The emergence of the electronics manufacturing services (EMS) sector has been wonderful to watch. The bigger impact, though, has been on the supply chain as these business trends have created what I see as one of the best supply chains in the world.
The electronics manufacturing services (EMS) industry took globalization and ran with it. The largest EMS companies built massive campus facilities in Asia, chasing low labour costs and rationalizing the supply chain as they went. Asia wasn't the only destination for lower cost manufacturing: Mexico, Brazil and Eastern Europe with their large pools of skilled labor and proximity to the world's largest consumer markets were also the targets for development.
The next major influence on the EMS was a negative one. During the tech-wreck (aka the dotcom boom and bust of 2000) and subsequent downturns, the EMS industry was in a position of substantial over capacity and when the supply and demand pendulum swings heavily against you the only way to survive is to be the best you can be, the most competitive you can be and the most reliable you can be. This turmoil in the market toughened the industry beyond recognition, improving systems and controls and forcing yet more soul searching into how they could simply do things better. Better than before, but more importantly better than everyone else
The line between cooperation & competition
Competition is a wonderful thing and doubtless if you live in a big city you know that the area with the most restaurants is generally the area with the best restaurants. The EMS industry not only developed itself into a very sophisticated industry with many global multi billion dollar players, but it also built a quite superb supply chain around it.
One of the most notable impacts I saw in my career was when the industry entered new geographies. I remember some of the early campuses being built in Asia, Mexico, Poland, Hungary and Romania and the impact they had. One of the largest projects I was lucky enough to be involved in was shaping the campus in Guadalajara, Mexico, for Flextronics (now called Flex). When we arrived, SCI (now called Sanmina) had been there for sometime, but there was little critical mass in the supply chain. In the time we arrived, several other large contract manufacturers, such as Jabil and Solectron (now a part of Flex), also invested heavily in the city and the whole process taught me so much about how an industry can develop. The arrival of three of four largest contract manufacturers in the world in the summer of 1996 changed Guadalajara and its supply chain forever, with suppliers beating a path to our door.
EMS companies cannot survive in isolation and by recognizing that we needed a strong vendor community we were able to grow in the region more rapidly than if we tried to do everything ourselves. Rather than build factories, we built a campus with a strip mall of units that could be rented out to the vendors that we and other EMS companies needed around us, including sheet metalwork companies, moulders, and shipping companies. We worked with the local suppliers to turn them into the vendors we needed. In addition, we built the infrastructure the area needed to be a serious manufacturing region.