© Wilson Electronics Production | February 09, 2010
More predictions for the EMS-industry
Market researcher Charlie Barnhart offered his own predictions and forecasts for the EMS-industry at the company's recent OEM Only - Outsourcing Navigator workshop.
Mr Barnhart started out with some pretty tame comments. "Within the next five years, the industry will be unrecognizable from what it is today," he predicted. "The regionalization trend we've been talking about for years is finally gaining traction, which will be good for smaller EMS companies. Many OEMs have already begun re-directing at least a portion of their electronics manufacturing requirements." As this transition continues to escalate CBA also predicts a significant percentage of companies will decide to bring at least some of their manufacturing back in-house. "I've already gone on record saying that by the end of Q2 2012, the outsourcing growth pendulum will reach its zenith and thereafter begin swinging back in the other direction," Barnhart continued. "I now predict that at least one of the Top Tier EMS companies will be absorbed by an OEM and that another will completely disappear not long after this reversal begins." The afternoon ended with a frank and no holds barred discussion of topics such as a comparison of OEM and EMS company financial expectations and what constitutes a rational expectation on both sides of the equation. "Our recent data reveals just how dissatisfied the OEM community is with their current outsourcing solution. The level of mistrust between the parties is astounding, and unique to this industry. We believe this is principally due to a catastrophic break down in forthright and rational communications between the OEM and their EMS suppliers. The business model is deeply flawed, and has been for some time; the global economic crisis has just accelerated the awareness of the dysfunction." CBA recommends that OEM companies should do a complete re-analysis of their supply solution starting with a blank piece of paper, versus the usual approach of taking half-measures in an attempt to preserve legacy resources. “OEMS should view their entire supply chain as a single interconnected enterprise,” he recommended. “Then they will be in a position to design a holistic solution that not only fulfills their requirements but also makes competitive sense."