As it reported interim results, resistor and sensor group TT Electronics said it was experiencing the worst visibility it had ever had, and may lay off more manufacturing jobs if the situation does not improve.
The company says that assessing short-term demand for products from the telecoms sector is virtually impossible. John Newman, executive chairman, said: "I'm talking about September. In July and August, order intake was very low on telecoms."
He adds that colleagues who have been in the business for more than 20 years have never seen business conditions like this.
But Newman remains confident in the long-term potential of the company: "It is being driven by demand from the automotive sector. We've just secured a £67m order deliverable in 2002. That's the type of thing we are getting. One third of cars will have steering wheel sensors in seven to eight years."
The economic climate has also required the company to develop new product applications to stimulate sales. TT has just received a £1m order from a medical customer for precision resistors it recently developed.
It has already shed 8% of its worldwide workforce — around 900 people in manufacturing — and has a contingency plan to shed more should the downturn continue as well as to consolidate certain manufacturing operations. But Newman says there are no plans to cut back R&D.
He summed up the prospects for the industry segments TT serves: "Automotive and industrial are fine; computers you can guesstimate; telecoms you just don't know."
The company remains open to acquisitions and is looking to the US, eastern Europe and Germany to enlarge its involvement in sensors, pick up specialised resistor companies and strengthen its position in induction.
TT reported essentially flat first half sales. Predicting full-year sales is "crystal-ball gazing", said Newman, but added that full-year profit is forecast to be £37m, compared to £40.7m, according to TT's brokers.
The day before it released the results, TT announced the £2.6m sale of its United Packaging machine and film manufacturing company to Helero.
It is the last demerger of non-core businesses, which has seen TT shed glass container and magnet wire businesses in a bid to focus on the electronics sector.