop antenna.

Shortly thereafter, he developed a car antenna that fit neatly on a car’s running board, enabling early car radios. He sold those product lines to another company and evolved his business into making radio kits during the

The 1940 Newark catalog featured low-cost “Bud boxes” that became a staple for engineering students.


today are used for server racks. In the 1990s, the company pushed into NEMA- and IP-rated enclosures, which currently represent more than half of the company’s sales. In its fourth generation of family leadership, Bud Industries continues to provide the enclosures that serve the market as it has evolved. Today, Bud can provide almost any type of enclosure from tiny hand-held units to large cabinet racks, and from simple NEMA 1 enclosures to boxes that meet stringent NEMA 4x and IP68 standards. They add up to more than 3000 standard enclosures in astonishing variety, made from steel, aluminum, plastic, and fiberglass. Best of all, through a network of domestic and international distribution, more than 90% of these products are available to ship on the same day.

Bud Industries www.budind.com 440-946-3200 - saleseast@budind.com

Bud can modify standard enclosures with custom cutouts in only five days—an industry-leading turnaround.


Chapter

04

STRATEGIC MOVES OVERSEAS Though they didn’t make it around the world in 80 days, distributors’ global merger and acquisition frenzy, during the heyday of the 1990s, kept a dizzying pace with deals announced on monthly basis. Having established themselves as national players in the 1970s and ‘80s, distributors first ventured across the pond in the early 1990s. Arrow Electronics Inc. and Richardson Electronics were the first to make international moves. Avnet Inc. jumped in too – acquiring the Access Group, a U.K. based semiconductor distributor in 1991, followed by the purchase of FHTec Composants and Nortec. Avnet made its first Asian acquisition, the purchase of WKK Semiconductors, in 1995. 57

After nationalization, distribution’s move to the global stage was a natural next step. Arrow Electronics and Avnet led the charge, acquiring dozens of competitors as they followed suppliers and customers around the world. Steve Kaufman, Arrow’s CEO from 1986-2000, led the company’s consolidation across the U.S. and its expansion into Europe and Asia. Arrow completed more than 50

ELECTRONIC COMPONENT INDUSTRY EVOLUTION

acquisitions, including names such as Ducommun (Kierulff), Bell Industries, Pioneer-Standard and Wyle in the U.S. Abroad, Arrow acquired Spoerle

Arrow CEO, Steve Kaufman 1986-2000≥


(Germany), Silverstar (Italy), Field Oy (Finland), TH:s Group (Norway), Exatec A/S (Denmark), Gates/FA Distributing and CAL (Hong Kong and China). “I will take credit for the consolidation from national to global although there was an element of luck,” said Kaufman. “I had lived in Europe and I was comfortable there and I didn’t see why we should stop at the end of the ocean. Suppliers and customers were [overseas]. But I see expansion as an extension [of the U.S. strategy] rather than something new.” At the same time, Avnet felt pressure from suppliers and customers who wanted the company to have a stronger European presence. In quick succession — over the course of 18 months

starting in 1991 — Avnet acquired F.H. Tec Composants of France, Nortec AB of Scandinavia, and Access Group. In early 1993, Avnet acquired Electronic 2000 AG, and Adelsy. Although 90 percent of Avnet’s 1992 revenues came from domestic sales, then-CEO Leon Machiz publicly committed to Avnet’s global expansion and predicted that by the end of the century, the lion’s share of Avnet’s growth would come from international sales. He was right. Machiz handed Avnet’s CEO reins to Roy Vallee in 1998 and Vallee continued what Machiz started. Vallee oversaw more than 60 acquisitions on his watch, establishing Avnet as a true global entity. Some of them were the industry’s

100 YEARS OF THE AUTHORIZED CHANNEL

biggest deals. Memec was acquired in 2005 and Bell Microproducts in 2010. The split of VEBA with Arrow and Schroder Partners yielded Avnet the European stable of companies including EBV Elektronik, WBC, Atlas Services Europe and Raab Karcher Electronic Systems. Avnet acquired Marshall Industries in 1999. Vallee prioritized acquisitions based on product lines, cultural or geographic fit. Global expansion, he said, was a reflection of market needs. “In a global economy, business migrates to the most efficient provider: that means products and services. We intend to be the highest value provider,” Vallee told Purchasing magazine in 2001. In retrospect, Vallee said, Avnet had to look at the

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bigger picture and decide what it wanted to be as a company. “Initially the big strategic decision Avnet had to make was, ‘are we going to stay focused on North America and expand into adjacent markets that leveraged our core competencies, or focus on technology distribution

and expand globally along with our suppliers and customers?’ My perspective was that if we didn’t expand globally our distribution business here in North America would eventually become disadvantaged, so the decision was clear. Once we decided on becoming a global technology distributor,

Vallee’s plan worked as he led Avnet’s M&A expansion to 69 countries and quadrupled sales by 2013.

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ELECTRONIC COMPONENT INDUSTRY EVOLUTION

we then chose to start with the European region, and the UK specifically to minimize the risks and our learn from our mistakes as we expanded into other countries and regions.” Just a couple of years later Avnet decided to be a consolidator rather than an acquisition target. “Of course, we chose the former and successfully acquired Hallmark in 1993. By the mid-’90s we had 2 strong motives driving our appetite for M&A— continued global expansion to enter new geographies, and consolidation in the markets we were already in to increase our scale and scope. Strategically we knew that we had to succeed at both, so we worked hard at developing the capabilities to be good at both acquiring and integrating companies. We developed and followed the mantra of ‘best peoplebest practices’ starting with the integration of Hallmark”, stated Valee.


M&A is not everyone’s game Not everyone joined in the trend, with some distributors electing to grow organically and open offices abroad as their answer to global expansion. Notably, catalog house DigiKey, broadline distributor Future Electronics Inc. and specialist TTI Inc. largely resisted entering the M&A fray. Still, they followed the supplier and customer trail. “Global wasn’t something I really wanted to do,” TTI founder Paul Andrews said in a 2019 interview. “It was uncomfortable for me, but suppliers were requiring something beyond local distributors. In 1990 we expanded into Europe and in 2000 into Asia.” Over the years Digi-Key had numerous opportunities to join a bigger partner. It, like TTI, wanted to maintain their unique business models.

“We’ve had no experience in acquiring other companies, but if we have a secret weapon

it is the culture. If you do greenfield you have a culture and your culture must be consistent across multiple geographies. Then you don’t also have to teach people to unlearn bad habits. We have found that [strategy] to be successful. It took longer, but it has been extremely successful in the EU.” –P EI-Genesis CEO Steven Fisher, in 2014 Future and TTI got into the global game by duplicating their domestic business model in strategic regions. Andrews opened in Munich in 1992 and made a few acquisitions. In 2000, Mouser Electronics joined the TTI stable, running as a separate business. It wasn’t until 2017 that TTI made its first major foreign acquisition, South Korean semiconductor specialist Changnam I.N.T. Ltd. In total, TTI made 12 acquisitions in its 50-year history; the company itself was acquired by Warren Buffet and Berkshire Hathaway.

100 YEARS OF THE AUTHORIZED CHANNEL

Although it made a few acquisitions, Future invested millions of dollars on a technology platform, managed from Montreal, that links all of its assets globally and those of suppliers. In fact, Future cites its stability as an asset for its customers and suppliers. “What a lot of this M&A has done is they’ve increased the relevance of certain lines on our line cards,” said Karim Yasmine, corporate vice-president, Future Electronics, in 2017. “M&A transformed the channel,” said TTI’s Andrews, founder and CEO, who passed away in March 2021. “That changed the industry and Avnet was right there with them. That caused a large evolution in the industry

Robert Miller.

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— customer consolidation, supplier consolidation and distributor consolidation — it was a major change.” However in 2017, Texas Instruments Inc. discontinued its distribution incentive, or demand creation, program and in 2019 dropped six distributors in a significant blow to the channel. TI had historically used distribution widely and had no prohibitions regarding competing lines on distributors’ shelves. “With supplier consolidation, sometimes you win, sometimes you lose, and sometimes they’re neutral,” said Phil Gallagher, current CEO of Avnet. “But it’s not new. I’ve been around for four decades. And when I started, at General Electric, Intersil, Fairchild, National and Motorola were the top lines. They’re all gone.” And while the industry has gotten no less competitive than the heady days of intense M&A activity, the number of deals leveled 61

off in the early 2000s and has held relatively steady – with more opportunistic deals vs wholesale country/ regional invasions.

How big is big? As Arrow and Avnet led the charge in global acquisitions other companies faced a crossroads: either bulk up their size to compete or become a more focused niche player. At issue was the question of economies of scale as distributors struggled to define how big you had to be to compete on the global stage. At the time of its acquisition by Arrow in 1999, Bell Industries President

Gordon Graham said his company needed to reach a $1 billion in sales to play in the same arena as the top tier. But after reaching that size, he conceded, it still wasn’t enough. Arrow’s president at the time, Francis Scricco, said “it’s a constantly moving target. It’s a global scale game and there are only a couple of companies that can do that. At $1 billion, you don’t have sufficient scale.”

“It wasn’t easy growing to our size without borrowing or taking public funds and it took us 45 years to become an overnight sensation.” — Future’s Robert Miller

The growth of distributors from overseas is evident in this 2020 chart.

ELECTRONIC COMPONENT INDUSTRY EVOLUTION


A few years later, a little bigger wasn’t enough. Pioneer-Standard sold its components business to Arrow due to lack of global scale. “It has become pretty clear that if you’re a semiconductor distributor and you don’t have a global footprint, then you will either lose suppliers or customers because of a migration of manufacturing from North America to Asia, which is likely to increase,” said Wall Street analyst Matt Sheerin at the time. With suppliers and customers looking for more services for less money, Arrow’s Scricco said, the industry is like a pressure cooker. “The big companies make money because of scale. The small companies make money because of focus and the ones in between get killed because they have neither scale nor focus. Being in the middle is like the valley of death.”

On the other hand… coming to America “I was hired by WPG Holdings to create a vision, mission and strategy for the Americas region in September 2011,” said Rich Davis, president of WPG Americas. I had to rely on my 30 years of experience in electronics, including stints at Intel and Arrow running sales, marketing and operations.” Taiwan based WPG Holdings is ranked #1 globally for semiconductor distribution with a pedigree in technical sales and marketing as their “go to market” strategy. The question I had to answer was ‘would that work in the Americas?’” Davis continued. “After many discussions with our suppliers, customers, the ECIA and the rep community I decided to focus WPG Americas on a specialized technology

100 YEARS OF THE AUTHORIZED CHANNEL

model; memory & storage, lighting & power and embedded solutions. We also kept the structure very flat and eliminated costs that were unnecessary and got in the way of selling.” Since that decision in 2012, WPG Americas has grown substantially in profitability and revenue. We were basically a ‘startup’ when I took over so it wasn’t always a smooth journey,” Davis added. “We were able to hire some great talent which really made the difference for us. We have great supplier partners and a simple strategy tied to accountability which is executed by a great team of employees. I am extremely proud of the team WPG Americas has assembled and how we go to market in the region. I will always appreciate the support and guidance ECIA

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THERE’S NO PLACE LIKE HOME In an industry defined by M&A, the fourth largest company in the Americas, as ranked by Electronics Sourcing in 2021 — is an anomaly. Thief River Falls, Minn.-based Digi-Key has always serviced customers around the country and world from its single home base. While it’s a strategy that paid off, it was an uphill battle in the early days, noted Vice Chairman Mark Larson, president and COO of Digi-Key for 39 years. “The greatest challenge we faced was convincing suppliers that it was in their best interest to authorize Digi-Key as a distributor for their products. Mark Larson. Twenty-five years ago, most manufacturers of electronic components followed the practice of authorizing distributors for well-defined geographic territories. They typically required that a distributor had a physical presence and a sales force presence in each territory for which they were authorized. Digi-Key was disruptive right from the start. We had no physical presence beyond Thief River Falls … our presence was always virtual: initially a printed catalog and later a website. First, the United States was our ‘territory.’ Then the world was our ‘territory.’”

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Most suppliers had established distribution networks that they had taken years to develop, Larson noted. “They valued their distributors and the business relationship between the supplier and the distributor was cemented by many strong personal relationships. Distributors were protective of their territories. They generally had outside sales teams that called on accounts and had both personal and business relationships with many of their customers. But the world was changing. Many of their customers were first introduced to the internet through personal purchases. They came to appreciate the ease of Internet purchasing.” Over time many gravitated to the internet for business purchases, he added. “Even as a catalog distributor we marketed to a national audience into which we had no physical presence. And when we adopted internet marketing and implemented websites for countries in Europe and Asia the manufacturers had to determine how to deal with channel conflict. They wanted to maintain their traditional distributor network based on physical presence in geographic territories. But they also realized that not to develop a strong virtual presence would negatively impact their market share. It took a lot of work to convince many of them of the fact that Digi-Key’s virtual presence was worth the pain of disruption in their channel.”

ELECTRONIC COMPONENT INDUSTRY EVOLUTION


The History of History of Ferrite

During the 1930’s research on ‘soft’ ferrites were conducted, primarily in Japan and the Netherlands. However, it was not until 1945 that J. L. Snoek of the Phillips Research Laboratories in the Netherlands succeeded in producing a ‘soft’ ferrite for commercial applications. Originally manufactured in a few select shapes and sizes, primarily for inductor and antenna applications, ‘soft’ ferrite has proliferated into countless sizes and shapes for a multitude of uses. Ferrites are used predominately in three areas of electronics: low level applications, power applications, and Electro-Magnetic Interference (EMI) suppression.

History of Fair-Rite Products Corp.

Fair-Rite Products Corp. is a family owned business that was formed as a partnership in 1952. With his partners, Edmund Stanwyck and Jack Webb, Richard Parker created Fair-Rite Products Corp. in Wallkill, New York. By 1955, the company was supplying products used in the entertainment electronics industry. Ten years later, in Palestine, Illinois, a new and separate division was established to support the Midwestern television and radio equipment manufacturers. Fair-Rite quickly expanded into the rapidly growing EMI suppression market, manufacturing ferrite shield beads. The growing demand lead Fair-Rite into the Medical, Lighting, Automotive, Communication, Aero/Defense, Smart Energy and Industrial Markets. With locations in New York, Illinois and China, Fair-Rite continues to be on the cutting edge of ferrite technology, expanding its product lines across a broad spectrum of exciting new markets.

For close to 70 years Fair-Rite Products Corp. has been YOUR SIGNAL SOLUTION, offering a comprehensive line of ferrite products for EMI suppression, power applications, and RFID antennas. Fair-Rite is ISO 9001, TS 16949 certified and ITAR Compliant. Custom manufacturing, prototype development, and engineering assistance are available. If you can dream it, we can do it.

REACH OUT TODAY FOR ALL YOUR COMPONENT NEEDS! 1-888-FAIR-RITE | FAIR-RITE.COM

100 YEARS OF THE AUTHORIZED CHANNEL


SPOTLIGHT:

LEAN, MEAN SUPPLY CHAIN MACHINES

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In the beginning, it was all about which region you served, which suppliers you carried and whether or not you had product in stock. Simpler times. Then the distribution industry expanded. As it matured, companies became regional or national players; some went on to become international or global companies. The distribution industry reinvented itself over and over again. Consider supply chain services.

industrial department and played a pivotal role in Sager’s transition to an industrial components distributor, saying, ‘There’s a dollar on the floor.’ We’d be looking for it when in actuality Ray was saying, ‘That part over there is worth a dollar and needs to be identified and returned to stock.’”

“Key to our growth was our inventory, which was robust. We were taught to respect and manage it for success. Before closing each night, we swept the floors and made sure all the inventory was back in its proper location. I’ll never forget Ray Sanderson, who ran the

Suppliers design and manufacture their own products. Distributors essentially buy products in large quantity and sell them in small quantities. Distributors can also transform those products by adding value. So how do you add value? It has to be with services you wrap around the products.

— Jon Norton, Former Senior Vice President, Sager Electronics

ELECTRONIC COMPONENT INDUSTRY EVOLUTION

Some would argue distribution has always provided services, starting with the basics — carrying inventory and shipping it to customers. Eventually, distributors added to their stable of services with connector assembly in the 1960s and ’70s; later in the ‘70s came semiconductor programming.

“Every six months we supply our representatives with a runoff that lists all of their industrial distributors. And this is the complex part, the industrial distributors. It also shows for each one every industrial part number they have bought in the last six months and how many times they have bought it in what quantity. So, they can walk in and say, ‘Look, you’re buying the same


A couple supply chain options in the early days were pick it up yourself at the distributor or a very rare photo of Avnet dropping parts directly to an airplane on the tarmac to be shipped.

part number twentyfive times in the last six months, and you’re buying thirty, and forty and fifty; why don’t you buy a thousand?’” — R. William Woodbury (Sprague Products Company)

Former CEO of Arrow Electronics Inc., Steve Kaufman, credits programming for setting the stage for other valueadded services. “There was now opportunity to offer services to customers and suppliers and become part of the supply chain,” he said. “There were PALs then FPGAs and distribution moved beyond

100 YEARS OF THE AUTHORIZED CHANNEL

warehousing to build relationships that were long-lasting and tight. Those were two sea changes I saw – the rise of the computing age/internet/e-commerce and the ability to offer global services.” Just-in-time delivery, in-plant stores, vendormanaged inventory, kitting, assembly, special

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packaging, ASIC design, memory programming, engineering and turnkey board assembly are among distribution services. The cost of providing these services was often bundled with the purchase price of components.

Pioneer ad in the mid 80’s describes all their value and supply chain support for clients to consider.

Led by Arrow and Avnet in the early 2000s, the industry introduced the “fee for service” model to focus on generating better profit margins. While the term has gone out of style, the concept has remained. Without buying a single part, customers use distributors for bill of materials analysis,

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highlighting potential component obsolescence issues, monitoring the lifecycle of components, and providing cross reference lists. Longtime Avnet executive Greg Frazier began focusing on end-to-end supply chain management at Avnet in 1986. He created Avnet’s Integrated Material Services (IMS) unit, its first dedicated business unit to specialize in supply chain in 1996. Frazier noted service levels followed the customer and grew more complex as businesses evolved on the world stage. Today, distributors offer everything from basic forecast planning and vendor-managed inventory to supply chains customized to a manufacturer’s design and production facilities. “Let me put it like this,” Frazier told Supply and Demand Chain Executive magazine. “The globalization or ‘internationalness’ of the supply chain has added significant levels of complexity to the supply

ELECTRONIC COMPONENT INDUSTRY EVOLUTION

chain. But there’s no way to back out of it… it’s going to continue to happen.” Many distributors developed their own IT systems to manage this complexity. Lean inventory practices leave little product in the channel to manage a sudden demand spike. “One of the advantages we’ve had in the past is our intelligence of what to carry and how much,” said TTI Inc. CEO Mike Morton. “We can share, with our suppliers, more information on a given part number than ‘we sold it to this customer.’” And data-sharing goes both ways. Suppliers use distribution information for production planning. “The last 18 months has validated our system,” Morton added. “We have never shipped as many transactions and we never had inventory perform so well.”


Global Supply Chain Strengthens the Model Growing complexity within the overall electronics marketplace has meant opportunity for distributors and supply chain services. A mainstay today is the “design in one region, build anywhere” concept that reflects how manufacturing is done. The emergence of large global manufacturers and contract manufacturers has made it possible for customers to design and develop products in one region, while production is done in another – usually more cost-effective — region. These customers require integrated supply chain support (planning, forecasting, inventory management, etc.) across regions, as well as local support in design and production markets.

“Switchcraft was the first manufacturer of electronic components to tag a product with the part number and price, making it easy for

the distributor to sell our product. I should mention that a long time ago I found the best objective we could have was to arrive at a policy that made it easy for our customers to do business with us. This tag was certainly indicative of that policy.”

of digital tools that have enabled visibility and really opened up the market. “You know,” Paulson added, “we’re doing things today we couldn’t do five years ago, let alone 15. And it’s just really exciting time

– Wilfred Larson (Switchcraft, Inc.) Today’s supply chain has grown incredibly sophisticated. “It really starts with just the level of connectivity and the evolution of the digital, and the sharing of information,” said David Paulson, global vice president, Avnet United and Avnet Velocity. “It used to be that you were sending spreadsheets back and forth on Excel or even Lotus Notes. That’s where it started. But ultimately today, from a digital perspective, the entry to get global visibility into a supply chain is so much lower, whether it’s simple things like EDI, or more advanced sharing tools that you can bring to the party – there are a lot

100 YEARS OF THE AUTHORIZED CHANNEL

Clever ad simply shows how TTI impacts a company supply chain.

to be involved in that kind of solution creation and implementation because there’s a need, and we’re filling the need. Simply put, that’s our role on the supply chain ecosystem — to do what others can’t, as an extension of the customer’s needs, as an extension of our suppliers. And we’re continuing to innovate and evolve to

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meet the needs of both.” Those capabilities have been tested and proven during the 2020-2021 Covid-19 pandemic and subsequent supply constraints. In its Q2 2021 earnings release, Arrow said the pandemic did not stop it from being a steady source of supply — its supply chain management, engineering and design services continued to hold steady. Arrow saw an uptick in demand related to consumer electronics and IT related to enabling a remote workforce. “Arrow has again proven to be a source of reliability and stability for suppliers and customers amidst supply chain disruptions and an uncertain economic backdrop,” said CEO Michael J. Long.

A CAUTIONARY TALE OF JUST-IN-TIME In the summer of 1998, a labor dispute at General Motors served as a cautionary tale of relying on just-in-time (JIT) manufacturing. A strike at two GM parts plants in Flint, Mich., shut down production. Because GM relied on JIT (a now common practice in the supply chain) once a facility ran through its parts supply it set off a chain reaction of closures. Ultimately the strike resulted in shuttering 26 of 29 GM North American plants and losses in hundreds of millions of dollars. “The benefits of JT far outweigh the disadvantages,” said a GM spokesman at the time. JIT “is an ingrained part of what we do … When you have a disruption, the backup is almost immediate. But we’re committed to JIT — warts and all.” JIT is again under the microscope as the automotive industry deals with a semiconductor shortage. JIT has come to encompass component manufacturing and distributor deliveries. While this has streamlined costs it has reduced the level of inventory in the supply chain. GM couldn’t have stockpiled enough parts in 1998 to keep the plants running during a lengthy strike and stockpiling adds cost. Despite GM’s painful lesson, JIT remains a cost-effective way to manage inventory. Even when there’s potential disruption, manufacturers are willing to take the risk.

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100 YEARS OF THE AUTHORIZED CHANNEL

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Investing in the Future Since our founding in 1968, Future Electronics’ mission has been to Delight the Customer®. Our steadfast commitment to on-time delivery, continuity of supply and flexible inventory solutions have contributed to positioning Future as a global leader in electronics distribution, operating 170 locations in 45 countries. We continue to innovate through customized solutions for our customers, world-class engineering expertise and market-leading programs. And we continue to invest in our partners, customers and team members.

