ALAMEDA, CA, Jan. 14 - Technology Forecasters Inc. forecast that last year's double-digit growth for the EMS and ODM industry will continue into 2005.

In its latest report, the market research group forecasts average growth rates over the next five years of 15% for EMS, 20% for ODMs, and 16% for all outsourcing.

Overall drivers for healthier growth include the fact that EMS companies, led by Flextronics, are making a major commitment to the ODM model to maintain customers. "There are more opportunities for cooperation between ODM and EMS companies," said vice president Eric Miscoll. "As ODMs brand their products and push into the OEM space, there's less competition between the ODM and EMS business models, because they send their manufacturing to EMS."

TFI also reported:

• As RoHS and WEEE regulations take effect, OEMs and EMS companies are reviewing bills of materials for compliance. "It's a good time to take a look at a wide range of design for manufacturing issues, while ‘the patient is on the operating table," recommends president Pamela Gordon Gordon. "Additional cost savings will come not only from more efficient designs, but also from pruning product lines before the compliance deadlines."
• The firm's Beijing-based analyst Mark Natkin's says local technology standards are being promoted by the Chinese government to help create a sense of national unity. "Even failed standards help achieve this goal, so expect this trend to continue," he says.

The firm's next quarterly market meeting takes place March 9-10 in Guadalajara and features comparisons between manufacturing in Mexico. Also to be covered: outsourcing lessons learned in computers, environmental compliance in low‑cost regions and a panel discussion on the current status of manufacturing in Mexico.

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