The landscape of the UK EMS industry has changed considerably in the last 10 years as companies continue to move manufacturing to lower cost regions. Stadium Electronics managing director, Richard Reid, looks at which direction EMS may take in the future As the trend for offshore manufacture continues, the UK EMS industry must review positioning to remain competitive and viable in the current climate. According to Reed Research, the European EMS market is forecast to be worth 4.8 billion by 2011, however, the UK EMS sector is expected to lose overall share, accounting for just over five per cent by 2011.
UK EMS companies are already basing their business model upon high value, low volume and high technology mix production utilising more design and engineering expertise than that of low cost region providers, but it is reported that in order for small to medium sized EMS providers to remain successful, the trend towards niche market targeting is key.
The medical sector in particular is a high growth area for the electronics industry worldwide, not only in medical devices but within a wider spectrum of products in the healthcare and wellbeing markets including consumer marketed products with electronic content.
Driven by the increasing average age of the population, technology innovations and a predicted growth of medical and healthcare-related products in this sector, means this is a very attractive area for EMS providers with the right offering.
Capability
As is the case with most EMS providers, offering a complete end-to-end solution beyond manufacturing brings the most opportunity but in the medical and healthcare sector added value in new product introduction, product life cycle management, full product build, packaging and logistics is especially appealing as OEMs look to concentrate their resources on purely development and marketing.
Experience already gained in medical products is an obvious prerequisite for further growth within EMS providers in this sector. However, if you are not already involved in the medical sector then proven results in related products such as scientific instruments, monitoring devices, laboratory equipment, healthcare-related equipment and consumables will portray competence through a product with similar high technology high mix characteristics.
Expertise in another niche market with equally stringent regulations, the automotive or defence sectors for example, will also demonstrate higher level capability and as long as the correct regulatory approvals are in place to support this.
Regulation
ISO 13485:2003 approval specifies key requirements for a quality management system in order to demonstrate ability to manufacture or assemble medical devices and related products.
The standard is internationally recognised, is based upon the USA FDA requirements and focuses on maintaining product safety, risk management, inspection and traceability, documentation, validation of processes for sterile medical devices and demonstrates an organisations ability to provide medical devices that consistently meet customer and regulatory requirements.
We have this year completed a program of implementation to this standard at Stadium which includes a class 10k clean room at our facility in China.
The offshore argument
Medical EMS for UK OEMs is typically local due to the complexity of the products and need to be in close proximity to the customer. Language barriers, lengthy set up periods, IPR and quality issues typically associated with taking production offshore, leaves UK EMS providers better placed at servicing the medical sector. However, as OEMs experience the same increasing time to market pressures and price competition as their counterparts in the consumer or industrial sectors for example, the need for a long term plan as the product matures can result in the customer driving the offshore manufacturing decision.
EMS providers with strategic overseas partnerships or wholly owned offshore facilities can offer true product life cycle management and a long term partner approach. In 2000 Stadium acquired a facility in Southern China which supports the UK EMS operation in this way. Products typically begin their production life at our facility in Hartlepool, and as the products mature or volumes increase there is opportunity to move production to China passing on savings to the customer whilst maintaining product integrity and local product management in the UK.
Barriers
It may be argued that despite having the relevant capability and approvals in place, the move from EMS providers into the medical and healthcare market will still be met with a degree of reservation from the OEM.
There is a perception that EMS providers lack knowledge in the medical sector through experience that is too diverse covering a broad spectrum of markets and additionally, that relatively low volume production is not attractive to contract manufacturers. This may have been true a few years ago but, as the industry has matured and more production moved offshore, the trend actually suggests otherwise. EMS providers have perhaps just not been very good at telling anyone what they can now offer. It brings an opportunity for increased communications activity and to revisit positioning strategy and the industry becomes more market focused.
The UK remains a strong contender for EMS, not only in manufacturing and assembly but through design and added value in the growing niche markets such as medical and healthcare. As long as we continue to be market responsive and further strengthen our offering to the niche OEMs there is a strong future for EMS in the UK.