Even as merger and acquisition activity by the largest electronics manufacturing services vendors appears to be leveling off, consolidation in the midtier is picking up, as smaller EMS players seek to grow geographically, acquire factories and design capability, and enter new market segments.
In the latest example, Creation Technologies Inc. today announced it has acquired Second Source System Inc. (Richardson, Texas), a privately held contract manufacturer with projected 2004 revenue of $16 million.
Second Source operates surface mount technology lines and has 15 customers in the communications, industrial controls, computer, and medical product markets. The move was aimed at deepening Creation's penetration in markets it currently serves, as well as expanding the Vancouver, B.C.-based company's footprint in the United States. The acquisition will give Creation its sixth site in North America, and its second in the U.S.
The new operation will be renamed Creation Technologies-Dallas, and will provide EMS services for medium-volume, highly complex electronics products, Creation said in a statement.
The operation will be moved to a new 40,000 sq. ft. location in nearby Plano, Texas in January 2005.
"The Southern United States is a key area of focus for us as we believe this region is underserved by EMS companies who are able to provide full expertise in the area of complex electronics," said Arthur Tymos, president of Creation Technologies. "We became particularly interested in Texas given the number of potential customers and the associated growth opportunities for Creation. Adding this location in the Southern U.S. is a significant step forward in our strategy to be the service provider of choice in North America in our market niche."
Creation, with approxiamtely $100 million in revenue, recently acquired $35 million Eder Industries Inc. (Milwaukee) from APW Ltd., expanding its design capabilities and establishing a footprint in the Midwestern U.S.