Bouncing back After years of offshoring, the UK’s contract electronics manufacturers are seeing strong order books. By Graham Pitcher.
T
he impression given by a range of national media is that UK manufacturing, in general, is on the ropes. But when it comes to the electronics sector, nothing could be farther from the truth; certainly in the opinion of Phil Inness, chairman of the Electronic Manufacturing Services Association (EMSA) group within trade association Intellect and managing director of Bedford based manufacturer Axis Electronics. He believes the UK contract electronics market is probably worth £1.4billion a year. “The market is in pretty good shape,” he observed, “and is certainly growing in excess of 5% a year.” In his role as EMSA chair, he sits down on a quarterly basis with the members to see how things are going. “Most companies are positive,” he reported, “and have been for the last year. As far as we can tell, order books are as strong as they have ever been.” The one potential dark cloud on the horizon is a decline in business. “Some comments were made at our last meeting about a ‘softening’ in demand, but those companies have been unable to quantify their feeling.” The performance of the UK’s contract manufacturing sector is encouraging, given the degree of offshoring which has taken place over the last decade. “There has been a mass migration of work offshore in the last 10 years,” Inness noted. “Some of this should have gone overseas without question,” he accepted, “while some should not have, but did. Companies now realise that offshoring isn’t going to be a fix for all evils and there is much cleverer decision
22
22 November 2011
making today.” The challenge of offshoring has seen the UK EMS sector improving its efficiency in the last five years, Inness believes. “There are now a lot of good UK companies that can do a good job at a good price,” he asserted. “When you compare that to the risks involved in offshoring, it makes sense to keep the work here in the UK.” Inness reflected that many companies jumped on the offshoring bandwagon without giving the move enough thought. “They may have realised certain savings, but then ended up with obsolete stock or found the work was wrong and had to be put right, with all the time delays involved. Now, there’s smarter procurement; if someone wants 73 units, they can order 73 units from a UK company and have no wastage. If you go offshore, you may have to order 100 units or more to get the price breaks.” He sees three distinct bands of EMS business. “At one extreme, there’s high volume consumer. At the other, low volume, high reliability. And in the middle is a large amount of business up for grabs.” Vying for this business are some 250 companies, broadly grouped into four bands. “There are the multinational names,” Inness said, “then 10 companies or so turning over roughly £50million a year. Below them is a group of probably 50 or 60 companies doing between £5m and £20m a year, then the rest.” In general, said Inness, the UK’s EMS sector is recruiting and investing. “Companies continue to invest in new production equipment. As technology
Top: EMS companies need to provide products to specification, on time and at a competitive price Above: Axis has a Class 10,000 cleanroom, supporting bare die attach, wire bonding and integration for rf products
changes, they have to keep up and the industry, as a whole, is much closer to the leading edge than it has been and more capable of responding to customers’ needs.” With the technology in place, Inness believes that EMS companies don’t necessarily have to sell. “It’s all about giving the customer what they need so they can sell their products on the global
www.newelectronics.co.uk
