The Rising Role Of Contract Manufacturing Companies

The Rising Role Of Contract Manufacturing Companies

In 1977 businessman Roy Kusumoto established a solar panel manufacturing company called Solectron. To help raise the funds required to set up production he began offering electronic manufacturing services to the major original equipment manufacturers (OEMs) around Silicon Valley. Up until that time most of these companies did their own assembly work in-house but Roy Kusumoto reasoned that during peak periods he could offer them a viable alternative to having to put on extra staff to cope with the extra work load. Staff that would become again redundant once the peak passed.

A year later he sold Solectron to Winston H. Chen, the EMS business model took off and all plans to produce solar panels went by the wayside. Solectron was sold again in 2007 to Flexitron but not before it had spent many years as one of the largest international electronics manufacturing companies in the world and established a trend of outsourcing in the electronics industry that changed forever the way most OEMs operate.

The Rising Role Of Contract Manufacturing Companies

Most of the electronic manufacturing services that followed in its wake primarily started out producing the PCBs (printed circuit boards) for communication and computer systems but the OEMs did the system assembly work themselves. Today though most if not all electronic contract manufacturing companies have broadened their range of services considerably, branching out into services design work, system assembly, testing, warranty and repair work, delivery and logistics, software design and customer service. They’ve also moved into other industries where electronic equipment has become a standard and important part of the production process. Industries such as medical, industrial and instrumentation.

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