THE ATTRACTION TO EMERGING REGIONS FOR CONTRACT MANUFACTURERS
Author: Leora Lawton Company: Technology Forecasters Date Published: 4/28/1997
Surface Mount International
Abstract: In the past three years, new regions emerged in the electronics global horizon to attract manufacturing facilities. With annual growth rates in the electronics contract manufacturing industry hovering around 30°/0for the last few years, contractors continue to seek ways of adding capacity and capabilities in customer-desired regions. While the actual proportion of production in these regions in terms of market share or revenue is still low, these areas should not be ignored by contract manufacturers or OEMS seeking trends in business strategies because they offer strategic positioning for present and future markets. It is worthwhile to consider the relative strengths of each area, as well as the motivations behind establishing a presence in the global frontiers of electronics manufacturing. It’s easy to state that reduction of costs is the driving factor in opening up facilities in emerging regions, but that would bean inadequate, if not misleading, explanation. Certainly lower labor and fixed costs contribute, yet emerging regions create a momentum of their own. Once a critical mass of companies locate there, it becomes even more attractive for other companies to conduct business there as well. Indeed the second-most elicited reason by contract manufacturers to open a facility is to be near their customer base.