Electronics Production | July 10, 2009
Margins in all EMS sectors (except Automotive) will remain in Q3
Margins in all sectors (except Automotive) are expected to remain relatively constant in Q3CY2009 as backlogs and book-to-bill ratios stabilize.
Global EMS Costs: The underlying burdened cost of labor for electronics manufacturing services was basically unchanged in May/June net of currency translations which were generally unfavorable for North American OEMs. Short of a significant reversal in valuation trends of the USD$ the burdened cost of labor for electronics manufacturing services in Q3CY09 are expected to be: flat to very slightly lower in Mexico; marginally higher in Canada, Eastern Europe, Japan, China and Australia; and flat in the balance of the major global geographies. EMS Margin Expectations: Margins in all sectors (except Automotive) are expected to remain relatively constant in Q3CY2009 as backlogs and book-to-bill ratios stabilize, said Charlie Barnhart’s Projections for Q3CY2009 EMS Industry. Some upward fluctuations in Mil/Aero & Automotive look likely as does select downward pressure in Communications and Medical on perceived strength of individual OEM’s product offering. Historically, during times of falling demand in the EMS industry average margin expectation tends to be flat to slightly down. EMS Capacity & Lead-times: Lead-times are expected to remain relatively flat to slightly down (except with ODMs in China where they have been lengthening) and are expected to improve slightly over the balance of the second half of CY09 as demand is expected to remain soft as a result of the global economic situation.
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