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"There" is wherever the consumers are as regionalization becomes the new watchword for the E/E industry. That is according to a new study conducted to compare the relative attractiveness of Mexico and China as destinations for electronics manufacturing services (EMS) investment. According to the study, Mexico may be the preferred location for manufacturing of these devices if the market to be served is North America.

Matt Defosse

September 1, 2011

2 Min Read
For plastics processors serving the E/E industry, there’s nothing like being there

The study was conducted by Eric Miscoll, a researcher and principal at Charlie Barnhart & Associates, a consulting firm focused on providing information on the cost drivers and risks associated with global electronics manufacturing.

One of the main themes of the Charlie Barnhart & Associates study is regionalization. "The trend of electronics manufacturing is regionalization. The data that we have collected over the last couple of years verifies this. Electronics OEMs are building in a region for a region," explains Miscoll. For plastics processors with customers in the electronics/electrical industry, such a trend may mean they not only require a global footprint, but also have the design and manufacturing flexibility to make different parts/systems in different regions. Profitably, of course.

According to Miscoll, and good news for many processors and mold makers, an increasing number of EMS manufacturers are focusing more on a "Total Cost of Outsourcing" that takes a holistic approach to a system's cost and doesn't focus entirely on wages or other costs. Energy costs, costs related to transportation and regulation, tax burdens, and other considerations are being taken into account, good news for processors in developed regions who long have argued that their TCO can match or beat those of companies whose advantage primarily is access to cheap labor.

The main focus of the study is a comparative analysis of the relative attractiveness of Mexico versus China for EMS manufacturers. "Labor rates and other costs in EMS production hubs are changing. When an electronics manufacturing service provider is commercializing its production in the United States, Mexico is the best cost option in terms of manufacturing," notes Miscoll.

Miscoll was recently interviewed by The Offshore Group, a provider of outsourced manufacturing support ("shelter" services) in Mexico. That interview, available as an audio podcast as well as in written form, can be accessed by clicking on the link.

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