Pricing and labor costs in the global electronic manufacturing services market are believed to be stabilizing with minor variations across geographies as efforts worldwide to relieve tensions in the economy begins to yield results, according to a research company.
In a report, Charlie Barnhart & Associates noted cost of labor within the EMS market remained unchanged in May and June and margins across the industry were flat except in the still turbulent automotive sector. The market research and consulting company also said it expects the EMS sector to continue to stabilize through the current quarter of the year.
"Margins in all sectors (except automotive) are expected to remain relatively constant in the third quarter as backlogs and book-to-bill ratios stabilize," said Charlie Barnhart, principal at Charlie Barnhart & Associates, in a report. "Historically, during times of falling demand in the EMS industry average margin expectation tends to be flat to slightly down."
Barnhart said the high-tech contract manufacturing industry remains weak as customers watch carefully for signs of a recovery in demand and as the supply chain continue to reflect the negative impact from the worldwide economic recession that sprung up in the United States in 2008.
"Short of a significant reversal in valuation trends of the U.S. dollar, the burdened cost of labor for electronics manufacturing services in the third quarter are expect to be flat," Barnhart added. "Flat to very slightly lower in Mexico; marginally higher in Canada, Eastern Europe, Japan, China and Australia and; flat in the balance of the major global geographies."
The researcher predicts EMS manufacturing capacity and lead times will remain under pressure although he forecasts some improvement in the second half of this year compared with the first half.
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