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Growth Opportunities in the North American Aerospace and Defense EMS Provider Markets
Frost & Sullivan, Sep 2006
This research service covers the electronics manufacturing service (EMS) providers opportunities in the North American aerospace and defense (A&D) industry. The research also discusses various trends within the EMS penetration in North American market as compared to the world A&D industry. These trends have been analysed in terms drivers, restraints, market valuations, market revenues and competitive analysis. Top ten industry challenges affecting EMS providers opportunities are also discussed. The research also provides competitive roadmap, mergers and acquisitions trends and market share analysis of the top EMS providers in the A&D industry.
This Frost & Sullivan research service titled Growth Opportunities in the North American Aerospace & Defense EMS Provider Markets provides an overview of EMS opportunities within the Aerospace & Defense segment along with revenue forecasts, analysis of key drivers and restraints, impacts of major industry challenges, competitive analysis, and various trends affecting growth opportunities. The study also contains a competitive roadmap of EMS providers along with analysis of mergers and acquisition trends. In this analysis, Frost & Sullivan's expert analysts thoroughly examine the following markets: aerospace - both military and commercial - and defense industry.
Market Sectors
Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research:
- Commercial aerospace sector
- Military aerospace sector
- Defense sector
Technologies
The following technologies are covered in this research:
- RFID
- GPS
- Wireless communication technologies
Market Overview
Potential in Aerospace and Defense Industry Boosts EMS Progress
The electronics manufacturing service (EMS) penetration within the aerospace and defense (A&D) industry has undergone remarkable transformation. Increasing A&D contracts have spurred original equipment manufacturers (OEMs) to embrace EMS providers as strategic partners. As the A&D industry continues to offer promising opportunities, the number of EMS participants is likely to increase. Though the number of EMS providers has improved, especially since the recovery of the electronics industry, the rate of penetration of EMS providers in the industry has still not reached a significant number, according to the analyst of the study. The major deterrents to this are that EMS providers lack requisite infrastructure capabilities, financial stability, strong local supplier network, design and engineering skills, and low-volume high-mix manufacturing expertise.
As with any other industry, the key driver for outsourcing to EMS providers is cost management. By outsourcing to EMS providers, OEMs can offshoot expenses related to manufacturing, logistics, overhead expenses, and other infrastructure costs. With an EMS provider, OEMs need not upgrade their surface mount technology (SMT) line on a regular basis to keep up with the changing requirements of the electronics industry. This results in major cost savings, as a single SMT line can cost well over a million, and through reduction in personnel costs to operate an SMT line. OEMs are increasing outsourcing for enhanced cost and resource management.
Demand from Defense Industry Drives Market Growth
The A&D industry is prone to a high degree of engineering changes. This is a major challenge for OEMs, as they need to constantly ramp up their manufacturing sites and production lines while ensuring cost optimization. EMS providers, on the other hand, have the expertise and resources to cater to the manufacturing and quality demands of the A&D industry. This is mainly due to their foray into medical, industrial, and automotive industries.
However, the rising demand for applications in the defense industry is driving growth. The wars on terrorism and in Iraq are key reasons for market expansion. The demand for sophisticated weaponry and the need for real time communication have been major instigators for increased defense spending. Additionally, products that require electronic assemblies need to be replaced and stocked during a conflict. This has increased defense spending and driven growth for the EMS industry. Some OEMs have been so busy during the war with Iraq, that they have been forced to outsource manufacturing to a third party to cope with demand, explains the analyst. In addition to this, OEMs can depend on EMS providers for a continuous supply, which is critical. This is also driving growth in the EMS provider market. After the 9/11 attack, there has been increasing spending from Homeland Security to counter terrorism.
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