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Electronics Production |

Ready… Set… Africa?

As evident by their financial performance during 2006-2007, most tier-two EMS providers have experienced growing pains. In fact, iSuppli analysis and datasets suggests that second-tier EMS providers only grew 1% during 2006 and 2% in 2007.

By Adam Pick, iSuppli’s Principal Analyst For EMS/ODM Services The key challenges impacting tier-two EMS providers were OEM procurement shifts, consolidation within the EMS landscape, and competitive threats from tier–one providers. However, a handful of tier-two EMS providers bucked these challenges and expanded share last year. For example, Zollner Elektronik’s (Zollner) turnover increased from 585 million euros to 686 million euros during 2007, an impressive 17.3% increase. What makes the sales increase most impressive is that Zollner’s management continues to grow the German company primarily through organic means. “I believe there are a number of reasons why Zollner continues to expand its share,” stated Markus Aschenbrenner, Zollner’s Manager of Business Development, during a recent iSuppli interview. “First, we have a broad offering of services. Nearly all of our market segments increased on an absolute dollar basis during 2007. Second, the European economy is doing quite well. Third, our business continues to be of an organic nature. We have had some exciting wins in the past six months but we don’t see our strategy of incremental growth changing. Fourth, our business model is quite unique.” In review of Zollner’s business model, its uniqueness is apparent. The company, founded in 1965, provides high mix assembly services bundled with design support. Plus, Zollner is vertically integrated. “We manufacture plastics, sheet metal, enclosures, coils, PCA’s, modules and complete assemblies,” according to Aschenbrenner. Zollner Expansion Into Tunisia? To manage the growing demand for its services, Zollner announced on March 18 that it will build a new factory in Beja, Tunisia in Northern Africa to produce inductive components. During the iSuppli interview, Aschenbrenner reflected, “The impact of inflation and labor rates in Eastern Europe is being felt. While labor rates are not the only reason to shift capacity, the skilled workforce in Tunisia is a compliment to our overall manufacturing strategy.” As for the next Zollner capacity expansion, nothing has been formally announced. However, Aschenbrenner did suggest that North America could be attractive for Zollner. “In terms of best service to our customers, it might make sense to extend our presence into the United States,” Aschenbrenner concluded. For more analysis and datasets specific to the strategic shifts and trends impacting the electronics manufacturing market, see Adam Pick's April edition of The EMS/ODM Monitor – Zollner Expands Sales And Capacity Into Africa. To learn more, please contact visit http://www.isuppli.com/catalog/l3_emso.asp?sr=emso&se=32 or contact iSuppli at + 1 310 524-4007.

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March 28 2024 10:16 am V22.4.20-1
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