Investing in our customers • Globally integrated distribution centers in EMEA, Asia and the Americas provide the latest cut-off times, on-time delivery and access to inventory worldwide • Direct access to global product marketing teams provides deep marketing expertise and insightful market intelligence • Global and regional sales and engineering expertise offer market-specific knowledge and elite technical support • Flexible and differentiated customer programs deliver tailored options for financing, inventory availability and life cycle management

Investing in our people • Proudly recognize our people as our most valuable asset to maintain an effective focus on value-based selling • Retain the most knowledgeable and experienced professionals in the industry to support growth in established markets and channels Future Electronics, Corporate Headquarters - Montreal, Canada.

Investing in our partners • Dedicated technology-based product marketing teams match the solutions of our suppliers to the needs of our customers • Largest available-to-sell inventory in the industry supports leading global supply chain programs and business solutions • Comprehensive design support enables demand creation for our partners’ key NPIs with strong conversion to design wins and revenue • Deep integration with the rep community provides unmatched service for customers globally

• Hire and develop the brightest new talent to secure a leadership position in emerging technologies and markets • Cultivate a company-wide culture of achievement to Delight the Customer® Future Electronics is driven by a keen entrepreneurial spirit, a forward-looking mindset and a constant drive to evolve. We believe that the best way to deliver value is by investing in the success of our people, our partners and our customers. ____________________________________________________________

For more information please visit: www.FutureElectronics.com or call: 1 (800) FUTURE1


Investing in our Future Success for our partners Growth for our customers Development of our people

www.FutureElectronics.com


The Cannon Plug The Birth of Connectors – ITT Cannon In 1915, James Cannon opened Cannon Electrics and while he did not invent the “Internet of Things,” he laid the foundation for the interconnected world we live in today. 106 years ago, Cannon took his first step towards transforming the technological landscape and “connecting the next century.” The initial years were tough, but there were a few clues that Cannon had what it took to develop game-changing products. With the now legendary Cannon plug– and many more to follow, Cannon set the stage for a huge multi-billion industry that catapulted Hollywood movie makers, aircraft manufacturers, communications companies and other types of businesses into major industries of their own.

In 1933, Cannon entered aerospace business by developing a modified F connector – now called the AF connector – for the Douglas’ DC-1 transport plane. It was the first connector built specifically for aircrafts, and its innovative design helped Douglas move quickly to build subsequent DC models that would make aviation history.

Keeping Us Connected Since the 1930’s, Cannon Connectors have undoubtable helped shape the interconnect market by supporting applications from space to hospital emergency rooms.

Originating in a small backroom space in Los Angeles, then a 15-by-16-foot backyard shed, Cannon’s business was driven by an insatiable desire to invent. His first inventions ranged from electric toasters to the first telegraphic fire system for the city of Los Angeles. In 1923 – now backed From the invention of rack-and-panel and D-subminiature to the latest fiber-optic, composite and miniaturized connectors, the Cannon brand has been synonymous with innovation, reliability and quality for over 100 years. Today, we continue to innovate on behalf of thousands of customers worldwide with:

Original Cannon Electronics Logo from 1915.

by five other investors and working from a two-story plant, Cannon contrived the M plug, which revolutionized the electronics industry and turned the “Cannon plug” into a generic name still used today for these types of connectors. The four-pronged Type M Series connector was designed as a quick method to ground the electrical motor on portable meat grinders, but it was Hollywood that turned the plug into a star. Movie studios used the connectors to allow their new electrical cameras to move freely about while shooting a scene.

J Plating – Cadmium replacement Tin Zinc Plating

MKJ Warrior Series

MOVE MOD

DC Liquid Cooled EV Connectors

____________________________________________________

Learn more at ittcannon.com


f

ring o life

100 years of amazing connections bringing the next century of innovation to life. 1910s

1920s

1930s

1940s

James Cannon establishes Cannon in a backyard shed in 1915

Cannon’s P connectors enable the very first ‘talkie’ movie

Cannon AF plugs are used on DC series planes

Cannon develops the AN plug, the mother of all military specs

1950s

1960s

1970s

1980s

Cannon’s D-Sub, the first multi-purpose connector, is launched

Cannon plugs reach the moon with Neil Armstrong

Cannon’s ARINC 600 Rack & Panel connectors set aviation standards

Cannon fiber optic interconnection systems bring the first super computers to life

1990s

2000s

2010s

Zero Insertion Force Connectors transforming ultrasound equipment with robust image signals

Cannon’s Universal Contacts drive the global growth in cellular handsets

Cannon’s MKJ Series connectors bring increased protection to the modern soldier

2020s

CCS1 High Power EV connectors from Cannon bring us one step closer to a sustainable world

At ITT Cannon, We Connect When it Matters Most

C m

Zer transf w


Infineon and ECIA: On the Course Forward Success through association History Infineon was born in 1946, when the Siemens Managing Board established a laboratory for basic research on power semiconductors. Six years later, the first Siemens Semiconductor factory was founded, followed in 1959 with the establishment of production in Regensburg, where Infineon continues to manufacture chips today. Throughout the 20th century, the company pioneered many semiconductor categories, including power transistors, security chips and microcontrollers.

An Independent Infineon On April 1, 1999, Siemens established Infineon, as an independent global company with 25,000 employees (12,000 in Germany). The company name combines “infinity” and the Greek word “aeon,” meaning eternity. Infineon went public on March 13, 2000, listing on the Frankfurt and New York stock exchanges under the symbol IFX. In June of that same year, Infineon was included on the German DAX.

Infineon: 2000-2010 Infineon achieved several milestones in the decade following its IPO. In 2001, at the height of the Internet boom, Infineon developed the Trusted Platform Module (TPM), a secure computing environment, now found in everything from autos to data centers to the Internet of Things (IoT). Infineon also announced the world’s first power semiconductor based on Silicon Carbide (SiC), a base material with the lowest losses and the highest efficiency. Today, Infineon remains a leader in the SiC space. In the early 2000s, Infineon streamlined its product portfolio around a market-driven strategy and cemented its reputation as a reliable source in segments demanding utmost quality, such as automotive power train and body controls. The company opened a Bangalore, India research center and development network; a manufacturing facility at the Kulim High Tech Park in Malaysia; a headquarters in Shanghai China, and an Asia-Pacific headquarters in Singapore. In Europe, the company opened a Romania development center, expanded power module production in Hungary, and moved its headquarters to the environmentally friendly Campeon campus, in Neubiberg, Germany.

Product innovations have included • Tire pressure sensors to increase safety and reduce fuel consumption. • Epassports that encrypt data, securing personal information.

Infineon: 2010 – 2021 From 2010 on, Infineon executed a strategic shift from chip supplier to system provider, strengthening its focus on energy efficiency, mobility, security. Highlights included: • Reinforced its leadership in semiconductors for every step of the energy supply chain, launching production on 300-millimeter thin wafers. • Supported the worldwide evolution of eMobility, from mass transit, to eBikes, to autos. • Drove development of secure personal communications and mobile applications such as ticketing, payments and vouchers using cell phones. • In 2018, Infineon announced a new 300-millimeter chip factory in Villach, Austria. Infineon also made two strategic acquisitions between 2015 and 2020 to enhance its offerings: • The 2015 acquisition of International Rectifier, expanded Infineon’s power electronics portfolio and cemented its leadership in power semiconductors. • The 2020 acquisition of Cypress Semiconductor Corporation, strengthened its solutions-oriented go-to-market capability while further expanding the company’s footprint in North America and Asia-Pacific.

Today, Infineon customers have access to the most comprehensive portfolio for linking the real and the digital world. The company advances the technologies of tomorrow, including work with five research institutes in Germany to drive the development and industrialization of quantum computing. It’s another step in the company’s mission to make life safer, greener and more reliable while connecting the digital to the real world.

• Breakthrough MEMS microphones, TV diodes, and automotive radar. • Power saving families of semiconductors supporting energy efficiency, grid and alternative energy applications.

www.infineon.com


Infineon congratulates our industry channel partners for 100 years of service We link the real and the digital world. Infineon - We make life easier, safer and greener

www.infineon.com


Chapter

05

HOW OEMS AND GEOPOLITICS SHAPED THE CHANNEL The U.S. electronics component distribution sector has a long, circuitous history. It started in the 1920s with storefront shops in New York City, Chicago and other urban centers serving ham radio hobbyists. Today, it’s a multibillion-dollar global network of physical distribution centers and digital services for engineers and purchasing managers. Distribution is at the center of a trillion-dollar electronics industry. The institutionalization of the U.S. government’s funding of advanced technology for military use through the Defense Advanced Research Projects Agency (DARPA) in 1958 profoundly impacted the pace of commercial technological innovation.

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In the mid-60s the fax machine changed how people communicated globally. Photo Alamy

For instance, the patent for ENIAC computing technology entered the public domain in the 1970s, lifting restrictions on modifying its technological designs. Continued development over the following decades made computers progressively smaller, more powerful, and more affordable. As the industrial defense sector grew in the 1960s and 1970s, it spawned a vibrant commercial electronics

ELECTRONIC COMPONENT INDUSTRY EVOLUTION

industry spanning components, industrial and communications equipment, and consumer products, which created opportunities for electronics distributors. The commercial electronics market grew and gradually eclipsed the military market. Today, the military and aerospace sector accounts for just 15 percent of the total distribution market. One of the early technologies that


transformed how business was conducted was the fax machine, invented in 1964 by the Xerox company. “The fax machine was a revelation,” said Michael Knight, president of the Exponential Technology Group and senior vice president of corporate business development, TTI. “It gave us real-time communication with suppliers and customers in the U.S. and around the world,” he said.

Rise of the digital age Through the 1970s, the distribution of components was a local, relatively unsophisticated business. Component suppliers didn’t want to share shelf space with their competitors, so they demanded loyalty and obedience from their distributors. “This model

Industry leading publication shares the excitement of the new computer opportunities for distributors. Tony Hamilton is featured.

created leverage for the supplier, but the OEM customer wasn’t keen on it, as it limited their options,” said TTI’s Knight. The balance started to shift in the mid-1980s as the market for electronic components increased because of the exploding desktop computing market and the early days of the internet. “Distribution was reborn in the 1980s,” said Don Elario, vice president, industry practices, ECIA, formerly with Arrow Electronics Inc. Distributors transitioned from a local business model to centralized management.

100 YEARS OF THE AUTHORIZED CHANNEL

They built large distribution centers and added programming services. “Arrow converted an old office to a service center that programed PROMs,” said Elario. The tug-of-war between component suppliers and OEMs intensified in the late 1980s over the suppliers’ tight control of distributors. There were two primary reasons. One was the rapid growth of the number of customers in diverse industries demanding electronic components. The other was the growth in the number of component engineering employed by OEMs driven by the rapid growth of desktop computing. “OEM customers started pushing for more distributor options and were open to

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multisourcing,” said Knight. “The role of the component engineer became prevalent. It was key to the expansion in the 1980s and into the ‘90s. “Engineers became the gatekeepers for every line item on the bill of material,” he said. This shift created opportunities for distributors. Semiconductors dominated the landscape, and more distributors opened shop. The number of distributors grew because distribution is less capital intensive than manufacturing components and has decent margins. “Back then, it wasn’t unheard of to have 35 percent to 40 percent gross profit on sales,” said Knight. The late 1980s was also the era of OEM outsourcing of manufacturing. Two early contract manufacturers (CMs) were Flextronics and Jabil, followed rapidly by others, both domestic and international. Taiwan’s Hon Hai Precision Industry Co., Ltd., also known as Foxconn Technology Group, is the world’s largest contract

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manufacturer. Today, Foxconn is the largest private employer in Mainland China and one of the largest employers worldwide. The new EMS model meant OEMs didn’t have to invest in manufacturing equipment. Instead, CMs built new facilities and bought existing manufacturing operations from the likes of IBM, Digital Equipment, and other OEMs. Today, the global EMS sector consumes most of the world’s electronic components. At the same time, there was a revolution taking hold in the freight services business. “I remember negotiating a contract with Fred Smith, CEO of Federal Express, for Marshall industries in the late 1980s to deliver all of our domestic packages within 48 hours by air freight,” said Elario. Shifting from seven-day ground delivery to two-day air delivery significantly accelerated the pace of business. It didn’t take long for FedEx competitors such

ELECTRONIC COMPONENT INDUSTRY EVOLUTION

as DHL and UPS to replicate the service and expand internationally. “The acceleration in package delivery accelerated distributors’ shift from local warehouses to giant centralized distribution centers. For example, Mouser Electronics consolidated to one giant stocking location in Texas, said Knight. “Today, if a customer in Europe places an order to Mouser today, chances are it will be there within two days.”

Economies of scale The 1990s distribution sector is remembered as the era of the Great Consolidation. It was also a period of diversification in the distribution sector. While the big broadline distributors grew by focusing on semiconductors and services for big OEMs, they created an opening for specialist distributors focused on components other than semiconductors, such as Allied Electronics, a division of


Electrocomponents PLC, and Sager and TTI, both owned by Berkshire Hathaway. Similarly, catalog distributors that deal mainly in small orders for

First FedEx Express aircraft, a Dassault Falcon 20 named Wendy, on display at Steven F. Udvar-Hazy Center.

R&D engineers and startups took advantage of the shift to grow their companies. These included DigiKey, Mouser Electronics, Newark, and others.

China began its journey to become a modernized economy with free-market reforms in 1979. In the 43 intervening years, it has set world records as “the fastest sustained expansion by a major economy in history,” according to the World Bank. Today, China is the world’s largest economy and largest manufacturer. Perhaps the most important event that paved the way for China’s strong growth and the ripple effect for the global economy was its admission into the World Trade Organization (WTO) on December 11, 2001. “You can’t overstate the impact that China’s admission to the World

Trade Organization in 2001 has had on the electronics industry,” said Dale Ford, research director, ECIA. “I’d argue that no industry has benefited more than the electronics industry.” Indeed, there were a number of benefits for the electronics section, including distributors: lowcost production and the opening of new markets across Asia, to name two. “We enjoyed the benefits through the decade. It was a game-changer,” said ECIA’s Elario. U.S. electronics companies were operating in China before its WTO admission, but the pace of investment in China accelerated in the

As time passed, catalog company revenue grew dramatically. They were the first to figure out e-commerce. Today, the small-order business accounts for 12 percent to 15 percent of all electronic components sold in the channel now go through these companies. Predicting China would become the US rival in the global economy was far fetched in the mid-20th Century.

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tension with China has intensified. There’s even speculation about the dawn of a new cold war between the two nations.

The supply chain is a consistent concern to all consumers for the first time in 2021.

early 2000s. Between 1992 and 2008, the number of private companies in China shot up from 140,000 to 6.6 million, even as the number of foreign corporations grew to 435,000. By 2010, 480 Fortune 500 companies were operating in China. Today, Apple, Cisco Systems, Dell Computer, Ford, Google, HP, Honeywell, IBM, Intel, Johnson Controls, Lucent, Motorola, Molex, Nokia, Panasonic, Qualcomm, RCA, Sony, Tektronix, Volkswagen, and Xerox all have a China presence. The manufacturing shift to China, as well as Vietnam, Thailand, and other AsiaPac nations, created a new set of challenges for managing complex 81

global supply chains. Specifically, building new relationships with air freight provides and shipping lines and constructing new distribution centers. The focus has been and remains just-in-time inventory efficiency and reducing the cost of both manufacturing and supply chain operations.

Geopolitics and Covid The last few years of the 2010s were a period of heightened tension between the U.S. and China, as the Trump administration imposed tariffs on imported Chinese goods, and China retaliated. The Biden Administration left the tariffs in place, and

ELECTRONIC COMPONENT INDUSTRY EVOLUTION

At the same time, the Covid pandemic has been a shock to the global economy, disrupting industries around the world as transportation and supply chain networks buckle under the pressure of lock downs and the Delta variant. In August 2021, the median cost of shipping a standard rectangular metal container from China to the West Coast of the United States hit a record $20,586, almost twice what it cost in July, which was twice the cost in January, according to the Freightos Baltic Index. Essential freight-handling equipment too often is not where it is needed, and when it is, there aren’t enough truckers or warehouse workers to operate it. The increase in connected technology enabled by artificial intelligence,


machine learning, and IoT is driving innovation at a rapid pace across all industries. It has led to skyrocketing demand for electronic components just as the world grapples with one of the most disruptive global supply chain crises in history. “While we can’t precisely predict the impact of this historic period we’re living through, we know global supply chains will never be the same,” said Dayna Badhorn, global vice president, Strategy and Corporate Marketing, Avnet. “Avnet is right in the thick of it, acting as an extension of our customers’ teams to help them manage forecasts and mitigate supply chain risk. All the while, we’re working closely

with our customers and supplier partners to shape the product designs and supply chains of a future to be more sustainable.”

What keeps you up at night? Top of mind for electronics industry leaders and government officials today is the rising tension between the U.S. and China over the fate of Taiwan. “It’s what keeps me awake at night,” said Ford, chief analyst, ECIA. “If China makes a move on Taiwan, it’s hard to gauge how much of an impact that will have. If there’s an attack on the IC infrastructure, the ripple effect would be devastating. On the other

hand, if there is no damage, and China just took control, they would have the global economy by the throat.” Consequently, the semiconductor industry is scrambling to build new fab capacity in the U.S. and Europe. Of course, bringing a new fab online is a 5- to 10-year process. Then there’s climate change and the threat to factories and distribution centers from flooding, wildfires, hurricanes, and extreme heat and cold. The good news is that the new larger distribution centers that many distributors have built recently are significantly more energy-efficient and automated than the previous generation, which means faster order shipping and time to market. “It’s a whole different world than what we grew up in,” says the ECIA’s Elario. “The stakes are high in every area, and we have to rely on the millennials now to take it in the right direction.”

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From Humble Beginnings to Global Leadership The Digi-Key Story The Digi-Key Electronics success story is a testament to the hard work, commitment and entrepreneurial spirit of our more than 4,800 employees worldwide, and the innovation of our almost 800,000 customers. It’s the story of how a small, privately-owned company with humble beginnings in 1972 continued to rapidly grow and evolve into a $4 billion industry leader today. In 1972 Dr. Ronald Stordahl started selling the “Digi-Keyer” – a kit for ham radio operators that helped transmit Morse code. That led to selling components – first to electronic hobbyists, and then to the commercial market. Over the years, Digi-Key flourished as the original high service distributor and has continued to add products and services, and provides those products to customers wherever they are. Digi-Key ships more than 25,000 packages per day from our corporate headquarters in Thief River Falls.

Digi-Key’s customer-centered business philosophy continues to drive the company’s rapid growth and success, and as a privately-owned company, we are able to stay focused on customer demands, rather than being beholden to shareholders. As the innovation leader, DigiKey provides access to the world’s broadest resources for technology innovation including digital tools and services. We’ve also remained loyal to our hometown of Thief River Falls, Minnesota. While it may have been easier to move our headquarters to a larger city with access to a larger workforce, Digi-Key has continued to invest in the community. Our community-driven culture is our secret sauce, and we take pride in doing 1,000 things right every day to support our customers. Currently one of the largest construction projects in the United States, the new Digi-Key Product Distribution Center (PDC) in Thief River Falls is a more than $400 million investment that will cover the size of more than 22 football fields and at more than 2.2 million square feet, could fit the Empire State Building on its side diagonally inside of the finished facility. The PDC is expected to be fully operational in the fall of 2021, and it will feature more than 25 miles of automated conveyor belts and 55 dock doors. Celebrating 50 years in business in 2022, Digi-Key is committed to serving as a global leader in innovation, enabling designers and engineers around the world, and we are dedicated to continuing to provide our high level of service throughout the future growth of the company. Cheers to 100 years of the electronics industry which we’re honored to be a part of, and here’s to 100 more years of enabling innovation around the globe!

_____________________________________________________ Digi-Key’s new Product Distribution Center in Thief River Falls, Minn.

Today, Digi-Key offers more than 11.7 million products globally from over 1,900 quality name-brand manufacturers. In addition, Digi-Key’s Marketplace Product provides a singular shopping experience for all things related to technology innovation — IoT, industrial automation, test and measurement and more. With offices around the world, we are the 4th largest among the more than 300 electronic distributors in North America, and the 6th largest worldwide.

For more information about Digi-Key, visit www.digikey.com.



To Our Industry Supply Chain for 100 Years of Growth…

CONGRATULATIONS from BlockMaster Electronics!

CONGRATULATIONS from Transducers USA!

CONGRATULATIONS from BEA Lasers!

For over 40 years, two electronics industry veterans, Ron Rutkowski and Joe Sieracki, owned and operated one of the largest manufacturers’ rep organizations in the Chicagoland area. In the mid-1990s, their strong relationships with one of the largest electronic connector companies led to the establishment of BlockMaster Electronics. Ron and Joe set up one of the first component off shoring operations by establishing a supply chain with China and other overseas manufacturers of electronic terminal blocks.

At the start of the 21st century, one of the industry’s premier cell phone manufacturers was unable to obtain enough transducers to ship their products on time. Because the owners of BlockMaster had strong relationships with Chinese manufacturers of transducers, they were able to meet the supply demand for this manufacturer and soon after, Transducers USA was born. Transducers USA offers a wide selection of piezoelectric transducers, electro-mechanical indicators, microphones, and speakers. Today, the company is a prominent supplier to medical equipment manufacturers of ventilators used in the fight against COVID.

Joe Sieracki initiated the purchase of a small red laser company by the two partners around 2008. Ron and Joe made the investment needed to add green laser products and set up BEA Lasers to market lasers for alignment applications. BEA Lasers specializes in the design and manufacture of OEM and ruggedized lasers required for custom applications, such as machine cutting and machine vision operations, edge detection, counting and many more. Today, BEA lasers are also used in robotic surgery applications.

BlockMaster set up headquarters in Elk Grove Village, Illinois, with terminal block inventories and extensive product modification and customization capabilities. This provided the market with fast initial shipments, followed by overseas shipments as needed. BlockMaster continued to grow over the years with strategic acquisitions. Today they offer one of the industry’s largest selections of terminal blocks, including High Power blocks.

800-783-2321 bealasers.com 847-956-1920 tusainc.com

DEDICATED TO THE MEMORY OF FOUNDING PARTNER, JOSEPH SIERACKI. WE MISS YOU!

800-595-8881 blockmaster.com 1400 Howard Street, Elk Grove Village, IL 60007

© 2021, BlockMaster Electronics, Inc.


High & Medium-Power Blocks Euro-Style & Pluggable Terminal Blocks Single & Double Row Terminal Blocks 5 Amps to 350 Amps

Alignment Lasers Green or Red Light Line, Dot, Cross Hair, Target Light Patterns Mounting Hardware

Piezoelectric Transducers Ultrasonics Microphones Speakers

1400 Howard Street, Elk Grove Village, IL 60007

© 2021, BlockMaster Electronics, Inc.


