Electronics Production | August 25, 2008
Shifts in labor rates and capacity for EMS
According to the most recent edition of the Charlie Barnhart Leading Indicators Monthly Report, the average cost of labor for Electronic Manufacturing Services (EMS) in most global geographies continues to rise at a rate equal to or slightly above the currency adjusted local inflationary index.
The exceptions to this trend are the United States, Mexico and India where the fully burdened cost of labor for both PCBA and Box Build was down marginally on improved absorption. The largest increases in the cost of EMS value-added services occurred in Western Europe and China. Both of these trends are expected to continue through 2008, net of significant strengthening of the UDS$ against the Euro & Yuan or its weakening against the Peso & Rupee, said the Charlie Barnhart Leading Indicators Monthly Report. Usable Capacity: According to the Charlie Barnhart Leading Indicators Monthly Repor, the majority of outsourcing continues to chase a diminishing available capacity principally located in the river deltas of China and the non-euro based countries of Central & Eastern Europe. While the industry continues to add capacity, these regions are approaching operational limits due to shortages in qualified human and infrastructural resources. Risk Factors: The composite business risk (CBR) indicator for all of North America, the euro-based countries of Eastern Europe, Thailand and Australia went down this reporting period (decreasing risk) and went up (increasing risk) in Malaysia, India and China. All of this means that Mexico (for North America), Thailand (for Asia) and the euro-based countries of Eastern Europe (for Western Europe) as the best value, lowest risk solution for high volume requirements. Lastly, the overall situation in China continues to deteriorate and given the high concentration of Outsourcing in this single geography we have begun advising our clients to accelerate analysis and integration of alternative solutions, according to the Charlie Barnhart Leading Indicators Monthly Report.
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