NEW YORK – Electronics targeted for auto, aerospace, industrial, instrumentation, military and medical products make up a $480 billion market, of which less than 5% is outsourced.

That’s according to a new report from Barron’s. The financial media outlet believes OEMs will slowly but steadily move programs to EMS companies over the next several years.

Each segment should add 2.5% in incremental growth to the EMS sector over the next two years, Barron’s says. Coupled with macro demand forecasts, plus incremental gains for consumer electronics cellphones (another 2.5%), and the industry growth rate should reach 10%.

Furthermore, the company says, this revenue will come with higher margins than past outsourcing programs. While the industry at large tries to buck 3 to 3.5% operating margin, the new revenue sources should have 10% to 20% incremental operating margin, Barron’s says.

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