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2019, a Year of Challenges

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I’ve previously written about how excited I am for the industry, and I really do think we are in the middle of a power revolution. This revolution is both due to new technologies and materials like GaN, and also due to advances in alternative energy generation and storage. The innovation we have seen over the last few years will continue and even accelerate as more efficient components hit the markets, so for technology at least, things are looking well.

That is all well and good, but unfortunately we do not live in isolation, and the industry is driven by prevalent market forces. Every power manufacturer relies on customers to buy their products to integrate into their own offerings. 2019 looks to be a challenging year for several reasons. In Europe, Brexit towers ominously over the whole continent. The UK is due to leave the European Union on the 29th of March this year and as I write, nobody really has an idea how that will look.  Negotiations over the last 18 months by both parties have led to a proposition that has been cautiously welcomed by industry, keeping the UK in the customs union, at least for a time, and providing manufacturers with some sense of certainty. UK Prime Minister, Theresa May’s MPs have not been so welcoming, due to several clauses in the agreement, particularly one that appears to divide Northern Ireland from the UK by keeping it in the single market as a backstop if no trade agreement is reached.

The vote on the agreement is expected to be rejected comprehensively by the UK parliament, leaving the country grasping for a solution with less than three months till the leaving date. There is no overall consensus in parliament, with MPs split between remaining in the EU, taking May’s deal or crashing out without a deal. A no-deal Brexit could send shockwaves through the whole continent, with predictions of trucks carrying food, medicines and components queued up at ports in the UK and France. As the UK is deeply embedded in the European supply chain, manufacturers on both sides of the channel are worried about the availability of products, especially those who use just-in-time techniques. The economies of both the EU countries and the UK could be hit badly by a no deal Brexit.

Brexit is only one danger that industry could face this year, and its effects could be amplified by other events around the world. In the US, President Trump has shown an aptitude for liberally applying tariffs on any products that he perceives are unfair on US manufacturers. China’s economic miracle has recently looked rather more shaky, and the country is in the firing line for more tariffs from the Trump administration, which could kick off the global downturn that many people believe is due.

There is still a fair chance that none of these events come to pass. There looks to be an increasing chance that Brexit will be postponed, or at least the deadline will be extended, to give the UK government time to find a solution that is acceptable to the majority of both the parliament’s MPs and the general population. Let’s keep our fingers crossed.

PSD

www.powersystemsdesign.com

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