Contract Manufacturing Outlook
An interesting press release from Frost & Sullivan...
Monday August 17, 8:05 am Eastern Time
Company Press Release
SOURCE: Frost & Sullivan
Frost & Sullivan: The Latest Cost Saving Strategy: Contract
Manufacturing in the Data Communications and Medical Markets
MOUNTAIN VIEW, Calif., Aug. 17 /PRNewswire/ -- As original equipment manufacturers (OEMs) experience growing
competitive pressures in many industries, companies are increasingly searching for ways to become more cost-effective.
Contract manufacturing (CM) is becoming a popular method for OEMs to increase productivity and cut costs. By outsourcing
the actual manufacturing of their products to contract manufacturers, companies are better able to utilize their time and
resources in designing, marketing and selling their products.
According to new strategic research conducted by Frost & Sullivan (http://www.frost.com), Contract Manufacturing Markets
for Data Communications and Medical Markets, the medical and the data communications CM markets, although in different
stages of development, offer the potential for incredible growth. CM growth in both industries is expected to be driven by the
rapid growth of the actual data communications and medical markets, which will lead to an increase in the amount of services
outsourced. The medical CM market was worth nearly $1.5 billion in 1997, and the data communications CM market, much
bigger than medical, hit $3.5 billion in the same year.
Large contract manufacturers currently dominate both the data communications and the medical markets. While the data
communications market remains one of the most important markets for large CMs, the medical market continues to gain
importance. Typically, the data communications market generates about 10 to 30 percent of the total revenue for large CMs, while the revenue produced from
medical operations constitutes about 10 percent of the total. Smaller CMs account for most of the medical CM revenue.
Since contract manufacturing is utilized as a cost saving strategy, contract manufacturers must be able to provide everything in the production process, from
maintaining the relationship to cost consequences for the remaining in-house production. The introduction of specialized prototyping and product development
centers will become a competitive threat to contract manufacturers. Although they are not yet capable of mass production, these centers specialize in transforming
concepts into mass production ready products quicker than traditional CMs.
''Contract manufacturers in the data communications market are perfectly positioned for continuous growth,'' says Frost & Sullivan Analyst Jouni Forsman. The
large OEMs in this market have accepted the idea of outsourcing, and the leading CMs have mastered the art of providing manufacturing services. CMs now
must provide more than just the core manufacturing services, such as design, prototyping, and logistics operations. The new goal for successful CMs is to take the
product from ''womb to tomb.''
The medical market has not yet caught up to the more advanced CM markets, but it is expected to face the same issues as the data communications CM market.
As increasing numbers of medical OEMs decide to outsource product-related business functions, the key to success for the smaller CMs is to retain their
specialized niche markets. In addition to staying up to date on the changing FDA rules, regulations and operating procedures, medical CMs must provide high
quality, reliable, timely, flexible and affordable service.
This new study by Frost & Sullivan contains an analysis of each market which includes revenue forecasts, market shares, technology and market trends,
competitive issues, and strategies. In addition, this study provides a qualitative look into the CM market from the OEM's point-of-view. Some issues covered are
the OEM's propensity to outsource different services, primary contract manufacturer selection criteria, OEM's relationship to current CMs, main challenges in
using CMs, and the future of CM as OEMs see it.
This contract manufacturing industry research has integrated the Market Engineering consulting philosophy into the entire research process. Critical phases of this
research include: Identification of industry challenges, market engineering measurements, strategic recommendations, planning and market monitoring. All of the
vital elements of this system help market participants navigate successfully through the data communications and medical contract manufacturing markets.
The companies participating in this market include: Benchmark Electronics Inc. [NYSE:BHE - news], Bull Electronics, Bulova Technologie, LLC, Celestica Inc.
