CONSUMER demand for gadgets such as DVD recorders and iPods continues to increase at a mindblowing pace.

But the speed of innovation and marketing is such that items such as your PC will lose value faster than your car. The electronics industry - our industry - is once again facing a challenging couple of years.

Not only are Welsh companies still battling to come to terms with the threat posed by outsourcing to developing countries like China and India, but as technology advances, so too does the mountain of disposable electronic goods for which manufacturers will become responsible under the latest European directives.

Under the waste electrical and electronic equipment (WEEE) directive and the restriction of use of hazardous substances (RoHS) directive, UK manufacturers will have to dispose of radios, hi-fis and other goods in the country where they were made or face massive environmental fines.

For many businesses this represents a major logistical nightmare, especially those who delay taking the necessary steps to implement systems and procedures that will address these policies effectively.

For the early adopters, 2005 and 2006 will bring enormous opportunity for growth, and the safeguarding of numerous highly skilled manufacturing jobs.

For Welsh manufacturers competing on the global stage, being closer to both the product and the marketplace will also benefit the consumer as suppliers will no longer be forced to add recycling and shipping costs necessitated by outsourcing to the price.

In 2004, we saw the benefits of a recovery in the electronics industry with the number of manufacturing business failures expected to drop to 2,230, the lowest level since 1993.

If the chancellor's plans - such as smaller companies being able to file a single tax return, 2.5 billion being invested in science and businesses not facing increased taxation - become reality, we certainly expect this recovery to continue.

My personal highlight of 2004 was attaining a silver ranking in the Wales Quality Awards, as well as being awarded the environmental prize. The quality award was based on the European Foundation of Quality Management's business excellence model. This is based on a framework of leadership, policy and strategy, people management, resources and processes, customer satisfaction, people satisfaction, society and business results.

Axiom uses this framework as a means to implement best practices by benchmarking ourselves against others.

In 2005, as electronics plays an ever-increasing role in everyday life, we will continue our drive for business excellence, and I hope that we'll continue to carry the torch for Welsh manufacturing, innovation and people development.