Chapter

06

THE INTERNET REVOLUTION On July 5, 1994, Jeff Bezos founded Amazon out of his garage in Bellevue, Washington (the online bookselling website would launch in 1995.) Three weeks later, Marshall Industries launched its e-commerce site, e-Trade, the first distribution site on the web. It included the company’s parts catalog, data sheets, sample requests and took component orders – and as the “first” in the industry, spectators abounded. In the fall of 1994, Marshall President and CEO Rob Rodin and Intel executive Dennis Reker showed off this “new technology” to distribution industry leaders at the thenNEDA Executive Conference in Chicago. Rodin and Reker walked the audience through 87

The first website that changed the channel.

placing an online order, searching for parts and more – to a hushed ballroom. Few had experienced e-commerce before. “I still have that presentation,” said Rodin. “It was set to the tune of ‘Rocky’. I remember the lights were in my eyes as I was looking out at the crowd and couldn’t really see anything. At one point I looked out into the first row of people – there were a few faces I could see; one

ELECTRONIC COMPONENT INDUSTRY EVOLUTION

was Pat Moran, he was with TI as their distribution guy. And his mouth was just wide open. And he was shaking his head at me. I made eye contact with Pat, and he mouthed to me, ‘What the *&%$# are you talking about?’” “Truthfully, I was just trying to compete. I called it e-Trade thinking I invented the name (he didn’t; it ultimately became Marshall. com). But I didn’t want it to be Marshall, because I


wanted the whole shelfsharing thing to change and I was trying to create another distributor — so everybody would go, ‘Okay, there’s no shelf-sharing in virtual space,’” said Rodin. Shelf-sharing, recalls former Arrow Electronics Inc. CEO Steve Kaufman, was an unwritten rule that distributors carrying certain U.S. semiconductor lines could not carry Asian chip lines and/or certain competitors. As U.S.

chipmakers exited the DRAM market in the 1980s and ‘90s, Arrow sought to provide memory to its customers through a very limited

Inc. would launch its own website (avnet.com) in August 1995 – and then it was off to the virtual races from there. Other

agreement with Samsung. Although Arrow had taken steps to alert suppliers’ sales managers of the arrangement beforehand it received so much push back from supplier executives it terminated the Samsung agreement.

distributors followed suit with websites of their own and began offering the array of services that now define the channel – data sheets, parametric search, quoting, bill of materials (BOM) tools, videos, reference articles, etc. The industry also came together to collaborate on standards for exchanging data, forming the RosettaNet consortium. The RosettaNet standard is still in use today by the semiconductor and components industry. E-commerce changed the industry like almost no other event. Traditional distributors jumped online. Internet-only companies including SupplyFrame,

“In retrospect, I would have handled that differently,” Kaufman said. “I missed that such decision-making had to be handled at the CEO level.” Rodin was ahead of his peers online by more than a year (and shelfsharing would hold on for a few more years after that.) It would be another 13 months before Avnet

The internet allowed a new service to buyers…component auctions in 1999.

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SiliconExpert, FindChips, Octoparts, to name a few, joined the mix to compete for billions in potential revenue to be earned from business-to-business e-commerce.

800-pound gorillas Printed product catalogs, once a staple of the industry (and five-pound tomes lugged around in

salespeople’s car trunks), are long a thing of the past. In 1996, the catalog distributor Digi-Key went online with the first of its many websites. Since then, Digi-Key has redefined itself beyond the catalog space, adding design tools, parametric search, community forums and supply chain services including bonded inventory, just-in-time shipping and BOM management.

This is a rare ad in the 80’s that had a simple headline that was no baloney.

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ELECTRONIC COMPONENT INDUSTRY EVOLUTION

In the 1960s, recalls Ray Norton, former CEO of Sager Electronics, there weren’t many catalogs and the industry relied heavily on the Radio Master, a book about 24-inches thick that included most manufacturer parts. “It was common practice during those days for customers to order by description rather than by part number,” he explained. “A distributor sales representative had to know voltages, wattage, amperage, resistor color codes, and the difference between single pole single throw, single pole double throw, and double pole double throw. Sales reps knew the different potentiometer tapers as well as the various outputs on a transformer. There weren’t many semiconductors, but rather tubes, rectifiers and diodes. Wire was called out by gauge, stranded number of conductors, shielding and overall jacket, and multi conductor was often cut to the length the customer needed.”


“In 1962, the transistor was announced by the New York Telephone Company. I was in Chicago at the Parts Show at the time when it came over the radio in the morning. I felt a sort of tension with some of the people I spoke to. They felt the transistor was coming out, they should ‘Run for the hills, the tube is going to disappear, the transistor’s taking over, there will not be any more service, nobody will need any parts because the transistor will last forever!’” – Rubin Green (Green Tele-Radio Distributors) Digi-Key stopped printing catalogs about 10 years ago, saving nearly $30 million in printing costs. It carries a vast selection of electronic components in stock and available for immediate shipment – most from its Thief River Falls, Minn., headquarters. The Internet was a huge boon for its growth trajectory. The company was founded in 1972 and grew to $1 billion in sales in its first

38 years, achieving the $1 billion milestone in 2010. It only took seven years to grow to $2 billion in sales, with the e-commerce as the engine fueling growth. Digi-Key is not alone in this space. In January 2000, TTI closed its acquisition of the Mouser Electronics catalog – a deal described as a “right time, right place” buy — by Paul Andrews, former chief executive officer of TTI Inc. Indeed it was. Andrews elected to keep the two companies separate and the Mouser e-commerce site has never looked back. Mouser features more than 5 million products from over 700 manufacturers with 22 support locations around the world. In 2007, Berkshire Hathaway acquired TTI and has continued to support the business. Other players in this space include Newark, Allied Electronics and the Premier Farnell companies. One of the tenets of all the TTI companies, said CEO Mike Morton, is the commitment to carrying

100 YEARS OF THE AUTHORIZED CHANNEL

Supported by dozens of distributors, trustedparts.com, netcomponents.com, findparts.com and onlinecomponents.com have evolved from this platform to benefit the industry.

inventory. “This is the model Paul founded and people buy from us because we have parts. Ultimately there is nothing we sell that they can’t buy from our competitors. But in the past 50 years, we have proven that our inventory, processes, knowledge and visibility are superior.”

Covid creates shifts During the global pandemic, the internet connected businesses, families, teachers and students in new and vital ways. It’s changed the way many companies conduct business. Arrow

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COO Sean Kerins told CRN magazine earlier in 2021 he doesn’t expect a return to the old business as usual. “I think most companies will forever think differently about the nature of work, how work gets done, where work gets done, the role of digital in helping them embrace how they serve their customers,” he said. “I think it’s important to be thoughtful and deliberate in thinking through what that should look like for the long term, but I think there’s certain things that we’ll think differently about, maybe forever. How much travel do we need to do? How often? Where? And how many people need to be involved?” “We’ve all learned now that collaboration technology is pretty effective,” Kerins added. “And so, we’ve all become in some ways even more productive when it comes to engaging our suppliers and customers even more frequently than in the past.”

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Covid also tested the supply chain. Multinational corporations deployed varying strategies to keep up production and distribution played a leading role, supplying parts to healthcare equipment OEMs even as borders closed down. A survey of 715 supply chain professionals by EMS provider Jabil found the pandemic disrupted 78 percent of supply chains — more than any other event in the last decade. The pandemic brought out best- and worst-practices as well. The counterfeit problem has intensified as semiconductor supplies tighten. The counterfeit chip market was estimated at $75 billion (and growing) in 2019, Paul Karazuba, senior director of product marketing at Rambus Security, told Semiconductor Engineering. Those counterfeits are believed to have been integrated into more than $169 billion worth of electronic devices, with confirmed cases in defibrillators, airport landing

ELECTRONIC COMPONENT INDUSTRY EVOLUTION

lights, intravenous (IV) drip machines and braking systems for high-speed trains. Rambus offers a cryptographic key solution, which embeds a unique key into each chip that is known only to the chip maker. The Internet has made it easier for counterfeiters to sell their wares as they can quickly set up a realistic website and take it down once a transaction is complete. The ECIA has worked alongside distributors, manufacturers, government and military to combat this issue. ECIA put together trainings, workshops and cooperatively worked on standards for the industry to help combat this issue. During the pandemic, ECIA shared new guidance, Countering Counterfeits: The Real Threat of Fake Products, noting that Covid has spurred counterfeiting across multiple supply chains as products have become harder to obtain.


Internet: Most Revolutionary Change “[The Internet] has been the most important change in the channel world — the opportunity to connect with customers and the suppliers, through applications and all the platforms that have been developed based on the World Wide Web,” said Michael Rohleder, former president of Insight and Wyle Electronics. “And, obviously, since I think that’s the biggest change in the channel, because it’s changed the types of salespeople that distributors have had to hire, it’s changed the expectations of the customers and the suppliers about the function of the distributor and the value added of the distributor and the direction of those offerings.” The changes have also been physical. “We were giving a tour recently to this gentleman, and we walked through one of the hallways, which had historically been set up

Electronic Buyers News supplement truly shares the concerns over the dot.com vs traditional distributor models.

to be lined with catalogs, brochures and things like that — and there’s nothing there anymore,” said Jim Banovich, president of Marsh Electronics. “From a sales perspective, that was the mainstay of all of us who were involved in sales and promoting our company, promoting our suppliers and

100 YEARS OF THE AUTHORIZED CHANNEL

manufacturers. It was all print; and now it’s all online, it’s all digital. The amount of information available to the customer whether it’s provided by our supplier partners — if they want to find out about the services and capabilities that each of us has — it’s all online.”

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FREE, PERFECT, AND NOW After reading John Sculley’s book “Odyssey,” which detailed his journey from Pepsi to Apple and offered an early glimpse into the power of smart machines, Rob Rodin was intrigued. Then, Rodin saw the early launch of the Mosaic browser, which garnered 2 million free downloads, and he saw a clear path to the future. Even with its problems – it was slow, clunky; it crashed frequently – it was still the culmination of all things a self-professed sci-fi fan imagined. Rodin was hooked. “I called my team together and said, ‘I want to be on this internet. And, we have to do it as rapidly as possible. Everybody will see it, everybody will do it. And I want to be the first,’” he said. “I was convinced that this was so obvious.”

What Rodin saw was customer service: 24/7 access with no added costs. His team got to work on launching a site and they were the first — by a lot. Recognizing that the technology world, engineers were early adopters of the internet, and likely had access through wider bandwidth and powerful workstations (vs AOL dial-up from home), Marshall dove in with an array of offerings that would set the bar for the industry. The company scanned data sheets, pulling product information from the massive books that salespeople carried around in the trunks of their cars. They added video training and seminars through the Education News Entertainment Network was modeled after CNN, but targeted to engineers. The site quickly amassed a following of more than a million engineers. It was a heady time. In the early days, Rodin noted, both the Mosaic and Netscape browsers kept track of all new websites launched. They featured “what’s new on the net” items, including daily announcements of 10-20 new websites – so everyone knew of all of that day’s new websites. It led to new business practices as well. “We connected all the independent reps. We had so many Japanese lines and many of them didn’t have direct sales, so we started giving them their point-of-sale reports through our intranet. They had their private sign-ons and access to the network,” said Rodin. “We were moving so fast. Every day, there was a new idea.”

Rob Rodin.

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100 YEARS OF THE AUTHORIZED CHANNEL


SPOTLIGHT:

A BRIEF HISTORY OF EDS The roots of EDS run deep. Beginning as the Radio Parts Manufacturers National Trade Shows to today’s Leadership Summit, one thing has remained a constant – the exchange of ideas and innovations to push the entire industry forward. It’s more than one week of meetings, it is year-round matchmaking and planning activity that culminates with the show. The Electronics Distribution Show & Conference (EDS) began in 1936 with the incorporation of the Radio Parts Manufacturers National Trade Shows, which then held its first event in 1937 at the Stevens Hotel in Chicago. For most of its history, the governance of EDS was by members and exhibitors, but in 2005 it changed to replace exhibitors with associations. This reflects EDS’s commitment to being an important gathering of the movers, shakers

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1941 Exhibitor location selection process was in person.

and brightest minds that electronic component manufacturers, distributors and representatives have to offer.

“At the first convention of the Radio Manufacturers of America (RMA, later to become the Electronic Industries Association) in 1925, E.N. Rauland, the group’s chairman, commented on the radio jobber situation by noting, ‘As you well know, in the present status of radio merchandising, we have

ELECTRONIC COMPONENT INDUSTRY EVOLUTION

every kind of jobber.’ Indeed, the industry had been growing, and jobbers’ numbers had increased tremendously, but there was no real form or substance to the fledgling industry. During the Depression years following Rauland’s remarks, though, the industry did begin to take shape, Jobbers began to concentrate on either the radio set or the part segments of the business, and by 1973, there were sufficient numbers of organized manufacturers,


distributors and representatives involved in the parts business to stage the first Radio Parts Manufacturers National Trade Show in the Stevens Hotel in Chicago. This was the beginning of what we know as the Electronic Distribution Show. The first part of this evolution into an industry could be found in an informal luncheon group called the Sales Manager Club, organized in 1932.” — Sam Poncher (Newark Electronics) Until 1964, EDS held successful annual shows in Chicago, except 1938 when a supplementary show in New York failed and a two-year recess during World War II. After shows resumed in 1946, they faced a competitive challenge for three years, when shows were attempted by the National Radio Parts Distributors Association. This

competition caused EDS to get creative and combine efforts giving distributors and manufacturers equal numbers on the board. In the late 1960s, the Electronics Representatives Association (ERA) began campaigning for a voice in the show corporation, rising to their present equal position along with the now EIA Parts Division. Thus EDS is now sponsored by three associations, representing the three industry functions concerned with distribution, each of which names four directors to the board of directors. The coming-together of these essential electronics associations was the foundation of today’s EDS, where top decision makers come together to build business, plan, discuss new opportunities, and reset goals. Today, EDS is a strongly supported, joint effort by the industry’s top trade organizations: the Electronic Components Industry

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Association, the Electronic Representatives Association and the Global Electronics Distributor Association. To get to where we are today meant that the show and organizations had to evolve. The ‘60s saw the beginning of two related new phenomena: the beginning of parts manufacturers selling components to the OEM through distribution, and the parallel move to distribution networks of one hundred or fewer locations. By the early ‘70s, the “industrials” were using the show to meet with their established re-sellers, felt no need to display product, and rebelled against being forced to maintain a superfluous floor presence. By 1973, the board changed the rules to permit suiteonly participation, reflecting a new set of industry needs and the beginning of the upstairs-downstairs format that still prevails. One of the strong points of EDS is its under-one-roof event format. From the 1970s to the 1990s, EDS made an effort to rotate the location

of the show to be more convenient to distributors across the country. However, the “under-oneroof” concept was not truly achieved until 1994 when EDS established Las Vegas as its permanent residence.

Ken Prince is one of key original architects of EDS followed by Gerry Newman.

The advent of new trade show facilities in hotels – the Mandalay Bay, the Venetian, the Mirage, and the Paris/Bally’s complex – gave EDS its first real option for relocation.

environment where all of the action happens on the convention floor. It is a combination of scheduled, one-on-one meetings, educational programs and networking opportunities to maximize success. EDS continues to be committed to their mission of idea exchange through high-level strategic meetings, event functions and informal gatherings to rekindle business relationships and build new ones. John Krehbiel Jr. President of Molex made a keynote speech in the mid 80’s at the EDS event in Vegas. The theme was distributors will be needed overseas as component manufacturers continue to expand globally. He suggested they go global too. It is very obvious a few listened.

With a new, consistent location, the format of EDS began growing and evolving into the EDS Summit we know today. EDS is not your typical tradeshow Streakers were the “in thing” in the 70’s. EDS 1974 highlight or lowlight.

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Switchcraft Celebrates 75 Years of Mutual Success with the Electronics Industry In 1971, Switchcraft founder Wil Larson said “What’s good for the industry is good for Switchcraft,” and at Switchcraft we continue this spirit of collaboration today. In 1947, the founders launched their company to the world by announcing their new products to distributors, and soon after that they hired their first manufacturer’s rep. Along with our customers, it is this collaboration at all levels of the electronics industry that has sustained our business. What started with small manufacturing companies and regional distributors has grown into a massive multinational industry which has enabled technologies which have changed the world, and at Switchcraft we’re proud to still make almost all of our high quality products in our own factories in Chicago. We look forward to many more years of success with all of our great partners in the electronics industry.

1946

Hires first sales representative, David H. Ross Co. and begins selling to electronics distributors

1995

First attends the Parts Distributor Show (now EDS) & pioneers the idea of prepackaged cable assemblies

1957

Switchcraft POS merchandiser is introduced and becomes a fixture at electronic showrooms

1971

1973

Switchcraft releases EN3 and shifts focus to harsh environment connectivity

1952

1947

Switchcraft is founded by 3 GI’s returning from World War II to supply high quality connectors

Switchcraft DC Power Jacks set many of the standards in place today

Conxall® plastic harsh environment connectors create a new interconnect category

2018

1999

Switchcraft® acquires Conxall®

2011

Switchcraft® Conxall® is acquired by HEICO

For more info, visit www.switchcraft.com or visit our YouTube

100 YEARS OF THE AUTHORIZED CHANNEL

Introduces new distributor-friendly polices with a 4-Year NPI return window & 4-Year Design Registration period

2021

Celebrates Switchcraft’s 75th & Conxall’s 50th Anniversary


An Everchanging Business It’s the One Constant in this Industry Since Earl Marsh incorporated Marsh Radio Supply in 1939, the company’s ability to shift, grow, and innovate has kept it successful through good times and bad. As technology evolved, so did Marsh Radio Supply, eventually changing their company name to Marsh Electronics in 1972. But that’s not all that changed!

assembly. In the 90s cable and wire harness assembly along with component sub-assemblies evolved, and MarVac Assemblies was created as a division of Marsh. They also offered inventory management programs and in-house stores that lowered acquisition costs, simplified procurement, and reduced inventory liability for their customers.

By the late 1950s, Marsh recognized that there was a growing market base of OEMs and turned their focus in that direction by supplying that market with a wide range of products, including high-current devices used in heavy equipment. They then shifted again in the early 1960s, when they began distributing semiconductor products, primarily power diodes and transistors. In fact, throughout the 60s, Marsh shifted several times, and it was not always by choice. It was also around this time that the company lost its founder and the founder’s business partner in short succession, leaving them in a precarious position. So employees Al Esmann and Jim W. Banovich took a hard look at Marsh’s condition and knew they should get building. Esmann took over as President, and Banovich became Manager of Industrial Sales. By 1975, Marsh saw its revenue grow by 6X. They built a 20,000 square foot facility in West Allis, which soon expanded to 40,000 square feet, devoting much of that space to the OEM and industrial markets. Soon after, during the 80s and 90s, Marsh recognized a need for assembly services and product modification options in the electronics industry. In the 80s they offered relay coil change out options and modular potentiometer

Marsh underwent yet another change in 1993 when Al Essmann retired. Jim W. Banovich took over as President, leading significant reorganization, and financial realignment of the company. They were acquired by Sterling Electronics in November 1996, and then Sterling was acquired by Marshall Industries in January 1998. With differing philosophies around their go-to-market strategy, Banovich’s sons, Jim S. and Steve, along with partner, John Casper, bought back Marsh Electronics in December 1998. Casper took the helm as President, Jim S. served as Vice President of Sales and Marketing, and Steve managed MarVac’s Assemblies Division. Today, OEMs make up 100 percent of Marsh’s business, and brothers Jim S. and Steve Banovich are at the helm. “We’re an electromechanical, passive, interconnects, and power semi-conductor solutions distributor,” Jim S., now President, humbly tells us. “We love to work on solutions, providing logistics, product procurement, and engineering support services to our customers.” Marsh enjoys the opportunity to assist with enhancing their customers’ production processes to become more efficient. Marsh’s inventory is unique and customized to their customers’ requirements. “Our inventory is mainly made up of non-cancelable, non-returnable components

The early days …


There’s one thing you can depend on in this industry, and that is that there’ll be plenty of change.” Mr. & Mrs. Earl E. Marsh, 1952.

unique to our customers” Banovich continues. “This is a big differentiator for us in our industry.”

and customized product for their production needs, or a fully assembled turnkey project or part, that can play into and help a customer’s logistics be more streamlined and efficient. That’s what we’re all about.”

“Instead of offering a brochure,” Banovich explains, “we’ll meet our customers with a blank piece of paper and put something together that works for both of us. We strive for great results for our customers, our suppliers, and ourselves.”

Still one of the largest electronics component distributors of its kind in the Midwest, Marsh Electronics maintains offices in Wisconsin, Indiana, Illinois, Ohio, Minnesota, North Carolina, and Florida. They aim to improve their customers’ bottom line, and their history has proven that their success has been built by providing unique solutions and turnkey engineered-type products to customers.

Marsh prides itself as being a provider of customer solutions, and the future of Marsh Electronics is to continue to grow in the solutions area. “Our customers are looking for more customized products and turnkey opportunities,” Banovich continues on to say. “We’ll provide an engineered

_____________________________________________________________

Learn more at: Marsh Electronics, Inc. www.MarshElectronics.com (414) 475-6000


Omron Electronic Components Celebrates 100 Years of the Authorized Channel Since its founding in 1933, OMRON has pursued innovation driven by social needs, leading the world in inventive ideas. The organization continues to work to improve lives and contribute to a better society by creating value for the future. Headquartered in Kyoto, Japan, Omron currently engages in four areas of business globally: Industrial Automation Business (IAB), Electronic and Mechanical Components Business (EMC), Social Systems, Solutions, and Service Business (SSB), and Healthcare Business (HCB). Locally, the EMC business operates out of Hoffman Estates, IL, where our Americas division provides advanced and high-quality electronic and mechanical components and modules, including relays, switches, connectors and sensors. From Factory Automation, Smart Home Building, Energy management to Power Tools, Automated Test Equipment and Entertainment, the EMC business contributes to the enhancement of functions and precision and the miniaturization of commercial and consumer equipment.

Omron Electronic Components Americas HQ Office in Hoffman Estates, IL

As a key part of our go-to-market strategy, EMC in the Americas utilizes distributors, allowing an extended outreach to more customers with our technology, products and services. A vast majority of our authorized distributors are ECIA members. As a proud member of ECIA ourselves, we fully support their mission, activities and actively engage with constituents. The networking opportunities and knowledge gained from peer manufacturers, distributors, members, industry research and events are highly valuable to our organization. This partnership allows us to better navigate the business environment for the authorized sale of electronic components. Omron Electronic Components celebrates 100 years of the authorized channel, and looks forward to navigating the evolving industry landscape together with ECIA member companies in the years ahead. ______________________________________________________________

You can learn more about Omron Electronic Components at components.omron.com. Follow us on LinkedIn and Twitter for the most up to date news.



