By Ben Ames
Recent consolidation in the electronics manufacturing industry has helped to reduce excessive infrastructure, but the industry has still outgrown its market, said Jeff Kaylor at the Military & Aerospace Electronics East Conference in Baltimore on May 18. Kaylor is principal applications specialist at Sypris Electronics, Louisville, Ky.
At the same time, prime contractors are doing less engineering with discrete components. Instead they buy finished platforms from their suppliers, and act as integrators of complex systems-of-systems, he said. In turn, that means that second- and third-tier contractors must tighten their focus on core competencies, and outsource the rest.
Those mid-level contractors are focusing on the design and integration of individual systems and subsystems, Kaylor said. That means they are looking for help in manufacturing circuit card assemblies and other electronics.
Taken together, these trends have driven up the market for outsourced manufacturing of electronics. That industry will rise from $3.6 billion in 2002 to $4.2 billion by 2007, for business in the worldwide defense and commercial aviation sector.
Those numbers look even better for the defense market alone, because the commercial aviation sector has been shrinking, said Kaylor. Contract electronics manufacturing for defense should rise at a 7.2 percent compound annual growth rate by 2007, compared to commercial aviation falling by 2.1 percent over the same period.
He cited a study called the "Worldwide Contract Electronics Manufacturing Services Market, 10th edition," from Electronic Trend Publications.