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Emergence of Ukraine, Middle East and North Africa as an Electronic Manufacturing Hub
Frost & Sullivan, Aug 2007, Pages: 13
Promise of Cost-effective Production Draws Global Electronics Manufacturers to UMENA Region
The increasing need for original equipment manufacturers (OEMs) to improve their outsourcing model is driving the growth of the electronics manufacturing services (EMS) industry. Fluctuating end-user demand coupled with intense competition and the globalisation of the electronics industry has compelled OEMs and EMS providers to investigate untapped growth markets in terms of boosting their competitive advantage and implementing cost-effective production strategies. This trend has led to the emergence of new electronics manufacturing clusters in and around demand-driven markets with the Ukraine, Middle East and North Africa (UMENA) region emerging as a particularly attractive prospect.
'Rapidly changing consumer behaviour coupled with the falling prices of consumer electronics is negatively affecting the profit margins of OEMs, pressuring them to look for cost-effective outsourcing solutions,' says the analyst of this research service. 'In this context, the promise of low-cost production and proximity to European consumer markets is underlining UMENA’s position as a suitable destination for global electronics manufacturers.'
Multiple Advantages Reinforce UMENA’s Growing Importance as a Global Electronics Manufacturing Hub, Regional Market Size Set to Double
The major drivers of the electronics manufacturing industry in UMENA include an abundance of skilled labour, proximity to Western Europe, a favourable manufacturing environment, surging economies and rapidly expanding local markets. At the same time, subsidies and tax waivers offered by UMENA governments to attract foreign direct investments and the presence of global production networks are attracting electronics manufacturers. Advanced technology and high-tech research facilities, the establishment of numerous technology parks coupled with a large pool of skilled labour are emphasising the importance of the region as an emerging low-cost electronics manufacturing hub in the global market.
The major challenges faced by the industry in the region include poor infrastructure and an underdeveloped component supplier base. Promisingly, however, strategic initiatives such as streamlining the flow of goods and services, and the building of a reliable supplier base are having a positive impact on EMS providers in the region. 'Principal demand for the electronics manufacturing industry is anticipated to derive from consumer electronics, telecommunications and industrial electronics sectors,' adds the analyst. 'Frost & Sullivan anticipates sustainable growth in the electronic manufacturing industry, with market size in UMENA set to double by the end of 2010.'
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