Chapter

07

ENVIRONMENTAL SUSTAINABILITY BECOMES A CORE VALUE “[In 2020,] Apple became carbon neutral for our worldwide operations, and we committed to becoming carbon neutral by 2030 for our entire footprint—from our supply chain to the use of the products we make. Those same products now use more recycled materials than ever, like the 40 percent recycled content in the MacBook Air with Retina display, and the 99 percent recycled tungsten we now use in iPhone 12 and Apple Watch Series 6.” — Excerpt from Apple’s 2020 Environmental Progress Report How times change. Apple’s commitment to environmental sustainability is good news for shareholders, employees, customers and the planet as the effects of climate change intensify in the form of higher

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temperatures, stronger, more frequent storms, floods, wildfires and rising seas. Apple is not alone. Many other leading technology OEMs are upping their sustainability game. For example, Google has been carbon neutral since 2007 and will be carbon-free by 2030. In 2019, it diverted 86 percent of its waste from global data center operations away from landfills. Dell, IBM, Schneider Electric, and other leading companies are making similar commitments

ELECTRONIC COMPONENT INDUSTRY EVOLUTION

to become carbon neutral and reduce waste. When mega-companies like Apple and Google and leading automotive and industrial OEMs make such statements they send a clear message to their ecosystem of consumers, government, the media, employees and supply partners. The message is crystal clear for the supply chain: “Get on board or risk losing us a customer.” EMS providers, distributors, logistics and transportation


companies, component makers and other suppliers are all doing what they can to reduce their carbon footprints, eliminate and recycle waste and pressure their suppliers to do the same. “The pressure is building, especially on smaller companies that can’t afford to make the required investments,” said Don Elario, vice president, industry practices for ECIA and formerly of Arrow Electronics. “At some point, if a supplier is not compliant, it will lose the business. The larger suppliers and distributors have no choice. They have to come into compliance and figure that out.”

Government mandates It hasn’t always been like this. Looking back three or four decades to the

early days of the modern digital electronics era, most technology companies had, at best, modest environmental goals that were part of their corporate social responsibility agenda. Back then, government initiatives drove changes in the industry’s environmental practices. One of the earliest that directly impacted the U.S. electronics sector was Energy Star, introduced by the U.S. Environmental Protection Agency (EPA) in 1992. Energy Star was a voluntary labeling program for appliance and equipment manufacturers introduced to encourage consumers to buy energy-efficient products to reduce energy use. It was followed four years later by the ISO 14001 standard, which provided a structure for efficiently managing resources and reducing waste. TTI uses

100 YEARS OF THE AUTHORIZED CHANNEL

ISO 14001 to manage waste, including cardboard and plastic materials. “14001 is in our quality manual,” said Kevin Sink, vice president, total quality, TTI. The distributor has a certain number of requirements it asks suppliers to abide by. While not required to be 14001 compliant, TTI encourages its suppliers to pursue it. “A lot of our suppliers are making the investment. It makes sense for them to reduce their waste stream as well,” he said. The stakes rose dramatically in 2003 when the European Union rolled out the Restriction of Hazardous Substances (RoHS) Directive. The standard restricted the use of six hazardous substances in electrical and electronic equipment manufactured in the EU.

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The impact was global, as non-European manufacturers were required to comply with RoHS directives even if only a fraction of their products were sold in Europe. The directive included detailed reporting requirements, which were a massive administrative burden for many companies in the electronics value chain.

WEEE’s recycling goals

Electrical and Electronic Equipment Directive (WEEE), mandating electronic waste recycling. Like RoHS, the WEEE directive impacted the design of electronics products worldwide to be more recyclable by setting collection, recycling and recovery targets. The WEEE goal was to recycle at least 85 percent of electrical and electronic waste by 2016. There was pushback from the global electronics sector early on against RoHS and WEEE. Both required costly changes to product design and material use across

In the same year RoHS was announced, the EU introduced the Waste

the board in electronic equipment, subassemblies, cables, components and spare parts that were not necessarily destined for the EU market. “It was a very painful time but also a very important time in the industry because ROHS and WEEE were the first environmental regulations to hit the electronics sector. They set the stage for other government regulations that followed,” said ECIA’s Elario, who was at Arrow when RoHS and WEEE were introduced.

ROHS RoHS was the first global environmental standard with teeth. The first six chemicals on the list below were targeted in 2003, and the other four were added in 2019.

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1. Cadmium (Cd): < 100 ppm 2. Lead (Pb): < 1000 ppm 3. Mercury (Hg): < 1000 ppm 4. Hexavalent Chromium: (Cr VI)< 1000 ppm 5. Polybrominated Biphenyls(PBB): < 1000 ppm 6. Polybrominated DiphenylEthers (PBDE): < 1000 ppm 7. Bis(2-Ethylhexyl) phthalate(DEHP): < 1000 ppm 8. Benzyl butyl phthalate(BBP): < 1000 ppm 9. Dibutyl phthalate (DBP): <1000 ppm 10. Diisobutyl phthalate (DIBP):< 1000 ppm Source: RoHS Guide

ELECTRONIC COMPONENT INDUSTRY EVOLUTION


Indeed, over time electronics companies accepted the standards and their responsibility to comply. While RoHS has been relatively successful at eliminating harmful chemicals, WEEE has not achieved its goal of 85 percent e-waste diversion. In March 2021, the European Parliament reported that less than 40 percent of e-waste in the EU was recycled in 2020. On the bright side, E-waste is the fastest growing waste stream in the EU. While Europe led the environmental charge from the 1990s through the 2010s, the U.S. Environmental Protection Agency (EPA) emerged in early 2021 as a new thorn in the side of the electronics industry. The EPA has regulated harmful chemicals for decades under the Toxic Substance Control Act (TSCA), but until this year had never directly targeted the electronics sector. That changed on January 6, when the EPA announced

it would be banning five persistent, bioaccumulative and toxic (PBT) substances in 60 days. One particular concern for the electronics industry is phenol isopropylated phosphate (3:1), or PIP 3:1. Even though the EPA had been discussing the ban with the industry, the 60day announcement came as a shock to the industry. “Nobody saw that coming,” says ECIA’s Elario. “But they should have seen it coming because it has been out there for a couple of years. Still, it caught the industry completely off guard.” On September 17, the EPA announced an extension of regulatory compliance of PIP (3:1) in the TSCA until March 8, 2022. Then, on October 21, it announced it would extend compliance to October 31, 2024. “It’s good news,” said Michael Kirschner, president of Design Chain Associates and an expert on environmental, health and safety requirements in the electronics industry. ECIA’s Elario concurs.

100 YEARS OF THE AUTHORIZED CHANNEL

“We appreciate the EPA’s extension. It will certainly help with the industry’s transition,” he said. “We want to thank the National Association of Manufacturers for its strong leadership in working with the EPA on this very important issue.” Avnet applies the principles of continuous improvement to make operations more environmentally sustainable and reduce carbon emissions. The company has three priorities: • Switching to renewable energy sources wherever possible • Improving the energy efficiency of offices and facilities • Consolidate facilities where possible

The circular economy Beyond setting deadlines for banning harmful chemicals and achieving carbon neutrality and zero waste, there is a lot of talk about a future built on a

106


circular economy model of resource use and product life cycle management, instead of the traditional linear model, which starts with extracting resources and ends when the product is discarded and replaced. The circular model aims to minimize extraction by reusing recycled, repurposed, and renovated parts and materials, together with innovative design that integrates repairability. Google is applying circular economy principles to design out waste, keep products and materials in use, and promote healthy materials and safe chemistry. This commitment extends to decoupling business growth from the growth of carbon intensity and material use. For example, in 2019, 19 percent of components Google used for machine upgrades came from refurbished inventory. When it can’t find a new use for its old equipment,

107

Google recycles or resells it. In 2019, the company resold nearly 9.9 million units into the secondary market for reuse by other organizations. Apple’s circular initiatives include promoting circular supply chains in partnership with the Platform for Accelerating the Circular Economy (PACE). The company has three priorities: sourcing recycled and renewable materials, designing longlasting products, offering access to repair services, refurbishing devices, and reusing parts.

ELECTRONIC COMPONENT INDUSTRY EVOLUTION

Historically, the issue with recycling old equipment was that it was typically shipped overseas to Africa and Asia. “While the intentions were good, there were unexpected consequences of this approach to recycling,” said TTI’s Sink. Inertia is perhaps the biggest threat to the electronics sector’s transition to a circular model. Consider the complexity of today’s global supply chains. Becoming circular requires a commitment from all


parties in the supply chain to re-evaluate and update their processes, from sourcing raw materials, including conflict minerals, to redesigning components and subsystems, retooling assembly, recycling and refurbishing materials for reuse to eliminate extraction of raw materials and extend the life of the finished products. “The problem with inertia is that it permeates the entire supply chain,” said Kirschner. “There are organizations attempting to address the

circular economy in the electronics industry, such as the Circular Electronics Partnership that includes large electronics OEMs.” But orchestrating such fundamental change is complex and will take years, even with the likes of Apple and Google leading the charge, said Kirschner. “The electronics industry is used to designing laptops to last five years. In the circular economy, it has to last ten years,” he said.

100 YEARS OF THE AUTHORIZED CHANNEL

“I don’t see a clear roadmap for upgrading a product like the mobile phone,” said Dale Ford, director of research, ECIA. “For instance, a modular, repairable, and upgradeable mobile phone is a great idea, but will it gain traction? Fundamental transformation takes a long time.”

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SPOTLIGHT:

A BRIEF HISTORY OF THE ERA Now in Its 10th Decade of Dedication to Education and Professionalism The 1930s & 1940s It was an inauspicious beginning to be sure. In 1935, the organization now known as the Electronics Representatives Association (ERA) was launched as a social club in New York named the Representatives of Radio Parts Manufacturers. Very quickly, though, as the radio parts business boomed in the late 1930s and throughout the 1940s, the association added chapters in other regions, published its first Buyers’ Guide (which later became the Rep Locator) and debuted a regular publication whose name, The Representor, has never changed. Also in the 1940s, ERA began organizing regional trade

109

Pennsylvania representatives event 1960.

events, held the first DMR (Distributor-ManufacturerRepresentative) conferences and became directly involved in the annual Radio Parts Show (the predecessor of EDS, which ERA still cosponsors).

The 1950s & 1960s In the early 1950s, membership in the organization changed from individual to company, making it a true trade association, and the first member Code of Ethics was adopted. ERA also developed its Lines Available service through which manufacturers publicize their need for

ELECTRONIC COMPONENT INDUSTRY EVOLUTION

reps by specific product type and territory. In 1958, in keeping with member reps’ expanding focus far beyond the radio industry into all areas of electronics, the name was changed to Electronic Representatives Association. (The “s” was later added to Electronic.) Also in 1958, the ERA Insurance Trust was established to provide medical, life and other types of insurance to member firm employees and families. Just a few years later, the trust was described by the Wall Street Journal as one of the most successful association group insurance providers in the U.S.


The early 1960s were highlighted by educational endeavors with the introduction of ERAsponsored industry seminars and other educational programs and the launching of ERA’s national management and marketing conferences. (The upcoming 2022 conference will be the 53rd such event.)

The 1970s & 1980s By 1970, ERA had 23 chapters and 1,100 member representative firms. Throughout the 1970s, ERA began exploring the concept of an alliance among organizations of manufacturers’ reps in other industries. That effort eventually resulted in the establishment of the Council of Manufacturers’ Representatives Associations (CMRA). Simultaneously with that activity, ERA founded the Manufacturers’ Representatives Educational

Research Foundation (MRERF), which now has 20 member organizations. MRERF provides professional certification programs for rep firm owners/managers, sales training classes for rep and distributor salespeople, and courses for manufacturers who sell through reps. By 1985, ERA’s 50th anniversary year, it had 26 chapters and 2,200 member firms. In 1989, ERA published the first four-color edition of its magazine, The Representor, and began offering its Chapter Officers Leadership Training (COLT) program for local volunteer leaders. Now in its 32nd year, COLT remains the only program of its kind among associations of manufacturers’ representatives. At the close of the 1980s, ERA introduced its Commitment to Performance initiative, through which member reps pledge to their

100 YEARS OF THE AUTHORIZED CHANNEL

manufacturers and customers that they will uphold the highest professional standards in conducting their business.

The 1990s & 2000s In 1990, ERA opened its membership to manufacturers, and within a few years, the national conference had been redesigned to include manufacturers, both as attendees and as participants in the program planning. ERA took a milestone stand on behalf of the outsourced field sales function in 1991 when Wal-Mart tried to deal directly with its suppliers by excluding manufacturers’ reps from calling on its stores. In response, ERA joined with the National Food Brokers Association in taking a highly public stance against Wal-Mart’s position which was eventually reversed. In 1994, a task force consisting of reps, manufacturers and 110


distributors developed and formally adopted Recommended Technical Standards for POS Reporting for the electronics industry. The next year, ERA launched its first website, and by the end of the decade most ERA publications and other resources were available for download.

Ray Hall.

In 2000, ERA became the first non-manufacturer member of the Electronics Industry Alliance. The same year, the association again championed the rep profession by leading efforts to reverse Motorola’s attempt to bypass reps and deal directly with suppliers. A year later, the Rep Locator database went online via the ERA website. Another significant event occurred in 2003 when ERA co-sponsored the first educational conference

111

— named Keystone — for manufacturers’ reps in all industries. From 2004 through 2006, ERA joined with other rep organizations to lobby for and win passage of new rep commission protection laws in several states. (There are now rep commission protection laws in almost all U.S. states.) At the close of the decade, in 2009, ERA began offering and archiving educational teleforums for all members, and it again expanded its national conference by inviting distributors to attend and assist in the planning.

The 2010s and 2100s During ERA’s 75th anniversary year in 2010, its website was significantly expanded and totally

1954 ERA board meeting.

ELECTRONIC COMPONENT INDUSTRY EVOLUTION

redesigned to provide members with many more free resources. Starting in 2013, ERA conducted a year-long research project that culminated in the publication of “Thriving on Change 2014,” a study of the evolution and near future of the outsourced field sales (manufacturers’ rep) function in the electronic industry. 2016 saw another significant outreach effort by ERA when membership was opened to distributors. Later in the decade, the ERA Executive Committee was expanded from its historic rep-only composition to include both a manufacturer and a distributor member.


1958 Past Presidents Night in New York City.

As the 2020s opened, ERA, like all businesses, institutions and organizations of every type, was compelled to face the challenges of the Covid-19 pandemic. In response, it successfully conducted its first virtual national conference, launched weekly “Water Cooler” teleconferences for members to discuss anything and everything, and introduced ERA Talks, a monthly podcast series featuring conversational interviews with electronics industry leaders.

In closing In this capsule history, it is impossible to name the thousands of enthusiastic member volunteers and consultants whose creativity, experience, expertise, leadership skills and extremely hard work have built this association’s legacy and made it a vital mainstay of the electronics industry. Nor can the thousands of educational and networking activities hosted by ERA and its many local chapters over the years be listed, much less described. And neither

100 YEARS OF THE AUTHORIZED CHANNEL

Walter Tobin.

can the many decades of invaluable contributions of ERA’s CEOs — Lawrence Garnello, Raymond J. Hall, Thomas J. Shanahan and Walter E. Tobin — be adequately summarized. Suffice to say, ERA’s impressive past will be a firm foundation for its bright and promising future.

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Projections Unlimited, Inc. The Difference is Personal Founded in 1980, Projections Unlimited, Inc. is an authorized distributor selling high quality electronic components and has been a long-standing member of the Electronic Components Industry Association. PUI values the role that ECIA (and NEDA) have played in creating a more equitable industry. More so, the ECIA has provided the industry with a level playing field among distributors; large and small. It is this level playing field that has afforded us the opportunity to have a meaningful impact and have even had a presence on the ECIA’s Board of Directors. Working alongside the ECIA, PUI established itself as one of the few remaining “Regional Distributors” with sales’ presences in Northern and Southern California, as well as New England. PUI’s emphasis on developing strong relationships with both our customers and suppliers alike by providing the highest level of service. Through our impeccable service and custom-tailored stocking and delivery programs, PUI is committed to providing you with the best possible solution to meet your individual needs. From PUI’s earliest days we have held to our core the following principles that have allowed us to provide the best possible service to our customers:

PUI’s Previous Tustin Location.

• We seek to provide our customers with a high level of technical expertise • We are committed to moral and ethical principles to our relationships with customers and suppliers alike. • We hold as our goal a fulfilling and enjoyable work environment for all people that makes up the PUI Family. It is these values that have guided our decisions as a company over the years and have allowed us to carve out our section of the market.

No Longer Just “The Capacitor People” Though founded as a Passives Company, PUI has grown the past forty years to expand our offerings significantly. Now offering over 200 authorized lines, PUI is bound to have what you are looking for. Spanning the product categories of Active, Electro-Mechanical, Interconnect components and Passives, we are continuing to establish ourselves as technical experts in an ever-growing catalog of products. In 2017, PUI acquired Eric Electronics to further expand the


As we look to the future, PUI is committed to continuing to provide our customers with the highest level of service and technical expertise. However, the digital landscape has provided us a wealth of opportunities for growth around the world. With the world at our fingertips, PUI committed to delivering on our mission around the world. ______________________________________________________________ Phone: Email: Website:

The PUI Family, Circa 1985.

714.544.2700 sales@gopui.com www.shoppui.com

scope of our provided services. This time however, instead of adding an additional product category, we instead added value-added services to our business model. Over the past couple years, this segment has quickly become one of our top performing product categories. If we don’t carry the specific part our customers are looking for, we can now provide a custom tailored solution to whatever their needs might be.

Value You Need Service You Deserve

15311 Barranca Parkway Irvine, CA 92618 (714) 544 - 2700 sales@gopui.com www.shoppui.com

Interconnect Solutions • • • • •

Over 40 years of experience in ValueAdded services allow us to find a solution for all your needs

Custom Cable Assembly Power Cords Industry Standard Cables Harnesses Switch Assemblies

Thermal Management •

About Us

Why Choose Us

PUI has specialized in the authorized distribution of electronic components for over 40 years. Over these years, PUI has created a strong focus on Value-Added Services. We understand that your company is unique and can be better served with more personalized service. For this reason, we have invested heavily into equipment and industry knowledge to separate us from the rest of the industry when it come to your valueadded needs.

 We seek to provide our customers with a high level of service and technical expertise  We seek continuous improvement by constantly training our person and improving our processes  We focus on personalizing our service to meet your unique needs.

• •

Custom Fan Assembly Fan Sinks Extrusions

• • • •

Open Frame Wall Mount Desktop WiFi Home

• • •

Fan Arrays Blowers Temperature Sensing Probe

Power Solutions • •

Automation Power Over Ethernet Chargers


Rochester Keeps Businesses Moving, Then and Now. The Semiconductor Lifecycle Solution™ Rochester Electronics was founded in 1981 by Curt Gerrish, an industry veteran having worked for over 20 years at Motorola Semiconductor. During that time the pace of technological advancements within the semiconductor industry began to result in a significant increase of end-of-life (EOL) components. Customers with long product lifecycles, and a need for ongoing “spares and repairs”, were met with increasing component obsolescence critical to their applications. What were initially thought to be inexpensive component replacements, often resulted in costly redesign and requalification. Identifying this need, Curt established a vision which has become Rochester Electronics. Providing customers with an ongoing source of supplier authorized components following EOL; while ensuring a traceable, certified, and guaranteed supply supporting High-Reliability and Industrial Customers with longer product lifecycles.

100% Authorized Distribution

The model Curt envisioned ensured both Suppliers and their valued Customers received the same high level of product lifecycle service required to keep their businesses moving. Through the years Rochester has continued to increase Supplier authorizations while expanding its product offering to include both active and end-of-life (EOL) semiconductors. Today Rochester has over 70 supplier authorizations with over 15 billion devices in stock encompassing greater than 200,000-part numbers warehoused in the United States at their Newburyport, MA and Portsmouth, NH locations. Their factory-direct offering negates the need for expensive testing. Rochester is AS6496 compliant. 01

Moving beyond in-stock inventory, the Rochester vision expanded to include licensed manufacturing, beginning with the transfer of an Intel Military Product line. Ensuring customer quality and reliability, Rochester achieved ISO9001 certification in 1998. Fast forward to today, Rochester has manufactured more than 20,000 device types. With over 12 billion die in stock, they have become the world’s largest die bank and have the capability to manufacture over 70,000 device types. Rochester Electronics’ build-to-order (BTO) devices use information and technology transferred directly from the OCM. All product is sold with the OCM’s full approval under the original manufacturer’s part number. All parts are manufactured at their US-based headquarters located in Newburyport, MA. At this same location, Rochester offers manufacturing services. Their portfolio includes a Hermetic assembly line fully developed with QML certification to MIL-PRF-38535 and they have achieved plastic assembly qualification. Rochester’s in-house testing services, DSCC QML approved to MIL-STD-883, received QML Space Level Certification in 2007. Providing high-quality testing solutions for both suppliers and customers alike, a Reliability testing lab with QML certification, archive, and analytical services was added. Rochester established its first U.S. Design and Technology office located in Rockville, MD in 2008. This team can replicate an original device with full support from the original device manufacturer. The result is a form, fit, and functional replacement guaranteed to the original datasheet performance. No software changes are required. A second team was added in 2016 located in Burnsville, MN specializing in Analog design capabilities. While broadening their product focused service solutions, they expanded their global reach and regional sales support, both physically and digitally. Rochester’s global sales headquarters is located on the Newburyport campus with their APAC headquarters in Singapore; Japan headquarters in Tokyo; and EMEA headquarters in St. Neots, UK. Branch sales offices are in Arizona, USA; Beijing, China; Shanghai, China; Chengdu,


Rochester’s most recent achievement is coming soon. They are working to receive IATF-16949 certification by the end of 2021 to better support the Automotive industry. In founding Rochester as the worlds’ first authorized distributor of EOL components, Curt Gerrish is respected as an industry pioneer. A lot has changed in 40 years, but not Rochester’s commitment to their customers and suppliers which remains stronger than ever.

Licensed Manufacturing

China; Shenzhen, China; Osaka, Japan; Ramonville SaintAgne, France; and Munich, Germany.

Rochester is focused on providing Authorized solutions to meet the ever-growing needs of the semiconductor industry anytime, around the globe, now and in the future — Rochester is here to keep your business moving!

________________________________________________________

In 2017, Rochester released version one of a web-based buying application. This has evolved to become an online customer experience platform with full e-commerce service and content supporting 11 different languages. This platform continues to transform and grow to meet the demands of customers around the world.

16 Malcolm Hoyt Drive Newburyport, MA 01950 Phone: +1.978.462.9332 email:sales@rocelec.com

WE KEEP YOUR BUSINESS MOVING. The world’s largest continuous source of semiconductors.

Authorized Distribution Manufacturing Services

Licensed Manufacturing


Congratulations to the 100 year milestone of the channel Our partnership This 100-year milestone for the channel also marks ebm-papst Inc.’s 30th anniversary with ECIA. ebmpapst first joined in June of 1991 when the association was called NEDA; NEDA and EIA ultimately merged and became what is now known as ECIA. Earlier this year ebm-papst also celebrated 40 years in business since it’s founder, Wes Roth incorporated the company in North America on July 20th, 1981.

