CBA to Provide Q4 2018 EMS Industry Update

October 3, 2018, Maui, Hawaii.  Charlie Barnhart & Associates, LLC (CBA) has scheduled the Fourth Quarter 2016 Outsourcing Navigator Council (ONC) webinar for its member companies for October 27, 2016.  During this webinar CBA will present its updated electronics manufacturing services (EMS) industry data for the third quarter 2016 and forecast for fourth quarter 2016.  The new data will also be disseminated to ONC members in CBA’s updated Total Cost of Outsourcing (TCO) tool.

Members of the ONC receive quarterly industry data reports, associated webinars, and updated TCO tools in Excel format.  The webinar for this quarter is scheduled for Thursday, October 27, 2016 at 9am PDT.  This webinar will include:

  1. New ONC Data-set (major upgrade!)
  2. Cost of Labor Update
  3. Corporate Costs are Rising
  4. Solution Cycle is Lengthening
  5. Capacity Utilization is Flat (Except for one Geo!)
  6. Geographic Risk is Increasing

For more information about joining the ONC and an overview of the data sets and benefits included in membership, please refer to this link: http://charliebarnhart.com/index.php/services/onc/

About Charlie Barnhart & Associates, LLC  (www.charliebarnhart.com)

CBA is a business consultancy focused on the intersection of the producers and consumers of electronic manufacturing services. In this role, CBA researches, advises and trains clients on a broad array of issues including; like-kind/scale-equivalent assessment, industry best-practices, should-cost modeling, risk-mitigation and algorithmic trend & pattern analysis. Additionally CBA created and hosts the Outsourcing Navigator Council, the industry’s broadest collaboration of OEMs, EMS and associated Institutions who subscribe and apply CBA’s data-base and tool-set in the design and management of their global manufacturing solutions.

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The True Cost of Labor

An Insider’s Insights

By: Charlie Barnhart

When we talk to OEMs about the fully burdened cost of labor, in geographies around the world, they often are in disbelief of the numbers we present.

“That’s not what I pay!”

Actually it is. Doesn’t matter if it’s an OEM in North America, Europe, or just about anywhere else, virtually everyone thinks they are paying far less for labor than we report in our Outsourcing Navigator Council but the reality of the situation is that they are paying considerably more than they believe.  How can we so certain?

Two reasons:

  1. We have an unprecedented level of insight into this calculation from running and advising companies in the Global Manufacturing Services (GMS) industry, both large and small, for over a third of a century.
  2. Our client list and therefore our data base is one of the largest in the industry thus providing us with a constant and reliable stream of industry comparables during both good times and bad.

Insider Insight: Admittedly, the labor rate that appears on EMS/ODM quotes (or is provided to OEMs in discussion) can have very little relation to what’s actually included in a contractor’s quotation as the quoting process is as much an art as it is a science. This is true as there aren’t any accounting “rules” related to quotations and a contractor can present whatever number they wish, as long as they are in compliance with the requisite taxing and securities regulations. Which begs the question:

“Do you as an OEM share your detailed internal cost-accounting data with your customers?”

Never forget that GMS companies (be they EMS or ODM) are for-profit enterprises and therefore have to:

1. Fully recover all their costs,

2. Include sufficient margin in their price to produce a profit.

And if they don’t they will simply go out of business!

Insider Insight: For an EMS or ODM the simple truth is that the more they tell an OEM about their internal numbers the more the OEM will pick-away at their price. It’s just the way business works. We get what we negotiate, so handing the person you are “negotiating” with a loaded gun is a really, really bad idea.

As it says on our website: “Myths, misconceptions and financial gamesmanship have made rational decision-making relative to Outsourcing virtually impossible.”

And our data clearly reveals just how dissatisfied both the OEM & GMS community have become with their relationships, i.e. “The level of mistrust between the parties is astounding, and as far as we can tell wholly unique to this industry.” This is why CBA decided to construct the Outsourcing Navigator Council as a venue where professionals on both sides of the table can get real data-based, straight forward answers to their questions!

Bottom-line, you can trust the data from CBA, even if the numbers sound strange to your ear!

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Insights from CBA’s Latest Industry Report

October 21, 2017, Maui, Hawaii:  Charlie Barnhart & Associates, LLC (CBA)  released its Fourth Quarter 2015 Outsourcing Navigator Council (ONC) report to member companies last week.  The main issues discussed in the accompanying webinar were:

  1. Re-introduction of full TCO (Total Cost of Outsourcing) model.  Following an absence of two quarters necessitated by pricing issues in the industry, CBA has reintroduced the OEM Internal Spend and Geographic Risk Modules that in combination with the Global Pricing Module represent the full TCO analysis.
  2. On average, OEMs spend more internally in support of their outsourcing initiatives than they pay their EMS for transformation services.
  3. OEMs in general are underestimating the cost of building their own products.  In 4 out of the 5 surveys conducted this quarter, the expectations of OEM’s were below breakeven of even the most efficient EMS companies.
  4. The rate of reengagement by OEMs in the supply-chain (i.e. OEM controls pricing) has increased above CBA’s initial estimate from the first quarter this year.

Members of the ONC receive quarterly industry data reports, associated webinars, and updated Total Cost of Outsourcing (TCO) Tool in Excel format.  For more information about joining the ONC and an overview of the data sets and benefits included in membership, please refer to this website: http://charliebarnhart.com/index.php/services/onc/

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CBA to Provide EMS Industry Forecast for 2017 and Beyond

January 3, 2019, Maui, Hawaii.  Charlie Barnhart & Associates, LLC (CBA) has scheduled the release of its annual electronics manufacturing services (EMS) industry forecast for January 19, 2017.  This forecast will include: five-year economic forecast for EMS industry; global labor rates, corporate costs, mark-up, capacity utilization, and solution cycle (lead-time) by geography for all four quarters of 2017.

These data sets will be released to members of CBA’s Outsourcing Navigator Council (ONC) on January 16, 2017, and then presented and discussed in a webinar on January 19, 2017.  The new data will also be disseminated to ONC members in CBA’s updated Total Cost of Outsourcing (TCO) tool.

“The industry faces some challenging years ahead, so it is critical that company executives be aware of these data trends and adjust their businesses accordingly” commented Charlie Barnhart.  “I have worked in the EMS industry for over thirty years and have seen many business cycles. I created the ONC to help inform EMS and OEM companies on the ever-changing business dynamics and advise clients on how best to adjust their strategies to optimize their performance.”

Members of the ONC receive quarterly industry data reports, associated webinars, and updated TCO tools in Excel format.  For more information about joining the ONC and an overview of the data sets and benefits included in membership, please refer to this link: http://charliebarnhart.com/index.php/services/onc/

About Charlie Barnhart & Associates, LLC  (www.charliebarnhart.com)

CBA is a business consultancy focused on the intersection of the producers and consumers of electronic manufacturing services. In this role, CBA researches, advises and trains clients on a broad array of issues including; like-kind/scale-equivalent assessment, industry best-practices, should-cost modeling, risk-mitigation and algorithmic trend & pattern analysis. Additionally CBA created and hosts the Outsourcing Navigator Council, the industry’s broadest collaboration of OEMs, EMS and associated Institutions who subscribe and apply CBA’s data-base and tool-set in the design and management of their global manufacturing solutions.

Read More »