The practice of outsourcing electronics manufacturing gained popularity in the 1970s—largely in the U.S., and today most of the world's largest contract manufacturers (CMs) are headquartered in North America. Yet the never-ending search for lower cost manufacturing has prompted these companies to shift manufacturing to other regions—primarily to Asia. In fact, electronics manufacturing strategist Technology Forecasters Inc. (TFI, Alameda, CA) estimates that today more than a third of the world's outsourced electronic products are built in China and that by 2007 the portion will increase to half.

Profiling the type of manufacturing most likely to remain in North America is the focus of a study TFI will present at its March 10 Quarterly Forum for Electronics Manufacturing Outsourcing and Supply Chain, in the Dallas, TX, area. For the study, entitled Electronic Manufacturing Services Industry in North American Market: Current Outlook and Positioning for the Future, TFI interviewed executives at CMs around the world as well as name-brand product companies' outsourcing decision makers choosing among regions.

"Although most of the executives we interviewed were able to identify some niche markets or region-appropriate functions likely to remain in North America, without exception every executive predicted further loss of manufacturing jobs on the continent," said TFI president Pamela Gordon. "The keys to CMs retaining as many jobs as possible are to offer multinational manufacturing options—whether at their own facilities or through alliances—and to serving local customers with such close attention as to create a nearly impenetrable barrier to leave."

Yet even for the types of business likely to remain, disagreement exists among CMs and their customers regarding the staying power of manufacturing in North America. The CEO at a mid-sized North American CM said, "The strength will be the responsiveness of the industry in North America. This will not be available half way around the world. Cheaper product undelivered does not help the customer's bottom line."

A different response was offered by an outsourcing decision maker at a large North American customer company: "It's mainly price. Mexico, Dominican Republic and Puerto Rico have some cost advantages, but if total cost is less elsewhere then the product won't stay in North America."

Other TFI reports to be presented at the Quarterly Forum include Competing with the Dragon: The EMS Industry in Asia Outside China and Outsourcing in Telecom: Finding Value Again. A panel on the future of design services will be moderated by Tom Valliere of Design Chain Associates, and feature Bill Coker of Elcoteq Americas, Michael Shores of Texas Prototypes, Mike Wilkinson of Paragon Innovations and several original equipment manufacturers (OEMs) sharing their experiences of using contract design services. Also, Agile Software will coach Quarterly Forum members in tracking materials and recycling in accordance with environmental regulations WEEE and ROHS.

www.techforecasters.com

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