With over 20,000 products, ebm-papst offers customized, energy-efficient and intelligent solutions for virtually any air movement and drive technology requirements in a wide range of markets including ventilation, air-conditioning and refrigeration, heating, automotive, IT, mechanical engineering, commercial and household appliances, intralogistics, medical engineering and more. Our distribution partners are vital Our distributors are an integral part of our organizational structure. We value the relationships we’ve developed over decades of working together, and recognize the strengths that each channel partner brings to our business and the industry as a whole.

1981-2021 A message from ebm-papst CEO and recently appointed Electronic Components Industry Association (ECIA) Board Chair-Elect, Mark Shiring on the invaluable presence of ECIA within the industry: “ECIA provides a forum to share ideas and develop solutions that enable member companies to improve their business environment. It is about educating and developing the people needed to serve this critical industry. I am honored to have been elected and look forward to collaborating on issues to improve the industry and markets we serve.” ebm-papst is the world market leader in fans and drives. Founded in 1963, this technology leader has set international market standards with its core competences in motor technology, electronics and aerodynamics.

ebm-papst Inc. compact fans, motors & drives. USA | 100 Hyde Road | Farmington, CT 06034 Phone + 1 860-674-1515 | www.ebmpapst.us sales@us.ebmpapst.com


Milestone celebration ebm-papst Inc. celebrates 40 year anniversary, 30 year partnership with ECIA. Below are images of ebm-papst Inc. over the past 40 years since incorporation in 1981.

Founder Wes Roth with early ebm-papst employees.

ebm-papst 110 Hyde road before expansions.

ebm-papst 100 Hyde road expansion started in 1998.

We started our second manufacturing location in September 2019. Two years later we are about to break ground on a new facility in Johnson City, TN


Chapter

08

TECHNOLOGY & THE CHANNEL’S MARKETING STRATEGIES The past went away. Marketing remained — changing its shape and delivery mechanisms — but sticking around because it must. That’s one way to look at the recent history of the electronics industry. The only constant has been the need for effective marketing strategies, a “must-have” in all economic segments. The advancements that have changed the structure of the electronics industry have been widespread and intrusive, disrupting every tier of the market. Anyone who has been asleep the last 20 years would be struck by the speed and intensity of the market’s evolution.

brands such as EBN, EE Times, Purchasing, Electronic News, EDN and others thoroughly and effectively chronicled technology and the electronics business. Many of these storied publications are mere skeletons of themselves. Or gone completely. Marketing adjusted to the landscape. The professional demographic that marketers

The inflection points are numerous. The great consolidation that swept through the distribution market starting in the 90s reduced the number of regional, national 119

and global distributors, leaving only a handful of mega-players. Trade publications serving the design and supply chain were also affected. In their heyday,

targeted evolved as OEM procurement teams required more engineering-savvy. But the biggest disruptor was the advent and rapid adoption of the web. It changed the nature of business and the people involved in transactions.

Channel consolidation Other inflection points quickly followed. The ranks of regional and specialized distributors thinned out as the bigger companies expanded services. The use of AI/ML data intelligence, design tools, aggregators, and marketplaces

The foundation of marketing… product catalog pages and open house/trade show in a tent (Hughes-Peters).

ELECTRONIC COMPONENT INDUSTRY EVOLUTION


surged alongside the swift emergence of China as a major and often dominant player in contract manufacturing. Through all of this, the need for effective marketing remained unchanged. How it is done, though, is a different issue. Distribution remains a people business. Behind every purchasing decision is an individual or group executing to a desired objective. It’s therefore important to remember that people buy things, companies don’t. How they buy is what matters and that is what marketing seeks to influence. Technology has been the most important transformational driver for marketing. Let’s explore this. Tech is what this industry is all about, and as odd as it may seem, it didn’t really change marketing until the 1980s. Prior to that, communicating to buyers was the main objective. It wasn’t all

that complicated, either. There were about 4 major media companies that totaled maybe 10 branding platforms (think publications) and maybe 6 trade shows/conferences that really mattered. Up to that point channel marketed to buyers (EBN being the first which launched in 1971). Engineering/design services began growing in importance as a marketing target in the late ‘80s and accelerated in the ‘90s.

The industry goes global Distribution models were forced to change. The market went from focusing on regional operations to national before going global. The lines between broadline distributors, specialty and catalog blurred quickly leaving companies with global and extended services (beyond inventory) as the

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Electronic Buyers News.

dominant players. This meant marketing needed to align more specifically to these efforts. Let’s go down memory lane a bit. Gone are the days of some of distribution’s most memorable campaigns; Best little Warehouse in Texas from TTI; Wyle wins the West; National Anthem (National Semi and the Japan wars); American by Design (Wyle & its U.S. semiconductor lines) and Future and TTI passive’s tit-fortat during extreme shortages. The race car circuit, mainly the Formula races, has been a venue for many distribution companies. Arrow and Mouser are among supporters, and

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Avnet used another sports arena — the 1984 Olympics — as a marketing opportunity. Electronics suppliers and distributors continue to showcase their engineering acumen and product breadth through initatives such as the SAM car (see sidebar, pg. 126). ”Mouser is very proud to once again team up with Molex to sponsor Vasser Sullivan,” said Todd McAtee, Mouser VP, Americas Business Development. “Indycar teams capitalize on the latest technologies to finetune performance and control on the tracks and this sponsorship reflects our collective commitment to best-in-class teamwork and performancedriven excellence.” Then, in the late ‘90s, the web

Samtec ad is an example of many manufacturers who shared their distributors list.

established its foothold as the most significant platform for marketing and communication. By the early 2000s, it had virtually eliminated print media

as a significant marketing tool. This forced media companies to move to digital publishing as rapidly as they could. This meant that media companies

The Mouser-Molex racing campaign is designed to attract engineers to their combined capabilities.

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had to clearly reestablish/ evolve their value to readers who subscribed to their digital content. In the mid-1990s – way ahead of its time — Marshall Industries made a prescient move to engage designers and engineers with content. Marshall launched the Education, News & Entertainment Network (ENEN) — the first electronics-centric platform to provide video, taped or live presentations. Marshall CEO Rob Rodin recognized the opportunity to bring a new medium to engineers and the electronics industry. With digital marketing none of the old metrics worked anymore. The ROI needed to be better and more accurately measured. Throughout late ‘90s and even today the value of digital marketing is still being evaluated as digital intelligence and data tools are being integrated into the tech-stacks of more progressive companies. The goal: understanding the user’s journey and engagement with suppliers’ digital efforts with new media like video, social media, virtual conferences etc.

Today there are probably more than 30 digital brands from about 10 media companies that address the electronics industry. Most are for engineering consumption; there isn’t a platform dedicated exclusively to purchasing or the supply chain anymore that is industry recognized as the goto. Industry news platforms such as EETimes, EBN, E-News and Electronic Business have been virtually displaced or eliminated by digital publishing, for example EPS News — the ability to generate content without the need for full[1] time beat reporters. Today, even suppliers have found themselves providing content in competition with media. It should also be noted that co-op marketing contribution between distribution and their suppliers is becoming extremely difficult, where the manufacturers are continually demanding more proof of ROI. Marketing today and for the near future will require lots of digital savvy. Analytics/business intelligence will continue to drive success for all marketers. Better understanding and identification

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The infamous EEM catalog filled with manufacturers component product pages took a strong engineer to move it from a library shelf. Fortunately CDRom versions started to be used, then the internet saved a lot of trees.

Standard co-op ad design with a good eye catching graphic, message and two logos.

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CO-OP MARKETING

of the “user’s” journey, along with developing personas to establish key triggers that can provide intent, will increase exponentially as companies digitally transform. Third-party media will have to continually advance community building. Adopting technology at a

The need to increase revenue by using marketing techniques became an essential part of being competitive in the 21st Century. The ability to develop a brand that resonates with your industry is a significant growth strategy.

Most distributor offices celebrated large orders with bells, whistles and in Flip Electronics case a gong. Fun and good for morale.

more rapid pace is critical for marketing communication, as is generating the critical user intelligence needed for distribution to continue serving its customers.

Community Engagement impacts nonprofits and employees As noted in the coop marketing sidebar Hamilton Avnet’s support of the Jerry Lewis

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Brand and product ads in the publications were the primary tactic from the early 20s through the mid- century. As manufacturers realized distributors Hamilton Avnet changed the narrative on were important branding by donating funds raised with clients and suppliers to the Jerry Lewis Telethon. Tony to their success in Hamilton with other executives presents check to Ed McMahon. local and regional areas (that they could not cover) their marketing began to emphasize their distributors. They strategically cooperated or co-op marketing ideas with distributors that inventoried their products, and they noted their customer service attributes. The fact the cost was spilt between the two was a win-win for everyone. If they had a good lead generation process in place that’s when rubber hit the road. The foundation tactic of distributors was printing line cards listing all their suppliers and promoted their capabilities in their areas and some in national publications. Suppliers would on the other hand list all their distributors adjacent to their ads. Suppliers goals were simple get: “share of mind” of distributor inside and outside sales personnel to feel comfortable to sell their products vs the competitors. Again creativity was king as suppliers provided everything needed from sample kits to polo

ELECTRONIC COMPONENT INDUSTRY EVOLUTION


shirts and held training during lunch with pizza as its carrot to formal training like Molex University in Lisle, Illinois. As time went on creativity was the name of the game as they started using direct mail, collaborated at trade shows, golf outings, award recognition, held sales promotions and trip incentives including hunting trips, cruises, President Clubs, Super Bowl programs for people who surpassed quotas. The key national in scope trade shows like Wescon, Electro and Nepcon West were utilized by a few distributors with suppliers. But open house and tent trade shows where all their lines had table top displays were usually more effective, especially in smaller cities and towns. Avnet took to the theory to the next level with X-Fest attracting thousands globally to see what Xilinx and others had to offer. At first purchasing personnel were the main targets but as noted in previous chapters engineering became the target audience.

TTI founder Paul Andrews shows who’s Top Gun in an ad.

Today video, webinars, community and public relations activities tied to social media have been added to the mix. Most distributors did not have a public relations executive or agency until the 90s. But they began to take it seriously when Avnet led with it vs advertising. Readers believed stories written by journalist vs ads.

Industry communications executive, Al Maag notes, “A few examples of that community/publicity creativity were exhibited by the two largest distributors. In 1984 Hamilton Avnet successfully marketed their brand with suppliers during the summer Olympics in their headquarter city, Los Angeles. Later in that decade they also hit the hearts of many supporting the Jerry Lewis Telethons. In the mid 2000s Avnet held the Tech Games for Arizona college students competing for scholarship funds in a decathlon setting. He continues, “Arrow’s ‘Five Years Out‘ is an outstanding theme that was shared using commercials on TV and movie theaters and even on stadium signage in Denver. But their biggest success in my opinion was creating a race car for a paralyzed driver. (See sidebar) The goodwill and publicity generated was priceless and made their team look like wizards that could solve any engineering problem.”

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Telethon was a stroke of genius to do good and get the branding goodwill of this first notable community relations program in 1984. Fortunately today most distributors have formal programs benefiting the headquarters’ cities to their sales offices. Some are strategic global initiatives. The better ones are organized by employees (not just the CEO’s pet project) to engage and endorse, suppliers and clients. For example, 2011 was the inaugural year of “Digi-Key Cares”, a corporate community outreach program with a mission to build a spirit of teamwork and community volunteerism, as well as an outward focus of care and concern for others in our community, including those less fortunate. The program today involves many fundraising events that allow employees to provide personal monetary contributions, in addition to providing similar financial matching opportunities to Digi-Key business partners. In addition and more importantly, the program provides

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employees and business partners with volunteering opportunities at several local charities, so all involved can directly experience the joy that comes from helping friends and neighbors who have needs. It’s an outstanding morale and team builder. Avnet Cares program started in Phoenix a few years earlier and grew globally. It has been a staple of its public relations and employee engagement program. TTI was an early sponsor of Women in Electronics in 1971. They began to formalize their outreach efforts in 2011 by supporting Susan B. Komen Foundation. Since then they

ELECTRONIC COMPONENT INDUSTRY EVOLUTION

have diversified helping Veterans, food banks, garnered toys, Boys and Girls Clubs, Habitat for Humanity and even a math contest. Recently Flip Electronics started their employee initiative and is garnering food and toys over the holidays. So old or new the campaigns are a win-win for our industry organizations.

TTI Susan B Komen support.

Avnets CEO Phil Gallagher with his catcher at the Miracle League in Scottsdale AZ. after throwing out “first pitch.”


ARROW INNOVATION AND PUBLIC RELATIONS WIN One of the best examples of positive PR was Arrow Electronics building a car allowing a paralyzed former racer to drive again. Sam Schmidt who had raced in 27 Indy Racing League events was diagnosed as a quadriplegic after a tragic accident prior to an Orlando race in 2000. After CEO Mike Long heard the of the issue, he challenged his engineering team to get Sam back in the driver’s seat in 2013. Challenge accepted and brilliantly executed with supplier support especially using cameras and sensors. They modified a 2014 Corvette C7 Stingray and Sam raced again May 18, 2014 at Indianapolis Motor Speedway – days away from the Indy 500. It was a media frenzy.

“I thought I never would feel this freedom again. In this project, I’ve learned anything is possible.” — Sam Schmidt Congratulations to Arrow on this historic effort that truly enhanced their brand not only in the tech field, but the world that was watching.

Sam Schmidt (left) and Mike Long

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SPOTLIGHT:

EDUCATION Education has always been important to the electronics distributor. In the early days it was mostly ad-hoc, but it has now grown into an important part of a distributor’s process. In the beginning most education was either product training provided by suppliers or internal training on the basics of electronics. A few distributors had begun to develop local relationships with a few colleges and universities, but it was spotty at best. Frankly, the industry’s profile on campus was very limited. As the industry started to grow rapidly during the 1980s it became apparent that distributors needed to expand their pool of talent beyond the tradition of stealing talent from competition and promoting salespeople out of the warehouse. Recognizing this the industry’s

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association, the National Electronic Distributors Association (NEDA), started its education foundation in 1984. Its purpose was to promote opportunities within the distribution industry on campus. Initially these endeavors were targeted toward a handful of universities that offered degrees in Industrial Distribution. Texas A&M was the largest in this field along with schools like Purdue, Clarkston, NebraskaKearney and a handful of others. NEDA created a program called Project Host that would invite instructors and students from these universities to its Executive Conference and its annual EDS trade show. These early activities paved the way for many distributors to develop relationships, start internship programs and to start hiring college graduates.

ELECTRONIC COMPONENT INDUSTRY EVOLUTION

Today these activities have expanded beyond just Industrial Distribution programs and include schools that offer Supply Chain Management, Business Management and Electrical Engineering degrees. Texas A&M actually offers a Master’s degree in Industrial Distribution (MID) with an enrollment of more than 100 annually. The education alliance didn’t stop there. In 2003 NEDA contracted with Texas A&M to do an in-depth research study on quantifying the value of distribution for both suppliers and customers. Distributors were being threatened by web-based competition, EMS companies and unauthorized brokers. The study was the largest research project done at this time on distribution and confirmed the significant value authorized distributors


2020 Industrial Distribution Class at Texas A&M.

provided their partners. Electronics distribution has matured over the years. Those companies that have survived the industry’s consolidation recognize the importance of well trained and educated employees. After merging with ECA in 2011 the new association, ECIA, reached an expanded audience of distributors, manufactures, and reps. An e-learning initiative will be open for all ECIA members and is poised to go on-

line in 2022 with an initial installment of five entrylevel industry courses. ECIA is also revisiting the Texas A&M study and adding the manufacturer-rep role to the analysis.

The industry continues to be one of the most exciting industries and is at the forefront of many global trends. How far a company grows may depend on the capability of its team in both experience and education.

The opportunities are no longer local or even regional — many companies now have global footprints that require a much broader understanding of the industry, and for that matter the world at large.

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Congratulations to our authorized channel partners on the 100 year milestone Littelfuse would like to congratulate the Electronic Components Industry Association on 100 years of dedicated service. Littelfuse traces its roots back to 1927 and its innovative founder, Edward V. Sundt. After graduating as an engineer in 1923, Sundt moved to Chicago, where he worked at General Electric and, later, Stewart-Warner. In working with lamps and vacuum tubes, he found that the test meters were repeatedly burning out during the testing process. Three years later, after experimenting for hours with a variety of test meters, Sundt developed and received a U.S. patent for a fastacting, protective fuse for use in sensitive test meters. Sundt wanted to call his new company producing these small fuses, “Little Fuse,” but wasn’t allowed to trademark two such common words. So, instead he went with the one-word, misspelled “Littelfuse.” A small advertisement placed in the popular Radio News magazine resulted in the company’s first order worth $1.10. This provided the start that was needed and soon demand for the innovative fuses started growing. Total sales in that first year reached $264. The company’s early work was hallmarked by the introduction of circuit protection technologies for the automotive, aviation, and communications industries. This foundation provided an opportunity for ongoing engineering innovation that led to circuit protection

solutions for other industries and end markets, such as fuses for television sets and eventually mission-critical, lifeprotecting, high-durability fuses to protect microcircuitry for NASA’s Gemini space program. Since these humble beginnings, Littelfuse product development experts have developed innovative products to solve complex challenges for its customers. The company’s business has grown and expanded over our 94-year history with the ever-evolving electrification and electronification of customer applications, increasing the complexity, and ultimately driving content opportunities for our products. Our product technologies are closely linked to sustainable applications such as electric vehicles and EV charging infrastructure, renewable energy and energy storage, and power management. Today, Littelfuse is an industrial technology manufacturing company empowering a sustainable, connected, and safer world. Across more than 15 countries, and with 12,000 global associates, we partner with customers to design and deliver innovative, reliable solutions. Serving over 100,000 end customers, our products are found in a variety of industrial, transportation, and electronics end markets— everywhere, every day. From the advent of radio and television communications and the support of space exploration efforts, to automotive circuit protection innovations and advancements in computer technologies, Littelfuse has a long and storied history at the forefront of the electronics component industry. _____________________________________________________________

From the advent of radio and television communications and the support of space exploration efforts, to automotive circuit protection innovations and advancements in computer technologies, Littelfuse has a long and storied history at the forefront of the electronics component industry.



WPG Americas Inc. We are thankful for our engagement with ECIA WPG Americas Inc. a member of WPG Holdings, the largest electronics distributor in Asia, is now one of the fastestgrowing electronics distributors in the United States. Founded in November 2007, WPG Americas is a global provider of Semiconductor, Passive, Electro-mechanical, Interconnect, and Embedded products, services, and solutions to the Big Data, Internet of Things (IoT), Digital Display/Digital Signage, and LED/Solid-State Lighting markets.

2012 - 2016 - Moved warehouse from NY to new state-of-the-art facility in Mississippi. - Storage segment established - New offices in New York, Boston, Chicago and Phoenix 2017 - 2021 - Intelligent Connectivity Solutions segment established - Creation of Business Development Team - Awarded Fastest Growing Micron Disti - Creation of WPGA’s Innovation Tech Center - Warehouse approved for FTZ status - Investment in CRM & Lead Management Tools - Free Trade Zone goes live - Micron’s Number 1 Distributor

WPGA’s Solutions Segments Today Embedded Computing

Leading edge connectivity technology, specifically for connectivity & human interface applications.

Lighting and Power

Complete lighting design solutions including custom power and systems integration. WPG Americas Inc. distribution center.

As a member of WPG Holdings, WPGA is uniquely positioned to support our industrial and commercial customers with our extensive supply chain offerings. stateside locations, and production fulfillment/manufacturing in Asia. WPGA has grown year-on-year by investing in resources and technology solutions that exceed our customers expectations. 2006 - 2009 Acquired Dynamic Embedded Solutions and Jaco Electronics 2010 - 2011 - Lighting Solutions segment established - Increased Engineering, Sales & Marketing resources in all US regions - Opened operations in Canada and Mexico

Storage

Leading edge memory storage technology, specifically for the Data Center. _____________________________________________________________ WEB www.wpgamericas.com Email inquiry@wpgamericas.com Tel 888.WPG.8881


Intelligent Connectivity

Lighting

Power

Embedded

Storage

WORKING TOGETHER TOWARDS YOUR TOTAL DESIGN SOLUTION From design to delivery, we harness the latest innovations from industry leaders and connect them with our leading-edge design engineers and supply chain services, offering a complete solution in support of your ideas. Our focused supplier linecards target specific application areas; from lighting and embedded displays, to power, storage and Intelligent Connectivity solutions. Great partnerships, even better results.

www.wpgamericas.com inquiry@wpgamericas.com 888.WPG.8881

Download Our Specialized Linecard Visit WPGA at www.wpgamericas.com


Chapter

09

WALL STREET’S VIEW OF THE CHANNEL For more than 30 years, I have enjoyed a front-row seat to the ever-changing world of technology, electronics manufacturing and supply chains, as both a journalist and industry analyst. The first 10 years were spent at Electronic Buyers’ News¸ then an influential trade weekly, where I eventually became editor in chief. For the last 20 years I’ve been an equity research analyst on Wall Street, covering stocks across the tech supply chain, including component suppliers, electronic manufacturing services (EMS) providers, hardware OEMs, and technology distributors and resellers. I have had the pleasure of interviewing many of the leading industry executives and thought leaders, visited

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manufacturing sites across Asia, Europe and North America, and attended countless industry trade shows and conferences.

What follows are personal observations on the evolution of electronics distribution and its role in the ever-evolving supply chain:

Throughout those years, against a backdrop of constant innovation and disruptive technologies, globalization and consolidation, I’ve witnessed new industries and companies emerge – some prosperously, others not so prosperously. I have seen best-in-class players consistently outperform peers in their respective markets, and once successful companies lose share or fail altogether, mainly because they didn’t embrace change, such as expanding into new markets and geographies, investing in core technologies, and staying ahead of customers’ needs.

