Mexico contract manufacturing - EMS grows

While a lot of high-volume electronics manufacturing services (EMS) has left North America, Mexico's electronic contract manufacturing business is growing.

"Mexico lost a lot of business to lower-cost Asian electronics manufacturing services sites," says Robert Freid, president of Contract Manufacturing Consultants in Bellevue, Wash. "Most of that business will never come back." But Mexico seems to be "backfilling with higher-mix, mid-volume business, products that involve electro-mechanical assembly," says Freid.

He says Mexico is convenient for many OEMs who are selling into the U.S. "Companies look at communications convenience when deciding where to locate manufacturing." To have Mexico contract manufacturing plants within a time zone or two is preferred vs. communicating with Asia, which means you're on the phone at five or six in the morning." says Freid.

While a lot of high-volume, low-mix production moved to Asia over the last years, Asia is increasingly building more complex, lower volume assemblies, says Freid.

"Asia used to be interested in only higher volume manufacturing, but that has changed a lot. I visited contract manufacturing sites in Asia that have high-volume production, but also low- and medium-volume and higher mix products. The volume was 200-300 assemblies per customer. That is an important part of the growth in Asia."

Often the total landed cost of building a product in North America or Europe for products that will be sold in those regions is less or at least competitive with products built in China or other Asian countries.

North American electronics contract manufacturing sites will continue to be used for prototype builds and for final configuration of products before they are shipped to the end customer.

India is another emerging area for the electronics contract manufacturing industry. However, much of what will be produced in India will be for domestic consumption..