Comment: Asia CEMs not always best option

Paul Deehan

As well as all the other reasons to keep manufacturing local, certain parts of Europe are now comparable with China and Malaysia when it comes to pricing, which is probably why we are seeing a resurgence of manufacturing in Europe and an increase in ‘reshoring’ – business returning to the continent, primarily from South East Asia.

No one is seriously predicting the return of high volume consumer goods manufacture to Europe any time soon, although even very big smart mobile device makers have had well-documented issues, especially concerning conditions in the Asian factories where their aspirational products are made – there’s a price for everything it seems.

But leaving aside the consumer business, a significant number of our customers are looking to reshore, as the difficulties of dealing with a manufacturing partner on the other side of the world, speaking a different language and in a different time zone, become apparent.

The problems of working with a CEM based in Asia are exacerbated when the build is complex.

Companies that operate in high-reliability systems markets, such as aerospace and defence, industrial, medical, mass transportation, test and measurement, tend not to require the volumes that allow dedicated production lines to be set up and run 24/7.

Instead, their order size may be in the low thousands, or much less, yet their application may require enhanced testing at elevated temperatures for a prolonged period to guarantee quality and long life.

Plainly speaking, this is not what most Asian CEMs are set up to deliver; more importantly, they are not interested in doing so.

Yet what’s the alternative, if price is an issue – and it almost always is, even defence budgets are scrutinised and cut these days.

We recognise that many of our customers are under pressure to regularly review pricing structures in order to remain competitive. We have been able to alleviate some of this pressure through offering low-cost manufacturing in Slovakia.

The upturn in our business has come from two sources: existing customers moving all or part of their work streams to Slovakia to benefit from lower costs; and a number of brand new customers from around the globe placing work in the facility, including a certain amount of work coming back from Asia into Slovakia. We predict that this trend for re-shoring or dual sourcing will to continue over the next few years, particularly as the cost structure from our Slovakia facility is among the lowest in the EU, and comparable with countries in South East Asia.

Paul Deehan is CEO at AWS Group

Tags:
China, manufacturing