• Consolidation creates just a handful of major global distributors, but smaller distributors should continue to play key roles in local, specialized markets. In the mid1990s, there were at least a dozen publicly traded U.S.-based electronics distributors, and several more in Europe. Most of them were acquired by Arrow Electronics or Avnet, including Marshall Industries, Kent Electronics, PioneerStandard, Nu Horizons and Memec, while others filed for bankruptcy protection (All American Semiconductor, Reptron) or simply exited

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distribution (Richardson). The inability to compete on a larger, global scale was a key reason the smaller distributors ended up selling. In addition, the decision by global semiconductor and other component suppliers to consolidate their own distribution channels put a squeeze on companies lacking a differentiated model. Still, there are many distribution companies not starting with the letter “A” that are thriving today, including TTI Inc.,, which focuses on IP&E, and a number of regional players around the globe. Another important segment are the so-called “catalog” distributors (Digi-Key, Mouser, Premier-Farnell, among others), which have successfully transitioned to an online world

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with a robust business model targeting design engineers on behalf of suppliers. And yes, there will still be regional players, particularly in North America, targeting industries with a still-strong U.S. manufacturing presence, including in military/ aerospace, medical and other complex industrial segments. Lastly, the so-called independent or non-franchised distributors, once derided as gray-market brokers lacking legitimacy, have grown to play a key role throughout business cycles, helping customers manage through supply shortages as well as market gluts. • The cyclical nature of electronics components is not going away, but distribution can play key role in helping smooth out cycles. Every few years, when semiconductor and related markets are marching higher amid strong end markets, there’s

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always a declaration from companies or market watchers that volatile boom-andbust component cycles are a thing of the past. Given the massive consolidation among suppliers, distributors and manufacturers, more diversified end markets, and more sophisticated IT systems to help manage orders and inventory, the notion makes sense. Yet here we are, in 2021, facing arguably the biggest supplydemand imbalance in 20 years, which has prompted a slew of companies up and down the supply chain to miss or cut forecasts due to shortages. And inevitably, when bookto-bill ratios are well above 1.5 and “double ordering” is rampant, inventory builds at some point. Although demand across most end markets remains strong, concerns about an eventual inventory correction remain valid, just as we saw similar scenarios

ELECTRONIC COMPONENT INDUSTRY EVOLUTION

play out in 2004, 2011, and 2019. What may be different this time is that a slew of industries running on “just-in-time” manufacturing and inventory management (automotive, datacom, consumer, industrial) begin to take a different approach, building buffer stocks. Whether this plays out, in the face of constant pressure from investors on returns on working capital and lean balance sheets, remains to be seen, but the role of distribution in this potential transition is vital. We are already seeing major global distributors play a bigger role in managing their customers’ supply chains, some on a consignment basis. And EMS companies, which were once considered the biggest threat to distribution, have learned that distributors play an important, complementary role. And if indeed OEMs adapt to a “just-in-case” strategy with buffer inventory in place, the question is


who will end up carrying and paying for that. • Globalization of tech creates opportunities, as well as margin pressure. The migration of manufacturing from North America and Europe to Asia started well more than 25 years ago, and distributors have had to keep up with that trend to be relevant to global suppliers and customers alike. Arrow, for instance, has seen its sales from North America decline from 46 percent of components revenue in 2005 to less than 30 percent today, while over that same period, sales in Asia grew from 10 percent of revenue to just under 50 percent. With that shift has come pressure on margins, since highermargin demand creation business is greater in North America and Europe. Gross margin at both Arrow and Avnet has declined roughly 200-300bp in the last 10+ years, In addition to geographic impact, one

can attribute some GM erosion to the ongoing consolidation of the semiconductor market, giving greater pricing leverage to the large remaining players (and in some cases reducing the demand-creation role of distribution, as we have seen with Texas Instruments). Still, operating margins at distributors we follow have remained relatively constant (4-5 percent range) due in part to much lower operating costs, stemming from operating leverage and efficiencies, aided by multiple restructurings. • Despite their still-vital role in the supply chain, distributors still get little respect from Wall Street. In the 20+ years I have following public electronics companies, we have seen many best-in-class players garner higher earnings multiples on consistent earnings performance, returns on invested capital, and capital allocation (these include

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Amphenol, Littelfuse, TE Connectivity). And in distribution, one could easily argue that, while margins remain under pressure and cyclicality a way of life, the remaining players (both public and private) have demonstrated significant improvements in cash flows, ROIC and capital deployed. Yet, looking at market multiples for the two remaining public companies (ARW and AVT), we have seen little change in the last 20 years, with both stocks trading at roughly 8-11x earnings (depending one where we are in the cycle). By comparison, the S&P 500 currently trades at 21x earnings. What gives? One concern we hear from investors is the continued threat that the big global semi suppliers will move demandcreation business away from the channel and do it themselves, a la the TI model. Our view is that, yes, a handful or larger suppliers, given the myriad online design tools and data sheets

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available to customers, will attempt to work more directly with customers. But we still believe distribution will play a key role in demand creation for most semiconductor and component suppliers, given the large base to serve, which could be extremely costly. At the same time, most OEM customers will continue to find distribution to be a much more efficient way to manage supply chains than working directly with hundreds of suppliers. Still, remaining players will need to continue making investments in engineering and design support to win the customer at the earliest stages of design.

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CHAPTER AUTHOR Matt Sheerin is a managing director and senior equity research analyst at Stifel Financial, where his coverage includes electronic component suppliers, EMS companies, tech distributors, and Matt Sheerin. hardware OEMs. Before making the move to Wall Street in 2000, Matt was a journalist for both daily newspapers and trade publications, including 10 years at Electronic Buyers’ News, where he was editor in chief. Matt can be reached at msheerin@stifel.com. Opinions expressed are subject to change without notice and do not take into account the particular investment objectives, financial situation or needs of individual investors. For more information and current disclosures for the companies discussed herein, please go to the research page at Stifel.com.

ELECTRONIC COMPONENT INDUSTRY EVOLUTION


YEAR

100

ANNIVERSARY

of the Distribution Channel

Congratulations to ECIA on this historic milestone.

Molex is proud to collaborate with ECIA members on industry advocacy, technical standards and other programs that enable electronics to create a better future.

Learn how we improve everyday lives at molex.com/creating-connections

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Cornell Dubilier Through the Years Most celebrate the diamond anniversary at 75 years for its tremendous milestone – there are no colors once you get to 100 years and beyond, so for Cornell Dubilier Electronics’ astounding 112-year-old anniversary, perhaps just send a card and well wishes. The company traces its roots back to two independent companies at the beginning of the last century. The first, Cornell Manufacturing Company, founded in 1909 by a proud Princeton University graduate Octave Blake. Blake, who came from a wealthy family, received $1 million from his father to start a manufacturing company. Concerned it might fail, as is often the fate of start-ups, and unwilling to tarnish the name of his alma mater, he named the company after college rival, Cornell. The company beat the odds and Blake merged his company with Dubilier Condenser and Radium Radio Co., which was started in 1919 by William Dubilier. Dubilier was a prolific inventor who would go on to hold more Octave Blake than 300 patents. He discovered that sheets of naturally occurring mica act as the dielectric in a capacitor. The mica capacitor – still sold by Cornell Dubilier and in use today – would be broadly used in early radio communications, especially on navy ships, because of its compact size and robust construction as compared with its predecessor, the Leyden jar. The merged company, formed in 1933, became Cornell Dubilier Electric Company. The company would go public and trade on the NYSE until its purchase by Federal Pacific Electric in the 1970s. Federal Pacific was acquired by Exxon, and became part of its Reliance Electric Unit. In 1986, when Exxon decided to sell the entire unit, Jim Kaplan purchased Cornell Dubilier Electronics and the company once again became independent.

www.americanradiohistory.com

CDE In The Modern Era Current CEO Jim Kaplan, whose father bought back the company, noted that with six plants and more than 1,000 employees, the company is focused on capacitors for power electronics applications. Its products can be found in UPS systems, wind and solar power, battery chargers, motor drives, welding, aerospace, and medical equipment. True to its roots, CDE’s current products are still in in shipboard capacitors – on radar systems, other radio communications and more. Notably, CDE products can be found in the Israeli Iron Dome air defense system that detects and intercepts incoming rockets on Israeli soil. CDE’s capacitors are in the radar system that determines where a rocket is going to land. It will map that out in less than a second. Now privately held, the company has a philosophy of hire smart people, and keep them. Through numerous downturns, CDE has not had layoffs, retaining good people with great experience – and points to this as a significant competitive advantage. Another competitive advantage is CDE’s ability to adapt to changing business dynamics, the ability to grow through innovation, new product introductions, as well as growth through acquisition, and its growth through the distribution channel. “The opportunities ahead are just enormous. We have a bright future – it’s competitive for sure, but the future is so exciting for power electronics, it’s a matter of seizing it,” says Kaplan.



Flip Electronics “Making Obsolescence Obsolete”

In July 2015, tech entrepreneur Jason Murphy founded Flip Electronics with his wife, Kasey, at their kitchen table. Jason came up with a strategy to support companies looking for a safe, effective way to procure obsolete components. He knew OEMs and CMs could not take chances on counterfeit parts and wanted to avoid the grey market at all costs. However, these companies could not afford to shut down their production lines due to sudden obsolescence notices on their profitable products. Who would have thought that filling a void in this niche would result in such explosive growth? The husband-and-wife team moved from their kitchen table to their first office in Roswell, Georgia in March 2016, hiring their first employee. By December 2016, the company reached $1 million in revenue, and their business began to snowball. In September 2017, they moved to a 12,000-square-foot office. Growth and change continue to be the norm at Flip, as the company is currently moving into a new 73,000-square-foot facility with over 40 employees and tracking revenues that will exceed $70M in 2021.

The company continues to increase its revenue and to add outstanding suppliers. Flip has become a very successful authorized distributor and ECIA member responsible for supplying stock and supporting EOL, excess, aged, and discontinued products. Data-driven decisions are the foundation of the company’s strategy to acquire inventory from semiconductor manufacturers who have discontinued it due to the constant demand for new products. Flip Electronics’ comprehensive knowledge of distribution and manufacturing enables clients to avoid the pitfalls of grey market purchasing. The company focuses on the outstanding quality of the products they supply without compromising customer service. They always remember that their goal is to be more than a vendor—it’s to become their client’s partner. Due to their extensive growth, Flip Electronics ranked 343 on the Inc. 5000 list in August 2020 and again was named to this exclusive list in 2021. In 2019 and 2020, Flip was named to the Georgia Fast Forty, recognizing the fastestgrowing companies across all businesses in Georgia. Flip was also recognized recently for its fast-growing sales results by Electronic Sourcing North America, ranking second in the sales growth category. The company was also ranked 43rd overall in the top 50 North American authorized distributors. Jason Murphy: “We found that a young company has its advantages when starting out. You are blessed with talented and passionate people who all want to flip the status quo of doing things. I’m so proud of everyone for implementing successful supply chain solutions along with nurturing supplier relationships and creating a corporate but family culture we can all take pride in.”

Flip Electronics CEO - Jason Murphy.

Semiconductor manufacturers took notice of this rapidly growing startup with a unique business model. In August 2018, Cypress Semiconductor formed an agreement with Flip Electronics to become their first authorized line. NXP became an authorized line in February of 2019, followed by IDT, Intersil, and Renesas in June. Recent supplier additions include Lattice Semiconductor, onsemi, and Silicon Labs.

www.flipelectronics.com 800-958-4578 info@flipelectronics.com



Chapter

10

THE FUTURE OF DISTRIBUTION risk profile of global supply chains and how companies measure their performance. Digitization, transparency and resilience can mitigate many of these risks, experts say. The channel, which already applies these solutions to varying degrees, will have to fully embrace them to excel in the future.

What’s changed? 2020 was supposed to be a banner year for the electronics industry with the 5G rollout and steady growth in IoT, cloud and edge computing that will power artificial intelligence and deep learning, autonomous driving, augmented and virtual reality, and a slew of other applications and technologies in the years to come. 143

Instead, we got the Covid-19 pandemic, and everything changed. For at least the past 20 years, companies have optimized supply chains to achieve efficiency, using year-overyear cost reduction as the metric for success. However, the Covid-19 pandemic, geopolitics and trade tensions, climate-related disasters and cybersecurity disruptions changed the

ELECTRONIC COMPONENT INDUSTRY EVOLUTION

Even prior to the pandemic, the supply chain was under pressure. The trade relationship between the world’s largest economies – China and the U.S.—had devolved into a series of tit-for-tat tariffs. Those measures escalated into an all-out trade war. Europe’s economy, already teetering from Brexit, stalled. Capital expenditures in the electronics market declined for the first time in decades. Distribution stepped up


during these events by mitigating the impact of tariffs; moving safety and electronics gear around the world; and supplying critical industries such as healthcare. However, there are no signs that things will get easier. 2021 debuted with a semiconductor shortage and has been riddled with logistics disruptions. There is a sense that there has been a fundamental shift in the way companies view the interconnected global economy. Covid-19 has been the catalyst for many companies to re-examine the structure and performance of their global supply networks which have embraced lean, just-in-time and build-toorder inventory practices. Look at the semiconductor shortage of 2021. The automotive industry, which had forecast lackluster post-

Covid demand, was caught by surprise when car orders surged. Car makers deal directly with chip suppliers that don’t carry on-hand inventory. Automotive OEMs, which haven’t widely engaged with distribution, scoured the world for chips and still had to close some operations. The shortage has since expanded to other vertical markets. One solution, according to experts, is for OEMs and EMS companies to carry critical inventory. Data-sharing amongst supply partners would need to be enhanced. Digitization provides the means and the analytics necessary for demand forecasts, inventory visibility, disruption reports and contingency planning. “What I’ve seen for the past 18 months is a validation that our systems work,” said Mike Morton, CEO of specialty

100 YEARS OF THE AUTHORIZED CHANNEL

distributor TTI Inc., which developed its own ERP/MRP and e-commerce systems. “We were able to make information available to people no matter where they were or what they needed.” “While inventory was always key to our success, so too was customer service, which was always at the center of our business philosophy,” said Ray Norton, former CEO of Sager Electronics. “There was a lot of MRO business [in the industry’s early days], but it was gradually evolving into production business, and by the 1970s, customers began ordering in larger quantities and scheduling deliveries over six months. The advent of new technologies, new ways of conducting business and new distribution methods forever changed the industry,” he said.

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The new normal The new normal is being built around some of the familiar issues – distributor/ supplier relationships; supply chain disruption and environmental/trade compliance — along with geopolitical, security and digital considerations. New technologies — 5G, IoT, artificial intelligence and machine learning that will drive growth in the electronics market will also be used to improve performance in the supply chain.

1. Geopolitical concerns The electronics industry has become a battlefield in the U.S.-China trade war. Tariffs that were levied in 2019 intended to change China’s habits regarding intellectual property and market access. China’s failure to acquiesce to U.S. pressure became a stark reminder of how much the relationship between the two countries has changed since China was admitted into the WTO in 2001.

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At that time China was a vibrant, developing electronics market and U.S. companies rushed to gain a foothold in the region. Chinese rules required partnerships with indigenous businesses so distributors and manufacturers formed alliances there. Those alliances allowed Chinese companies access to foreign IP. The first volley in the trade war was tariffs. Distributors, which ship and store inventory from warehouses around the globe, became instrumental in managing added costs. Some customers wanted tariffs handled as a pass-through expense. Others wanted a surcharge added to their bills of material. Yet others want tariffed products treated as individual line items. Distributors manage many of those details. There is still no standard for tariff assessment in the electronics supply chain.

2. Climate change and the environment The number and severity of extreme weather events

ELECTRONIC COMPONENT INDUSTRY EVOLUTION

is increasing due to rising CO2 in the atmosphere and oceans. The number of hurricanes in the Atlantic in 2020 hit a record high of 31. It was the fifth costliest hurricane season since data was first collected in 1851. A recent McKinsey report suggested companies can expect supply chain disruptions from extreme weather and other catastrophic events lasting a month or longer will occur every 3.7 years, with severe events taking a significant financial toll. That translates to about 45 percent of one year’s earnings could be lost each decade because of disruptions. The prospect of a warmer planet suggests an increase in the incidence and strength of severe weather events and supply chain disruptions, which requires a robust resilience plan for the entire supply chain. Electronics companies are designing and building products with sustainability in mind. This encompasses supply chain processes, logistics


and technologies that affect the environmental, social, economic and legal aspects of a supply chain’s components. For distributors, this means everything from adhering to their suppliers’ and customers’ sustainability goals to smart warehouses, biodegradable shipping supplies, “green” facilities and reducing carbon footprints.

3. Digitization and cybersecurity China and some of its indigenous companies have been deemed a security threat by the United States. In April 2021, the Biden Administration issued an intelligence report stating that China poses the biggest threat to the U.S. from its push for “global power.” The report warned that cyberattacks from China could disrupt and disable infrastructure. By August, there were two known ransomware attacks impacting U.S. supply chains.

As the pace of digitization accelerates with the proliferation of IoT devices and the rollout of 5G, cybersecurity will undoubtedly become an even more critical issue for national security, business continuity, and the integrity of supply chain networks. It is common practice for cybercriminals to target the weakest link in the supply chain as a way to gain access to more cyber-mature supply chain members, including tier-1 suppliers and OEMs, according to research conducted by the National Institute for Science and Technology (NIST). Identifying, assessing, and mitigating cyber supply chain risks is critical to ensure business continuity and resilience, requiring close collaboration with key suppliers. Digitization has multiple security applications: maintaining the provenance of components; updating trade and shipping information and providing real-time information on supply chain disruption. Artificial intelligence and

100 YEARS OF THE AUTHORIZED CHANNEL

machine learning will automate many of these tasks and provide predictive analytics. Digitization can also deliver significant benefits to efficiency and transparency that are yet to be fully realized, according to consultancy McKinsey. Centralized “control tower” systems, for example, provide a company-wide view across geographies and products. They integrate real-time data, from inventory levels to road delays and weather forecasts, for manufacturing sites and supply-chain partners. When a problem occurs, the system can run scenarios to identify the most effective solution. “I see connectivity moving up and to the right,” said former Marshall CEO Rob Rodin, “and it’s all intelligent connectivity using machine learning, artificial intelligence and data extraction. But technology has to be combined with people.”

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Distributors are utilizing connectivity to engage with customers they normally don’t call on. They provide online design tools for engineers and provide suites of products and services for hobbyists, labs and the DIY community. They’ve also built engineering communities – one of the earliest was Newark’s element14 — for peer-topeer advice and support.

to manage global supply chains. Again, distributors play a leading role here. They carry inventory. Based on their shipping volumes they are important customers to carriers and can leverage those relationships. Their warehouses span all major regions – the Americas, EMEA and Asia-Pacific—so responses can be managed locally or internationally.

4. Random shocks

5. Supplier relationships

Unrelated to Covid-19, geopolitics, security, and climate change, there are random disasters waiting to happen. A recent example is the Ever Given incident in the Suez Canal in March 2021. The massive super-sized cargo ship got stuck in the Suez Canal for six days, costing billions in late shipments of goods from Asia to Europe and the Americas.

Supplier-distributor relationships have always been tricky. In the 1980s, certain U.S. suppliers would refuse to share a distributor’s shelf with a Japanese counterpart. Chipmakers, at that time, dwarfed their distributors in terms of size and market clout. They would threaten to terminate a distributor if it added a Japanese or Asian line.

While impossible to predict or plan for, dealing with these random shocks needs to be factored into rapid-response planning

Arrow Electronics tried, at one time, to provide DRAM to customers made by Samsung, recalled former CEO Steve Kaufman. The

ELECTRONIC COMPONENT INDUSTRY EVOLUTION

backlash was so severe that Arrow terminated the Samsung deal within weeks. “I thought it as time to drop the shelf-sharing rule,” Kaufman said. “I guess I was still a bit naive.” One semiconductor company pulled Arrow’s franchise from six U.S. cities anyway. Many of those chipmakers have now spun off into separate and specialized businesses and top-tier distributors far outsize them. Suppliers are still calling the shots, but distributors are using leverage to their advantage. When Texas Instruments exited demand-creation and then reduced its fulfillment network it consolidated under a single global distributor. When Analog Devices acquired Linear Technology it named Arrow as its sole distributor. Broadcom expanded its relationship with Avnet following its merger with Avago. At the same time, the sheer size of these distributors means many component


lines – and customers — don’t get all the support they need. Local, regional and specialty distributors fill that gap and provide high levels of service to their customer base. Distributors have also developed suites of online services to engage hobbyists, labs and the DIY customers that are a growing force in the electronics market. Digitization, transparency and resilience all require closer supplier-distributor relationships. Supply partners may need to strike a balance between justin-time and “just-in-case,” according to McKinsey. Having a sufficient quantity of key parts and safety stock is a buffer that can minimize the financial impact of disrupted supplies. It also positions companies to meet sudden spikes in demand.

Toward supply chain resilience Recent research suggests that flexible and resilient supply chains can deliver more than productivity improvement: They can

generate new value and profitable growth in the long term. Building supply chain resilience, according to McKinsey, requires transparency, strengthening risk management capabilities, redundancy in supplier and transportation networks, and holding more inventory. Designers can reduce product complexity so projects can be easily transferred across manufacturing sites. Preparing for future disruptions has a present-day cost, the consultancy notes. But these investments pay dividends over time by not only minimizing losses but improving digital capabilities, boosting productivity and strengthening industry ecosystems. It’s a win-win for the supply chain and the customer. At its core, distribution is about relationships. The names might have

100 YEARS OF THE AUTHORIZED CHANNEL

changed – the founders who pioneered the industry—the Hamiltons, Bells, Schwebers, Marshalls and Cramers—have been replaced by corporate monikers. They took risks, as did the Leeds family which established the first distribution newspaper – Electronic Buyers News – John Woodstock, who started Woodstock Wire in April 2001 and Ed Walter, who reported on the industry for Electronics Distributor. Tony Hamilton was the consummate salesman who showed up in his Culver City facility in a tank to promote a new military line to a more reserved Robert Miller. Innovative leaders like Paul Andrews, Steve Kaufman, Roy Vallee and Rob Rodin made the channel exciting. Who will continue to add flair, diversity, and corporate sustainability? Let’s not wait a 100 years to reflect, let’s check periodically and see.

148


Newark, An Early Pioneer in the Channel and Marketing From humble beginnings, an iconic brand Founder Sam Poncher started the company in 1927 as a small shop in Chicago that sold radio parts to radio enthusiasts. The name Newark pays homage to Newark, New Jersey, the site of the United States’ first and most powerful radio transmitter. The company published its first iconic catalog in 1948. Often called “The Bible of the Industry,” Newark could be counted on to have the latest and widest variety of electronic components available through any distributor. Its data and spec sheets were meticulous and up to date. Designers at electronics companies would often “steal” the catalog from one another to have access to information on the newest innovations in electronics. Newark catalog pages would become so dogeared and marked-up with use, the release of a new catalog was greeted with great anticipation.

Global access, with service close to home Newark has operations in the US, Canada, and Mexico, serviced from a regional distribution hub in Gaffney, South Carolina, and a new state-of-the-art warehouse in Leeds, UK. As part of Avnet Corporation, Newark has evolved into one of the world’s leading multi-channel electronics distributors, with a robust digital presence as well as a trained, knowledgeable technical support team.

Founder Sam Poncher.

The Newark Catalog 120

Although catalog distribution is different than it used to be – catalogs are largely online now; components are researched, datasheets are downloaded from the Internet, and components can be delivered overnight – the fundamentals are the same. Purchasers of electronic components want a vast array of products to choose from. They want in-depth technical content. They want a partner that knows the components they sell, and they want the correct order to arrive when it’s promised. Customers are willing to pay a premium for these services.

A commitment to innovation Along with its parent company, Avnet, Newark has a long history of innovation. They’ve developed many industry firsts that save time and increase productivity – like the first online community for engineers, leadership in stocking RoHS components, a nationwide network of local sales offices, customizable online catalog, and the exclusive distributor of the Raspberry Pi single board computer.

