Tier two firms face contract manufacturer competitionAlex Mayhew-SmithThe big contract manufacturers have started to move in on work traditionally carried out by the tier two firms, according to Gary Howse, MD of Hansatech.
"Major players are already doing this in the UK," said Howse.
For tier two firms to stay in the game they will be forced to reduce margins, according to Howse who added that some firms have already suffered.
One example is Leaf Technologies of Northern Ireland, which was placed into administration about a month ago and a sale of the firm is being looked for. The firm employs some 170 people.
Richard Spicer at medium sized manufacturer APC has no doubt the big firms will attempt to take business away from the tier two manufacturers. "We have seen this before. They can do that now but what will happen when business picks up? Will they say that [tier two work] doesn't suit us now?"
Howse argues that the tier two manufacturers are valuable assets for the UK, which produce the interesting, innovative products. Amongst the firm's customers are Applied Materials and Pogo.