Pressure is increasing on the remaining small- and medium-sized contract electronics manufacturers throughout Europe.
Nick Fairhead, sales director at Bedford-based MRP Electronics, said price pressure on OEMs is filtering down the supply chain to SMEs.
“CEMs need to be innovative to reduce costs to be competitive and a large number have done just that. However, an increasing number have been folding in the last 18 months… More will struggle,” he said.
While military and medical work can still be picked up from customers in the UK, most other markets have gone overseas to take advantage of lower-labour cost manufacturing, added Fairhead.
MRP has got out of this pressure cooker and been acquired by French electronic and electro-mechanical sub-assembly manufacturing group Asteel.
“Asteel has seen these same pressures hit CEMs in France but there is a massive gap in the market between tier-one CEMs and the SMEs, there is nothing between,” added Fairhead.
Fairhead said he sees Asteel filling that gap. The company is aiming for $1bn turnover in 2010 and has 12 manufacturing locations in France and Tunisia. Current turnover is around $750m.
“The idea is low and medium volumes, higher product mix and a very flexible service. It is a technology-driven business, not volume-driven,” he said.
Fairhead’s argument is that a lone SME cannot get too far back in the design cycle to be able to offer development and design for manufacturing and they cannot offer a route to volume manufacturing.
MRP will keep all its 130 staff, according to Fairhead and will be expected by Asteel to grow from its current turnover of around £12m.