The Raspberry Pi Compute Module


Why Choose Us? Access millions of electronics products from 600+ world class suppliers n Global resources with operations in 35 different countries n Personalized customer service and technical support from a team of industry experts n Value added services such as: stockroom solutions, custom components and enclosures, kitting, and more n Market-leading online community with over 600,000 engineers n

Call us for a quote on large or small orders, or email quote@newark.com SHOP THE WAY YOU PREFER

EPROCUREMENT SYSTEMS

Website: newark.com Email: order@newark.com / quote@newark.com Phone: 1 800 463 9275 M-F 7:00 a.m. – 8:00 p.m. (EST) Fax: 1 480 308 1687 Technical Support: Go online for live technical support or call 1 877 736 4835 Community: element14.com

We can link with any eProcurement system, and our dedicated e-team will facilitate your implementation. Email: eproc@newark.com NO MINIMUM ORDER FEES

SHIPPING Domestic: Order M-F by 9:30 p.m. (EST) Export: Order M-F by 6:00 p.m. (EST)

YOU CAN FIND US AT…

In-stock products normally ship the same day

GLOBAL REACH, LOCAL RESOURCES

newark.com • 1 800 463 9275

n n n

Millions of products, 800,000 in stock Supporting 48 websites in 35 languages Authorized distributor for 3000+ brands globally


Approaching 40 years in business A proud representative in the technology industry As we approach our 40th year in business, Crowley Associates has provided exceptional representation to our manufacturers, distribution channels, and our valued customers. We are an innovative, professional sales and marketing organization that work closely with our customers to make their designs a reality. Crowley’s manufacturer partners are the best-in-class suppliers of electromechanical, interconnect, passive, power, semiconductor, and thermal products. Together, we evolve with changing technologies, and cultivate a collaborative and engaging environment. We enable our manufacturers access to customers, distribution channels and contract manufacturers in our geographical markets. We take pride in our longstanding relationships, understanding of each customer’s needs, superior technical sales teams, digital transformation and innovation marketing tools, and most importantly our reputation.

The leadership of Alan Ahern, Kevin Ahern, Tim Shannon, Sue Breault and Rich Bouchard all focus on different aspects of the business; and come together to jointly make key strategic decisions for Crowley’s continued path forward. Each partner continues to be actively engaged with strategic customers and hold a keen touch with the ever-changing business dynamics. We also give back to our industry. Crowley Associates is a purposeful member of the Electronic Components Industry Association. Crowley is active with several key ECIA initiatives. Currently, Alan Ahern is the chair of the Independent Manufacturer Rep Council and is the Manufacturer’s Rep Director on the Board. Each day, the management team stands committed to the true value of our employees, empower them to develop their diverse talents and encourage a collaborative environment where self-motivated people thrive. In turn, they strive to be the very best at what we do, both in the eyes of our customers and our partners. We are truly a team in every sense. We believe in each other and support one another as we all work collectively toward a common goal. As we reflect on our continued success, what will our legacy be on our industry’s 100th year? We are a truly unique enterprise because of the way we were formed and what we value. We believe mutual success is not just measured in dollars. We want to make a difference by connecting with our manufacturers, customers and distribution partners through the power of our relationships and market knowledge. _________________________________________________________________

We look forward to hearing from you. 603-673-7050

Commitment To Excellence Our company invests in the latest technologies. Crowley’s advanced data analytic tools allows us to increase customer retention while identifying new emerging businesses and markets. Our proven digital marketing techniques are key components to our success. The management team, each having over 30 years of tenure, remains true to our history, knowledge, relationships, core values, culture and vision.



PEI-Genesis: Celebrating 75 Years 1946 - 1961: PEI-Genesis, a global leader in the design and assembly of custom engineered interconnect solutions was established in 1946 by two best friends Murray Fisher and Bernie Bernbaum. The year 2021, marks PEI-Genesis’s 75th anniversary. PEI-Genesis remains a privately owned company steeped in the same traditions and family values set forth by its founders. Throughout its evolution, the company’s product solutions have changed, yet the mission remains the same – to be a Trusted Advisor and solve customers’ problems Murray was born in 1911 in Scranton, Pennsylvania, while Bernie was born in 1914 in Bronx, New York. The two met in the Bronx and became lifelong friends. They shared not only a friendship but an interest in the emerging technology of electronics that went on to shape both their lives and the lives of thousands of people who have worked for the company they established 75 years ago.

engineer for Philco Radio at the Philadelphia Naval Shipyard. By this time, Bernie had his electrical engineering degree, and this technical expertise would be crucial to the partnership that Murray and Bernie would form after the war ended. After Murray was discharged from the US Army, the two men reunited again in Philadelphia and decided to use their love of electronics to form a partnership and take advantage of the demand for electronics after the war by purchasing surplus components from the Army. At this time, tubes and test equipment were in short supply, and most major cities, including Philadelphia and New York, had an area referred to as “Radio Row,” an urban district specializing in the sale of radio and electronic equipment. In 1946, the partners purchased a small company known as Lectronic Research Laboratories. LRL, as it was known, specialized as a wholesale and warehouse business for vacuum tubes and test equipment. They also started Lectronic Distributors to serve as their storefront to sell directly to engineers on Radio Row in Philadelphia. Murray’s wife, Millie, played an integral role in the business. She typed and organized the first catalog of tubes and electronic equipment that LRL offered to their customers. This catalog and others like it became a marketing device to customers around the world who wanted a source for hardto-find tubes and test equipment. In 1948 they bought a small company called Reliance Merchandizing, specializing in resistors and capacitors. Through multiple acquisitions and product expansions, the products they sold became the leading-edge technology of the time, which allowed them to achieve both national and local sales.

PEI-Genesis founders, Murray Fisher and Bernie Bernbaum.

The two partners formed their first business, NEO Radio, in 1930. They established this business to repair radios which were the primary means of communication at that time, and gave the two friends their first taste of being partners in an electronic-based enterprise. When World War II arrived, Murray served in the United States Army as a sergeant and radio repair specialist. Bernie had a defense job that required him to move to Philadelphia, Pennsylvania, where he worked as an

1961-1986: Beginning in 1961, PEI-Genesis entered a new phase of development. Murray and Bernie acquired Philadelphia Electronics, Inc., a distributor that sold all types of electronic components, including connectors from ITT Cannon. This is where the “PEI” in “PEI-Genesis” originated. By acquiring Philadelphia Electronics Inc., the partners were now able to source components directly from manufacturers such as ITT Cannon and Amphenol. It also meant that they


had greater access to sell to traditional Original Equipment Manufacturers (OEMs). At this point, PEI-Genesis provided a source of components for all kinds of customers, primarily in the Mid-Atlantic United States, serving customers in Pennsylvania, New Jersey, and Delaware. In 1973, Steven Fisher, Murray’s son, joined PEI-Genesis as the electronics industry was rapidly evolving with new technologies. Companies began to specialize in specific products; some chose to specialize in semiconductors or resistors and capacitors, while others only sold relays and wire. It was during this time that PEI-Genesis decided to specialize in connectors. PEI-Genesis AS9100D and ISO 9001:2015 certified manufacturing facility located in South Bend, Indiana, USA.

1986-2000: PEI-Genesis pushed the boundaries of specialization by laying the groundwork for a concept that is still crucial to the organization today – being a Trusted Advisor for its customers. This was accomplished by internal training for PEI-Genesis’s connector experts and developing a historic connector catalog that became a standard in the industry. Steven Fisher

In 1977, PEI-Genesis’s relationship with ITT Cannon was upgraded to a full value-added distributor. This was truly the beginning of the next phase of the company as a connector specialist. PEI-Genesis became better at the art of connectors in terms of assembly, product knowledge, inventory, and identity in the marketplace. In 1986, PEI-Genesis acquired another ITT Cannon valueadd distributor named Genesis Electronics, an ITT Cannon distributor since 1955. Genesis had a state-of-the-art factory in South Bend, Indiana, and was adept in valueadd connectors. Philadelphia Electronics Inc. and Genesis Electronics merged and formed PEI-Genesis, which created a single factory in South Bend that currently is the leading value-add facility of its kind in the world. This acquisition made PEI-Genesis a leading specialist in value-add connectors for industrial and military applications.

Over the next decade and a half, PEI-Genesis expanded across the United States and Canada with the openings of several sales branches to better serve its growing customer base. At this time, the company simplified its product line to connectors and connector accessories, with the goal of having the deepest and broadest offering in the world. After streamlining its product line, PEI-Genesis focused on developing one of the best assembly facilities in the world, located in South Bend, Indiana. Today, PEI-Genesis assembles 70 percent of its products and is considered the premier assembler of connectors globally. In 1994, PEI-Genesis created the first Harsh Environment Catalog, which would change the way connectors were sold and played an integral part in the industry recognition of the company. This catalog revolutionized how engineers searched for solutions, as it could be searched by the features of the connector


solution one was seeking, opposed to an engineer browsing through dozens of manufacturer catalogs.

2001-2021 and the Next 75 Years: Throughout the 2000s PEI-Genesis continued its expansion and opened new sales branches in Germany, Florida, Maryland, France, Italy, Mexico, Israel, India, and most recently Singapore. In 2008, PEI-Genesis opened a manufacturing facility in Southampton, United Kingdom, and another in 2015 located in Zhuhai, China.

As PEI-Genesis looks toward the next 75 years, innovation and customer service remain core objectives. PEI-Genesis will continue to be guided by its foundational values and be a Trusted Advisor to its customers. Thank you for celebrating with us! __________________________________________________________ To contact PEI-Genesis for more information, please call 215-673-0400 or email sales@peigenesis.com

During this same time, PEI-Genesis also expanded its product offerings by becoming a franchised distributor for key manufacturers including Amphenol, TE Connectivity, Souriau by Eaton, FΩilConn, Positronic, Conesys, Cinch, HARTING, LEMO, and many more. As of 2021, PEI-Genesis has over 12 sales branch locations, 3 global manufacturing facilities, and an extensive product line card of industry-leading connector brands.

PEI-Genesis celebrates 75 years of being the industry’s trusted advisors and solving our customers’ connector problems. Please visit us via the QR code or at www.peigenesis.com to learn more about our history.


The days of customers picking up parts at distributor stores like Marsh are long gone.


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10/17/96

Omron Electronic Components LLC

IL

Manf.

1/1/73

10/17/96

ITW ECS Lumex

IL

Manf.

1/1/80

10/24/96

RAF Electronic Hardware

CT

Manf.

1/1/75

5/14/97

Carlton-Bates Company

AR

Dist.

1/1/57

8/18/97

Phoenix Contact

PA

Manf.

2/17/98

Harting, Inc. of North America

IL

Manf.

9/28/98

BJG Electronics, Inc.

NY

Dist.

6/21/99

Omni Pro Electronics, Inc.

TX

Dist.

8/12/99

Hirose Electric USA

IL

Manf.

10/4/99

ON Semiconductor

AZ

Manf.

10/4/99

ITT Cannon LLC

CA

Manf.

10/27/99

Rochester Electronics

MA

Dist.

1/1/81

2/25/00

Ohmite Manufacturing Co.

IL

Manf.

3/13/00

Heilind Electronics Inc.

MA

Dist.

6/7/00

IBS Electronics, Inc.

CA

Dist.

7/27/00

Symmetry Electronics Corp.

CA

Dist.

1/1/98

9/27/01

Triad Magnetics

CA

Manf.

1/1/48

8/18/03

3M Electronics

TX

Manf.

1/28/04

IBM Corp.

NY

Manf.

1/1/11

2/2/04

Knight Electronics/Orion Fans

TX

Manf.

9/28/04

Laird Performance Materials a DuPont business

MO

Manf.

5/11/05

JRH Electronics, Inc.

NJ

Dist.

1/1/92

5/16/05

Electro Enterprises, Inc.

OK

Dist.

6/28/05

TDK-Lambda Americas

CA

Manf.

10/23/06

Area51-ESG, Inc.

CA

Dist.

2/20/07

Sanyo Denki America

CA

Manf.

8/6/07

PCX, Inc.

CA

Dist.

10/31/07

Kreger Components, Inc.

VA

Dist.

2/28/08

ELECTRONIC COMPONENT INDUSTRY EVOLUTION


JO IN ED

DE D UN

5/19/08

TDK Corporation of America

IL

Keystone Electronics Corp.

NY

Manf.

1/1/46

5/22/08

Westmark Electronics, Inc.

WA

Cornell Dubilier Electronics, Inc.

SC

Manf.

11/20/08

Victory Sales

IL

NAC Semi

FL

Dist.

1/1/08

5/27/09

Catalyst Unity Solutions

Fischer Connectors, Inc.

GA

Manf.

7/2/09

ArKco Sales, Inc.

Fair-Rite Products Corporation

NY

Manf.

1/1/56

10/19/09

Mornsun America, LLC

MA

Manf.

7/20/12

Sensata Technologies, Inc.

TX

Manf.

11/2/09

SMD Inc.

CA

Dist.

7/20/12

VCC

CA

Manf.

2/19/10

METZ CONNECT USA Inc.

NJ

Manf.

8/7/12

CUI Inc.

OR

Manf.

1/1/89

5/7/10

IRI

IL

Manf. Rep

9/4/12

Interstate Connecting Components

NJ

Dist.

1/1/85

7/20/10

Harwin

NH

Manf.

1/1/52

12/13/12

Dove Electronic Components, Inc.

NY

Dist.

1/1/83

7/30/10

MacInnis Group

MA

Manf. Rep

12/23/12

Micro Commercial Components (MCC)

CA

Manf.

1/3/11

East Coast Microwave Distributors, Inc.

MA

Dist.

1/1/89

1/8/13

Bud Industries, Inc.

OH

Manf.

1/1/28

1/4/11

DB LECTRO Inc.

Dist.

1/14/13

Presidio Components, Inc.

CA

Manf.

1/18/11

Tech-Trek Ltd.

ON

Manf. Rep

4/1/13

TX

Manf.

CO

CO

DA TE

FO

Manf.

TY P

MA

Memphis Electronic, Inc.

DA TE

E

CA TI ON

C&K Components

LO

3/6/08

M

DA TE

PA N

Y

JO IN ED

DE D UN FO 1/1/46

TY P Manf.

LO

DA TE

E

CA TI ON

Y PA N

CA

M LEMO USA, Inc.

1/1/91

4/23/12

Manf.

5/25/12

Manf. Rep

6/8/12

Manf. Rep

6/19/12

PA

Manf. Rep

6/26/12

MN

Manf. Rep

6/27/12

HolyStone

CA

Manf.

1/19/11

Fuses Unlimited

CA

Dist.

5/3/13

Coakley, Boyd & Abbett, Inc.

MA

Manf. Rep

1/26/11

New Yorker Electronics Co., Inc.

NJ

Dist.

7/22/13

Kruvand Associates

TX

Manf. Rep

1/1/71

1/28/11

Microwave Components Inc.

FL

Dist.

8/16/13

O’Donnell Associates North, Inc.

CA

Manf. Rep

1/1/63

2/3/11

Electroshield, Inc.

OH

Dist.

8/21/13

Brainard-Nielsen Marketing

IL

Manf. Rep

1/1/78

2/7/11

Chris Electronics Distributors Inc.

MN

Dist.

10/8/13

Mel Foster Company

MN

Manf. Rep

2/7/11

Hughes-Peters

OH

Dist.

10/8/13

Stackpole Electronics, Inc.

NC

Manf.

2/17/11

Logix Sales & Marketing, Inc.

TX

Manf. Rep

10/14/13

Harper & Two

CA

Manf. Rep

2/22/11

CK Associates

CA

Manf. Rep

10/28/13

CO

Manf.Rep

11/11/13

Schuster Electronics, Inc.

OH

Dist.

2/23/11

AKI GIBB

TDK Electronics, Inc.

NJ

Manf.

4/4/11

Hanna Lind

MN

Manf. Rep

1/3/14

Infinite Electronics, Inc.

CA

Manf.

3/18/14

Industrial Electronics Inc.

TN

Dist.

4/15/11

RECOM Power, Inc.

CO

Manf.

1/1/06

4/18/11

Insulation Supply Co.

CA

Dist.

4/18/14

English Technical Sales Co., Inc.

CA

Manf. Rep

6/27/14

PUI Audio, Inc.

OH

Manf.

4/25/11

AEM Group

AL

Manf. Rep

5/6/11

Beyond Components

MA

Dist.

8/4/14

TX

Dist.

8/18/14

Manf. Rep

10/8/14

CFE-MacInnis Technology Group, LLC

NY

Manf. Rep

6/9/11

Rutronik Inc.

Millennium Alliance

OH

Manf. Rep

6/21/11

Control Sales

IL

Panasonic

NJ

Manf.

8/8/11

Simcona Electronics

NY

Dist.

1/22/15

8/16/11

Kensington Electronics, Inc.

TX

Dist.

1/1/89

2/13/15

8/23/11

Recht Associates

CA

Manf.Rep

2/20/15

CT

Manf.

4/1/15

Luscombe Engineering

CA

Manf. Rep

Crowley Associates

NH

Manf. Rep

1/1/84

Spectrum Marketing Associates, Inc.

AZ

Manf. Rep

10/21/11

Carling Technologies, Inc.

Quail Electronics, Inc.

CA

Dist.

1/20/12

CA

Manf.Rep

5/13/15

EAO Corporation

CT

Manf.

2/7/12

Luscombe Engineering Company of San Francisco

Air Electro, Inc.

CA

Dist.

BlockMaster Electronics

IL

Manf.

6/18/15

Venkel, Ltd.

TX

Manf.

2/13/12 —

2/15/12

Brandel-Stephens & Co.

FL

Manf. Rep

6/29/15

SL Power Electronics

CA

Manf.

8/3/15

Abracon Corporation

TX

Manf.

2/16/12

Onlinecomponents.com

AZ

Dist.

1/1/99

2/29/12

Electronic Salesmasters Inc.

OH

Manf. Rep

8/18/15

WPG Americas, Inc.

CA

Dist.

1/1/07

3/6/12

Digi International

MN

Manf.

10/2/15

Advantek

MN

Manf.

4/9/12

Sensirion

IL

Manf.

10/6/15

100 YEARS OF THE AUTHORIZED CHANNEL

158


Stan Clothier Company

MN

Manf. Rep

JO IN ED

DA TE

DA TE

E

FO

UN

DE D

10/12/15

TY P

Y PA N

CA TI ON LO

CO

M

CO

Manf.

JO IN ED

UN

KS

DA TE

FO DA TE

E

TY P

CA TI ON

ECS Inc. International

M

LO

PA N

Y

DE D

ECIA MEMBERS LIST - CONTINUED 9/12/18

Tamura Corp Of America

CA

Manf.

12/2/15

Johnson Company Mfg Reps

MN

Manf. Rep

9/25/18

Dialight Corp.

NJ

Manf.

1/1/38

1/10/16

Thorson Rocky Mountain

CO

Manf. Rep

10/3/18

E-Switch, Inc.

MN

Manf.

10/8/18

All Tech Electronics

NY

Dist.

1/1/93

1/22/16

Crouzet North America

TX

Manf.

2/1/16

March Electronics

NY

Dist.

10/18/18

Fralia Company & Associates

TX

Manf. Rep

8/29/01

2/4/16

Analog Devices, Inc.

MA

Manf.

1/1/65

11/29/18

Pulse Electronics

CA

Manf.

2/24/16

NorComp

NC

Manf.

12/18/18

Relay Specialties, Inc.

NJ

Dist.

3/14/16

RSI, Inc.

TX

Dist.

12/20/18

World Micro, Inc.

GA

Dist.

3/22/16

Dy-Tronix, Inc.

MO

Manf.Rep

1/31/19

Arcadian, Inc.

NJ

Dist.

1/1/00

3/25/16

Powertech Controls

NY

Dist.

3/8/19

Masline Electronics Inc.

NY

Dist.

5/12/16

Cinch Connectivity Solutions

MN

Manf.

3/11/19

RS Components

Dist.

7/28/16

Nexperia USA Inc.

NC

Manf.

3/14/19

Walker Industrial Products

CT

Dist.

8/1/16

HHP Associates, Inc.

FL

Manf. Rep

4/12/19

Empire Technical Associates

NY

Manf. Rep

8/29/16

GMA Incorporated

ON

Manf. Rep

10/9/16

Ferrari Technical Sales

CA

Manf. Rep

10/11/16

Carlo Gavazzi Inc.

IL

Manf.

11/29/16

Sumida America Components, Inc.

IL

Manf.

1/1/99

12/6/16

Electroswitch Electronic Products

NC

Manf.

1/1/86

1/9/17

Electro Mark, Inc.

MN

Manf. Rep

1/20/17

BTC Electronics

NC

Dist.

1/24/17

Sorenson Lighted Controls (SOLICO)

CT

Manf.

1/27/17

Bridge Marketing

CA

Manf. Rep

3/9/17

CR Magnetics, Inc.

MO

Manf.

3/9/17

TSC America, Inc.

CA

Manf.

3/22/17

Bulgin

CA

Manf.

4/4/17

RFMW

CA

Dist.

5/11/17

Avia-Dynamics Corp.

CA

Dist.

8/11/17

Hongfa America, Inc.

CA

Manf.

9/28/17

Laird Thermal Systems

NC

Manf.

6/7/19

Mogultech International Ltd.

Dist.

6/26/19

Sunlord Electronics USA, Inc.

CA

Manf.

7/18/19

ION Associates

TX

Manf. Rep

7/25/19

Flip Electronics

GA

Dist.

7/30/19

NexGen Micro Electronics LLC

CA

Dist.

7/30/19

CSC Sygnum

ON

Manf. Rep

10/17/19

Walsin Technology Corporation

Manf.

10/25/19

CUI Devices

OR

Manf.

12/20/19

Gemini Components LLC

NJ

Dist.

5/19/20

Adaptsys Group

Manf.

6/10/20

SHOEI Chemical Inc.

AL

Manf.

6/18/20

Air Cost Control US, LLC

FL

Dist.

7/14/20

nVent SCHROFF

RI

Manf.

7/17/20

TWS Technolgy LTD

Manf.

9/10/20

VPG Foil Resistors

Manf.

10/6/20

Knowles Precision Devices

NY

Manf.

10/21/20

Neutrik USA, Inc.

NC

Manf.

11/9/17

Nasco Aerospace & Electronics

FL

Dist.

11/30/17

Benchmark Connector Corporation

FL

Dist.

1/29/18

Electrocomponents plc

Dist.

1/1/21

Renesas

CA

Manf.

1/11/21

Samtec

NY

Manf.

2/6/18

Component Distributors, Inc.

CO

Dist.

3/22/18

Crosslink Technology Inc.

ON

Manf.

1/28/21

CA

Dist.

2/1/21

John F. Kilfoil Company

OH

Manf. Rep

4/4/18

NextGen Components, Inc.

Leader Tech Inc.

FL

Manf.

4/9/18

SouthBridge

AL

Manf. Rep

2/4/21

GA

Manf.