[NYSE:CLS - news], Clinton Electronics Corporation, Comtel Electronics, Diagnostic Instrument Corporation, DII Group Inc. [Nasdaq:DIIG - news], EFTC,
Elamex S.A. de C.V., Electronic Manufacturing Systems, EOG Inc., Flextronics International, General Technology Corporation, Group Technologies Corp., IEC
Electronics Corporation [Nasdaq:IECE - news], International Manufacturing Services Inc. [Nasdaq:IMSX - news], Isis Surface Mounting, Jabil Circuit
Company, K-Byte Manufacturing, Kimball Electronics Group, LaBarge Incorporated [AMEX:LB - news], Mack Technologies Inc., Manufacturers' Services
Ltd., Manu-Tronics Inc., Mid-South Industries Inc., Nexus Custom Electronics, Plexus Corporation [Nasdaq:PLXS - news], Pragmatech Inc., Qtron Inc.,
Raven Industries Inc. [Nasdaq:RAVN - news], RELA Inc., Sanmina Corporation [Nasdaq:SANM - news], SCI Systems Inc., SeaMED Corp., Senior Systems
Technology Inc., Smartflex Systems, Inc., Solectron Corporation, Sparton Electronics, Stanford Telecom Inc., Tanon Manufacturing, Inc., Technical
Manufacturing Corporation, Turtle Mountain Corporation, XeTel Corporation, Data Communications Original Equipment Manufacturers, 3Com Corporation,
ADC Telecommunications, Inc., Advanced Fibre Communications [Nasdaq:AFCI - news], Advanced Video Access, Alcatel Network Systems, Amati
Communications Corporation, Ascend Communications, Aware Inc. [Nasdaq:AWRE - news], Bay Networks Inc. [NYSE:BAY - news], Cabletron Network
Express, Cisco Systems Inc. [Nasdaq:CSCO - news], Compaq Computer Corporation [NYSE:CPQ - news], Copper Mountain Networks Inc., DSC
Communications, General DataComm Industries Inc., Newbridge Networks, Northern Telecom/Nortel, Orckit Communications Inc., PairGain Technologies
Inc., Paradyne Corp., Performance Telecom Corporation, RELTEC Corp., Shiva Corp. [Nasdaq:SHVA - news], Texas Instruments, U.S. Robotics, Westell
Technologies Inc. [Nasdaq:WSTL - news], Medical Device Original Equipment Manufacturers, Abbott Labs/Critical Care Systems, Advanced Medical
Products Inc. [OTC BB:ADVA - news], Analogic Corp. [Nasdaq:ALOG - news], Applied Cardiac Systems, Axon Systems Inc., Baxter Healthcare
Corporation, Baxter Renal Division, Bayer Corp./ Diagnostics Division, Boehringer Mannheim Corporation, Braemer Inc., Braun Thermoscan, Cadwell
Laboratories Inc., Cascade Medical Inc., Corometrics Medical Systems Inc., Criticare Systems Inc. [Nasdaq:CXIM - news], Datascope Corp. [Nasdaq:DSCP
- news], Diagnostic Monitoring Corp., Diametrics Medical Inc. [Nasdaq:DMED - news], Discrete Data Systems Inc., GE Medical Systems, Grass Instruments,
Hewlett-Packard Medical Products Group, Home Diagnostics Inc., Imex Medical Systems Inc., Ivy Biomedical Systems Inc., Johnson & Johnson Medical Inc.,
Koven Technology, LifeScan Inc., Mallinckrodt Medical Inc., Medical Data Electronics Inc., Medicomp Inc., Nellcor Puritan Bennett Inc., Nonin Medical Inc.,
Novametrix Medical Systems, Inc., Ohmeda Inc., Oxford Instruments, Pulse Metric Inc., Quinton Instrument Co., SensorMedics Corporation, Siemens Medical
Systems Inc., Spacelabs Medical Inc. [Nasdaq:SLMD - news], Related Companies: Oracle Corp. [Nasdaq:ORCL - news], SAP America, Inc.
Frost & Sullivan is an international marketing consulting company that monitors the surface mount technology industry for market trends, market measurements
and strategies. This ongoing research is utilized to update a series of research publications such as #5586-28 U.S. Electronic Contract Manufacturing Markets,
and to support industry participants with customized consulting needs. Free executive summaries of all Frost & Sullivan reports are available to the press.
Visit Frost & Sullivan's web site at: frost.com
Report: 5042-28 Publication Date: August 1998 Price: $2950
SOURCE: Frost & Sullivan |
