Short ways out of the crisis

As the economic crisis hits hard on a global scale,
Shaun Ashmead at Axiom Manufacturing Services asks whether OEMs manufacturing decisions have been affected by rising oil prices, fluctuating exchange rates and whether higher transportation costs means that OEMs should now focus on working with local EMS providers. Can focusing in this way help alleviate recessional impacts and can this contribute positively to green issues? Uncertain transportation costs as a result of fluctuating oil prices, a lack of credit, variable exchange rates and a slowdown in the import and export markets are having a major effect on costs these days.

At such times it is vital that European businesses think laterally in order to remain afloat and OEMs should consider the positive impacts of focusing on local EMS providers. Not only would this boost the economy, helping to safeguard industry jobs, intelligence and the future of the industry, it would also help reduce costs and bring much needed stability to the local market.

In Europe we have close borders with our neighbours meaning that the benefits of off-shoring, such as cost reduction and the sharing of knowledge can be realised without transporting across vast distances.

The environmental impact of sourcing on-shore or locally to the country of origin is also significant. At a time when many sectors are re-evaluating their actions and policies in order to reduce their carbon footprint, the reduction of shipping in this way can only have a positive impact. Imports and exports account for a large proportion of the worlds carbon footprint and reducing European industrys contribution to this will help meet carbon reduction targets and improve environmental sustainability in the longer term.

Because of close collaboration with supply chain partners EMS companies are able to reduce total inventory levels, decrease product obsolescence, lower transaction costs and react and respond more quickly to changes in the market.

Certainly in highly skilled markets such as electronics, it may be argued that the more sophisticated the product, the greater the case for keeping production within Europe. A key factor to support this is proximity; if OEMs are closer to their EMS providers then higher technology products can be manufactured in close partnership, ensuring complete understanding of all processes without the short-fallings of a long distance relationship.

Add to this the fact that EMS providers are crucial to the wider economy through their work in helping innovative technology start-ups get their products beyond concept stage. It is therefore evident that there is an extremely strong case for focusing on out-sourcing to local EMS providers to benefit not only the manufacturing industry in Europe but also its carbon footprint.