3/10/21

WA

Manf.

3/11/21

Peerless Electronics Inc.

NY

Dist.

1/1/45

4/30/18

Siemens Building Technology

Positronic

MO

Manf.

5/22/18

PHYTEC America LLC

Advanced Thermal Solutions, Inc.

MA

Manf.

6/5/18

MaxLinear

CA

Manf.

3/15/21

TLC Electronics

MN

Dist.

7/9/18

EOS Power

Manf.

5/5/21

TRC Electronics

PA

Dist.

7/23/18

Traco Electronic AG

Manf.

5/10/21

SETfuse Americas Inc.

IL

Manf.

7/26/18

Noreast Electronics

ON

Manf.

5/20/21

Sigma Component Design Ltd.

ON

Manf. Rep

8/23/18

Shenzhen Codaca Electronic Co., LTD

Manf.

5/20/21


NEDA/ECIA EXECUTIVE LEADERSHIP Past Presidents 1937-39

Leslie C. Rucker

1975-76

Albert N. Kass

1939-40

Walter C. Braum

1976-77

Lew Shuler

1940-46

George E. Barbey

1977-79

Don Yates

1946-47

William O. Schoning

1979-80

H. “Skip” Twietmeyer

1947-48

Aaron Lippman

1980-81

Marvin Perkel

1948-50

Louis W. Hatry

1981-82

Eugene Chaiken

1950-51

Arthur C. Stallman

1982-85

Oliver Goold

1951-52

George E. Wedemeyer

1985-87

Len Benckenstein

1952-53

W.D. Jenkins

1987-89

Tony Cucchi

1953-54

Dahl W. Mack

1989-91

Chuck Poncher

1954-55

H.M. Carpenter

1991-93

Bernie Marren

1955-58

Joseph A. DeMambro

1993-95

William R. Feth

1958-60

Merrill W. Applebee

1995-97

Joseph W. Semmer

1960-63

Mauro Schifino

1997-99

Robert R. Carroll, Sr.

1963-64

V.N. Zachariah

2000-01

Skip Streber

1964-65

Sam Poncher

2001-03

Craig Conrad

1965-66

Mario Chirone

2003-05

David Herring

1966-67

Michael S. Spolane

2005-07

Phil Gallagher

1967-68

Harold H. Powell

2007-09

Francis J. Flynn

1968-69

Phillip E. Gufstason

2009-10

Brian McNally

1969-70

Robert B. Morris

1970-71

James C. Neustadt

1971-72

John N. Leedom

1972-73

Jim S. Silverman

1973-74

Irvin S. Horwitz

1974-75

Alfred Cowles, Jr.

ECIA Past Chairmen 2011-2012

John Denslinger

2013-2014

Michael Knight

2015-2016

Blair Haas

2017-2018

Dave Doherty

2019

Jeff Thomson

2020

Mike Morton

2021

Frank Flynn

Leslie C. Rucker

100 YEARS OF THE AUTHORIZED CHANNEL

160


NEDA/ECIA SERVICE AWARDS Year 1976 1976 1976 1977 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2014 2015 2016 2017 2018 2019

161

Last Poncher Wedemyer Zachariah Weatherford Chirone Horwitz Powell Cowels, Jr. Yates Silverman Gustafson Perkel Ahern Chaiken Van Dongen Goold Mack Cucchi No award given No award given Poncher Lyon Marren Spolane Burton Feth No award given Semmer Kaufman Carroll Hilton Streber Hall, Conrad

First Sam George V.N. R.V. Mario Irvin Harold Alfred Don Jim Philip Marvin Marcelle Eugene B. Dirk Oliver Toby Tony

Company Newark Electronics Wedemeyer Electronics Zack Electronics Weatherford Electronics Elmar Electronics United Radio, Inc. Powell Electronics Bluff City Electronics Genesis Electronics Electronic Expeditors Hughes-Peters, Inc. QAR Industrial Electronics NEDA Almo Electronics NAW Goold Electronics NEDA Arrow/Almo

Gail S. Carter Award Gail S. Carter Award Gail S. Carter Award Gail S. Carter Award Gail S. Carter Award Gail S. Carter Award Gail S. Carter Award Gail S. Carter Award Gail S. Carter Award Gail S. Carter Award Gail S. Carter Award Gail S. Carter Award Gail S. Carter Award Gail S. Carter Award Gail S. Carter Award Gail S. Carter Award Gail S. Carter Award Gail S. Carter Award

Chuck Mary Sue Bernard M. Michael S. Don Bill

Hawk Electronics NEDA KDG Express Sterling Arrow AESCO

Gail S. Carter Award Gail S. Carter Award Gail S. Carter Award Gail S. Carter Award Gail S. Carter Award Gail S. Carter Award

Joe Steve Robert Brian Skip Ray Craig

Gail S. Carter Award Gail S. Carter Award Gail S. Carter Award Gail S. Carter Award Gail S. Carter Award Gail S. Carter Award Gail S. Carter Award

Herring Vallee Gallagher Bruorton Flynn McNally Bruorton Davidson Larson Knight Knight Denslinger Haas Doherty

Dave Roy Phil Jim Frank Brian Jim Lee Mark Michael Michael John Blair David

Arrow/Avnet Arrow Powell Motorola/Avnet Arrow ERA TTI, Inc. NO AWARD GIVEN PUI Avnet Avnet KEMET Sager Electronics Arrow Electronics KEMET Allied Electronics Digi-Key Electronics TTI, Inc. TTI, Inc. ECIA Bud Industries Digi-Key Electronics

Gail S. Carter Award Gail S. Carter Award Gail S. Carter Award Gail S. Carter Award Gail S. Carter Award Gail S. Carter Award Gail S. Carter Award Gail S. Carter Award Gail S. Carter Award Did not receive; couldn’t attend North Star Award North Star Award North Star Award North Star Award

ELECTRONIC COMPONENT INDUSTRY EVOLUTION


100 YEARS OF THE AUTHORIZED CHANNEL

162


CHANNEL MERGERS & ACQUISITIONS Only showing EM-related acquisitions for Avnet; tried to exclude ARW ECS acquisitions MONTH #

9

MONTH

Sep

YEAR

BUYER

TARGET

1979

Arrow

Cramer Electronics

1985

Arrow

Spoerle (Germany) 40% in 1985

1986

Electrocomponents

Radionics (Ireland)

1987

Arrow

Ducommun (Kierulff)

1988

Arrow

Kierulff Electronics

6

Jun

1991

Arrow

Lex (Schweber)

6

Jun

1991

Avnet

Access

1991

Arrow

Almac Electronics

UK components distributor

1991

Arrow

Silverstar (Italy) 50% in 1991

1

Jan

1992

Kent

Shelly-Ragon

4

Apr

1992

Avnet

FH Tec Components

French components distributor

7

Jul

1992

Avnet

Nortec

Scandinavian electronics distributor, operations in Sweden, Norway, Denmark, Finland and Estonia

1

Jan

1993

Avnet

E2000

Central Europe components distributor

2

Feb

1993

Arrow

Zeus

7

Jul

1993

Avnet

Hall-Mark

Americas distributor of semiconductors,computer products, connectors, passives and electromechanical products and value-added services

9

Sep

1993

Avnet

Adelsey

Italian electronic components distributor

10

Oct

1993

Arrow

Component Agents - CAL (Asia)

1993

Arrow

CCI Electronique (France)

1993

Arrow

Amitron (Spain)

1993

Arrow

ATD (Portugal)

3

Mar

1994

Avnet

DeMico

Italian electronic components distributor

7

Jul

1994

Avnet

Penstock, Inc.

US technical communications specialist distributor

9

Sep

1994

Arrow

Anthem Electronics

12

Dec

1994

Avnet

Cable Assembly Operations of LaBarge

1994

Arrow

Field Oy (Finland)

1994

Arrow

TH:s Group (norway)

1994

Arrow

Exatec A/S (Denmark)

1994

Arrow

Gates/FA Distributing

1994

Electrocomponents

Radioparts (Denmark)

1994

Jaco

Nexus Custom Electronics

1995

Avnet

WKK Semiconductors, Ltd.

“70% interest, a Hong Kong-based electronics components distributor with operations in Hong Kong and

1

Jan

US - Cable assembly operations

the People’s Republic of China

163

1

Jan

1995

Avnet

Lyco Limited

Irish electronic components distributor

4

Apr

1995

Avnet

BFI-IBEXSA International, Inc.

European distributor of microwave and RF components, magnetic sensors, connecting devices and other specialty components

4

Apr

1995

Avnet

CK Electronics

French electronics components distributor

ELECTRONIC COMPONENT INDUSTRY EVOLUTION


5

May

1995

Avnet

Sertek, Inc.

European electronic components distribution, primarily marketing its products through a catalog, with operations in Germany and 20 other countries in Europe

7

Jul

1995

Avnet

VSI Electronics (New Zealand) Ltd. & VSI Electronics (Australia) Pty., Ltd.

Australia and New Zealand electronic components distributor

9

Sep

1995

Avnet

Setron Schiffer-Elektronik GmbH & Co. KG

Electronic components distributior operates in Germany and 20 other countries in Europe including Eastern Europe

12

Dec

1995

Avnet

Mercuries & Associates, Ltd.

“1st EMG Asia operation; 70% interest in the Science and Technology Division of Mercuries, a Taiwan-based

electronic components distributor 1995

Arrow

Components + Instrumentation (NZ)

1

Jan

1996

Kent

EMC distribution division of Electronics Marketing Corp

2

Feb

1996

Avnet

KOPP Electronics Limited

1996

Jaco

QPS Electronics

1

Jan

1997

Kent

Futronix

7

Jul

1997

Avnet

ECR

US point-of-sale and bar code peripheral products, which has been merged into the Penstock operation

12

Dec

1997

Avnet

EXCEL-MAX Communications Pte. Ltd.

“Singapore-based distributor of RF/ microwave, fiber optic and other

80% interest, South African electronic components distributor

speciality electronic components 12

Dec

1997

Pioneer

initial investment in World Peace

1997

Arrow

Conson Partners

1997

Jaco

Corona Electronics

1

Jan

1998

Marshall

Sterling

3

Mar

1998

Avnet

CiNERGi Technology & Device Pte. Ltd.

Singapore-based distributor of electronic components

5

May

1998

Avnet

Optilas International SA

French distributior laser (industrial and scientific), electronic and fiber optic components, and test and measurement equipment

11

Nov

1998

Avnet

Gallium Electronics

Israeli distributor focused on demand creation, RF microwave and ASIC design

10

Oct

1998

Avnet

Max Electronics

60% of India components distributor to form Avnet Max joint venture; remaining 40% was purchased in August 2002

10

Oct

1998

Future

Advent

1998

Arrow

Unitronics Componentes (Spain)

1998

Arrow

Marubun JV

1

Jan

1999

Arrow

Bell Industries

1

Jan

1999

Arrow

Richey

1

Jan

1999

Electrocomponents

Avnet’s Allied catalog division

2

Feb

1999

Arrow

Industrade AG

2

Feb

1999

Sager

California Switch and Signal (CalSwitch)

100 YEARS OF THE AUTHORIZED CHANNEL

164


CHANNEL MERGERS & ACQUISITIONS 4

Apr

1999

Kent

SabreData

5

May

1999

Arrow

66% of Panamericana Commercial Importadora

5

May

1999

Avnet

Bridge International

5

May

1999

Bell Micro

Future Tech

5

May

1999

Pemstar

Quadrus division of Bell Micro

5

May

1999

Pioneer

share of Eurodis increased from 5% to 12-13%

5

May

1999

Pioneer

share of World Peace Industrial increased, exact percentage unknown, WPI is private

6

Jun

1999

Kent

Advacom

10

Oct

1999

Avnet

SEI Macro

European electronic components distributor

10

Oct

1999

Avnet

Marshall

Americas electronic components distributior

1999

Electrocomponents

Allied Electronics

1

Jan

2000

Avnet

Eurotronics (SEI)

84% ownership of European electronic components distributior; Avnet previously acquired a 16% interest in Eurotronics (SEI) in connection with its acquisition of Marshall Industries in October 1999

1

Jan

2000

Avnet

Cosco Electronics/Jung Kwang

Korean electronic components and semiconductor distributior

1

Jan

2000

TTI

5

May

2000

Jaco

Interface Electronics

6

Jun

2000

Avnet

SEI Nordstar

70% interest in Brazilian electronics component distributor

“Acquired remaining 60% of SEI Nordstar, Italian electronic components

distributior; acquired 40% in January 2000 with the acquisition of Netherlands-based Eurotronics; integrated EM EMEA”

165

8

Aug

2000

Arrow

Wyle (US)

10

Oct

2000

Avnet

VEBA Electronics Distribution Group

Avnet acquired EBV Group (EBVElektronik & WBC, both European chip distributors) and Atlas Services Europe (logistics provider for EBV) and RKE in Nettetal, Germany. Arrow acquired Wyle Components and Wyle Systems.

2

Feb

2001

Avnet

RDT Technologies Ltd.

Israeli distributor focused on demand creation, RF microwave and ASIC design — combined with Gallium to create Avnet Components Israel

5

May

2001

Avnet

Sunrise Technology Ltd.

Chinese electronic components distributior

6

Jun

2001

Avnet

Kent Electronics”

North American IP&E distributor

9

Sep

2001

Future

Steiner Electronic Austria

3

Mar

2002

Avnet

Gamma Optronik”

Nordic region distributor of photonics products

1

Jan

2003

Arrow

Pioneer-Standard components biz

7

Jul

2005

Avnet

Memec”

Global distributor specializing in semiconductors

1

Dec

2006

Berkshire Hathaway

TTI

4

Apr

2006

Avnet

Printex Europe”

European RFID distributor — part of Avnet Computing Components (ACC) and Applied Computing Solutions (ACS) group in Europe

ELECTRONIC COMPONENT INDUSTRY EVOLUTION


10

Oct

2006

Avnet

ESCO Italiana”

7

Jul

2007

Avnet

Flint Distribution Ltd.

UK IP&E distributor

11

Nov

2007

Avnet

Betronik GmbH division

Germany-based passive components distributor, includes a sales office in France

1

Jan

2008

Avnet

YEL Electronics Hong Kong Ltd.

Hong Kong-based distributor of IP&E and limited semiconductor components in the Asia region

1

Jan

2008

Avnet

Azzurri Technology Ltd.

Distributor of semiconductors and embedded systems products in the UK, Germany, France and Italy

2

Feb

2008

Future

PN Electronics

6

Jun

2008

Avnet

Source Electronics Corporation

Provider of outsourced custom programming services for ICs from facilities in Brazil, China, Mexico, Singapore and the US — part of Avnet Logistics

12

Dec

2008

Avnet

Nippon Denso Industry Co., Ltd.

Japanese distributor of electronic components

1

Jan

2009

Avnet

Abacus Group Plc

UK-based European semiconductor and IP&E distributor, doubled our EMEA IP&E business

7

Jul

2010

Avnet

Bell Microproducts, Inc.

Americas and European distributor of storage and computing technology

7

Jul

2010

Avnet

Unidux, Inc.

Japanese components distributor

10

Oct

2010

Avnet

Eurotone Electric Limited

Chinese electronic components distributor that provides general purpose inverters for wind and solar power applications

10

Oct

2010

Avnet

Broadband Integrated Resources Ltd

Specializes in the repair of broadband and cable TV equipment in support of cable operators and manufacturers — North America

1

Jan

2011

Arrow

Nu Horizons

2

Feb

2011

Arrow

Trident Microsystems

3

Mar

2011

Arrow

Richardson RF

6

Jun

2011

Arrow

Seed International

8

Aug

2011

Avnet

JC Tally Trading Co., Ltd

Taiwan and China IP&E

8

Aug

2011

Avnet

Prospect Technology Corp.

Taiwanese semiconductor distributor

9

Sep

2011

Arrow

Chip One Stop

11

Nov

2011

Avnet

DE2

French embedded distributor

12

Dec

2011

Avnet

Round2

Integrated and customizable recycling services (electronics testing and repair, product disassembly and commodity recycling) — part of Avnet Integrated Resources

1

Jan

2012

Avnet

PDSI

After-market services business focused on repair, refurbishment, recycling and disposition of IT products — part of Avnet Integrated Resources

2

Feb

2012

Arrow

Asset Recovery

2

Feb

2012

Arrow

TechTurn

3

Mar

2012

Arrow

SiliconExpert

100 YEARS OF THE AUTHORIZED CHANNEL

Semiconductor and embedded systems specialist distributior in Italy, Greece and Turkey

166


CHANNEL MERGERS & ACQUISITIONS

167

4

Apr

2012

Avnet

Nexicore Services

4

Apr

2012

TTI

Sager

7

Jul

2012

Avnet

Altron GmbH & Co. KG

8

Aug

2012

Avnet

Components business of CRG Electronics Israeli distributor of PC products and electronic components

8

Aug

2012

Avnet

Internix, Inc.

9

Sep

2012

Arrow

Global Link Technology

10

Oct

2012

Arrow

Redemtech

12

Dec

2012

Arrow

Waching

12

Dec

2012

Avnet

USI Electronics

Americas distributor of discrete semiconductor, passive and electromechanical components to military and aerospace customers

3

Mar

2013

Avnet

RTI Holdings

Hong Kong and China distributor of wireless, optical, telecom, data communications, and industrial components

12

Dec

2013

Avnet

MSC Investoren GmbH

EMEA component distributor of embedded computing tech and display solutions as well as design and manufacturing

2

Feb

2015

Arrow

ATM Electronic

4

Apr

2015

WPG

Genuine C&C

7

Jul

2015

Arrow

Setron

3

Mar

2016

Arrow

Distribution Central

6

Jun

2016

Arrow

UBM Tech Electronics Network

10

Oct

2016

Avnet

Premier Farnell plc

Catalog business - High-touch, low volume

11

Nov

2016

Avnet

Hackster Inc.

Online community (ecosystem strategy)

7

Jul

2017

TTI

Symmetry Electronics

8

Aug

2017

Avnet

Dragon Innovation

12

Dec

2017

TTI

Changnam

1

Jan

2018

Arrow

eInfochips

7

Jul

2018

TTI

Compona Connector Systems

7

Jul

2018

TTI

Cosy Connector Systems

10

Oct

2018

TTI

RFMW

12

Dec

2018

Avnet

Softweb Solutions

2018

Electrocomponents

IESA

7

Jul

2019

TTI/Sager

Technical Power Systems

9

Sep

2019

Avnet

Witekio

11

Nov

2019

WPG

WT 30% stake

2019

Electrocomponents

Monition

3

Mar

2020

WT

ASMedia share exchange

6

Jun

2020

WPG

T3EX

10

Oct

2020

WT

Analog World

12

Dec

2020

Electrocomponents

Needlers

1

Jan

2021

Electrocomponents

Synovos

3

Mar

2021

Electrocomponents

John Liscombe

Americas provider of repair and installation services for consumer electronics and computers (depot repair, onsite repair, installation, spare parts management) — part of Avnet Integrated Resources, which provides reverse logistics and after-market services Germand IP&E distributor

Japanese components distributor

Design for manufacturing (ecosystem strategy)

Software solutions (IoT strategy)

Embedded software (IoT strategy)

ELECTRONIC COMPONENT INDUSTRY EVOLUTION


CREDITS Publisher: Al Maag

Chief Editor:

Significant Contributors: Mary Ellen Stack - Sager Jim Banovich - Marsh

Barbara Jorgansen

Marisa Farias, Nicole Freeman - Avnet

ECIA Executive Publishers:

Ian Basey - WPG

Victor Meijers Debbie Conyers

Stephanie Tierney - ECIA

Writers:

Heidi Elliott Steve Cholas Bruce Rayner Matt Sheerin Craig Conrad Tess Hill

Neda Simeonova - ERA Bob Dion - EDS Joan Koerber-Walker co-author; Our Industry Crowd: The Electronics Experience book Dale Ford Jennifer Read Cathy Walensky – TTI Our Industry Crowd: The Electronics Experience

Book Design: Maagcommplus

Research/Graphics: Victoria Heppner

Sponsors: Allied Avnet Blockmaster Bud Electronics Cannon Carling Tech Cornell Dubilier Electronics Crowley Associates Digi-Key Electronics ebm-papst Inc. Fair-Rite Flip Electronics Future Electronics Hughes-Peters Infineon Knowles Littelfuse Marsh Electronics Mel Foster Company Molex Mouser Newark Ohmite Omron Electronic Components onsemi PEI- Genesis Powell PUI Quail Electronics, Inc. Rochester Electronics Rohm Sager Switchcraft, Inc. TTI Vishay Women in Electronics WPG

100 YEARS OF THE AUTHORIZED CHANNEL

168


CONGRATULATIONS TO OUR INDUSTRY MILESTONE!


WE UNITED Women and Men Uniting to Advance Cultural and Systemic Change in the Electronics Industry womeninelectronics.com


CLOSING REMARKS David Loftus, ECIA President One of the things that stands out to me about our first 100 years of distribution is the tremendous entrepreneurial spirit. Look at people like Roy Vallee and the things he accomplished; or someone like Paul Andrews, who started a business out of nothing; created a tremendous powerhouse company; and was a huge contributor to the success of our industry. There are so many larger-than-life individuals who helped form this industry and really propel it as a key technology enabler. If you take a step back and look at the bigger picture, there have been a few manufacturers and customers that have tried to bypass distribution. They thought it was more costeffective or a more efficient way to do business. They tried to purposely cut

171

distribution out of the loop. It’s interesting because the last year has taught us about the importance of distribution; our value in the supply chain — with widespread shortages across the industry — and customers looking to eliminate risk to their supply chains. The fundamental value of distribution is smoothing out the bumps in the supply chain. And, as I look forward, I would expect distribution to be even more important to the industry with the ability to serve the tremendous breadth of customers wherever they are located around the world. Innovation is not slowing down; it continues to accelerate. That means there are always new entrants into the market that are going to drive demand for electronic components, and the industry will continue to flourish. With innovation

ELECTRONIC COMPONENT INDUSTRY EVOLUTION

comes change and the need to provide services, and distribution is in the best position to continue to provide unique offerings for hundreds of thousands of customers around the world. So, to the next generation: Soak in this information — use this as a tool to appreciate those who have come before you, understand the lessons history has taught us and the lessons you take forward. And think about how you can challenge yourself to contribute to not only improve your own lives but improve our industry and the future of mankind.


The Vishay journey began with one man, Dr. Felix Zandman, and a revolutionary technology. From there we would grow, arriving where we are today: one of the world’s most trusted manufacturers of electronic components. From discrete semiconductors to passive components; from the smallest diode to the most powerful capacitor, Vishay’s breadth of products are the very foundation that brings modern technology to life, every day, for everyone. We call it The DNA of tech.™ The Authorized Channel is an important part of our DNA and essential to our growth for six decades. Cheers to 100 Years!

www.vishay.com © Copyright 2021 Vishay Intertechnology, Inc. All rights reserved.

100 YEARS OF THE AUTHORIZED CHANNEL


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