Hickman Shearer | Implications of Cost and Lack of Equipment Availability on Outside Broadcast Sector

Hikes in costs and availability shortages for equipment are proving challenging globally and unsurprisingly, the effects are visibly spilling over into the broadcast and live events sector. The implications show no signs of abating and while a lack of material is the most cited reason, staff shortages, Covid-19 and Brexit implications are equally influencing supply and demand, further compounded by an international chip shortage and increased shipping costs. Much of the equipment used for the broadcast and live event production sector is heavily reliant on chip related assets, resulting in a significant impact on supply.

 “95% of manufacturers are experiencing component shortages with 70% of non-manufacturing companies experiencing a delay in finished goods.”

Potentially this leads to grim reading, with a recent report by PLASA and #WeMakeEvents revealing that availability is currently getting worse for broadcast and live production equipment, with some mentioning lead times of over a year for some kit. Lack of components and goods is affecting 97% and 90% respectively of companies, with a significant majority (94%) of specialist equipment manufacturers across the sector experiencing delays in components such as micro- chips, metals and cables.  

What is causing the delays in microchips and other equipment? 

While the key causes involve congestion at ports and a lack of materials, this has been further exacerbated by a fire incident in a crucial microchip factory. This is affecting 68% of manufacturers in the PLASA survey, with a quarter waiting in excess of 24 weeks for delivery. The result is severely restricted production, right at the time when demand is rising, with the impact  made even worse by delays in essential metals and cables. 

What are the implications? 

These delays are occurring across the spectrum of broadcasting and live events kit. Finished manufactured goods such as lighting fixtures, mixing desks and speakers are all affected. Typically, the findings suggest that lighting fixtures are the most reported item. Here, 28% are waiting between 5-12 weeks. Equally mixing desks are delayed by over 12 weeks, according with speakers and monitors taking 5-12 weeks. With all these items being technically complex and with high demand in the industry, the implications are hitting the sector hard at the very moment it is opening up post pandemic. The timings could not be worse. 

How are prices affected? 

Unsurprisingly, the result has also been an increase in costs created by this shortage of supply with one in ten companies citing a 91% cost increase in micro-chips. Availability is getting worse at present, lead times are over a year in some cases. The largest price increases come from manufacturers shifting to alternative sources or excess inventory sourcing in an attempt to maintain continuity of supply. In some cases, people are resorting to sourcing items from far-away locations and then paying exorbitant shipping costs to get them to their location. The hike in component cost is a recurring theme, but add to this shipping and the net cost becomes much higher. 

How can the broadcast and live production sector mitigate against this? 

Many from across the industry are lacking confidence in availability returning for the short, mid or even longer term. In fact, some consider that recovery on this front is going to be at least a two-year journey. The challenge is how the sector can mitigate for delays of over 12 weeks and broadcast equipment and prices going up in some instances by over 20%. And all of this just at the point when a positive shift in production is happening.

“An amazing opportunity for operators to purchase high quality broadcast equipment at a cost-effective price with immediate availability”. 

As Tim Chapman, Managing Director of Hickman Shearer says above, this is where companies need to look at ways to source equipment differently and  where well-maintained used equipment is becoming increasingly attractive. This could also prove to be the catalyst for broadcast businesses to look to reduce their reliance on finite resources and adopt more of the principles of the circular economy. Hickman Shearer’s advice here is all about extending the life of assets through different channels and markets. Auctions provide a key role in the circular economy and the forthcoming massive 3-day auction sale at Arena Television (in administration) is proving an incredible opportunity for operators’ businesses to purchase high quality broadcast equipment at a cost-effective price with immediate availability.