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  • Jerry Damron

2019 Year End Review & 2020 Insight - via EMSNOW

By: Jerry Damron, President & Global Solutions Executive – DCSI






The EMS industry, like our country’s current administration, seems to be at a crossroads. For the first time in perhaps a decade and a half, I am hearing about companies pulling their SMT back in-house; simultaneously, I see many tier one EMS suppliers still trying to acquire much of their customers’ SMT rooftops. In this past year I’ve seen strategic discussions around such issues as, do we win business by acquiring it, do we sell as the low price/high volume guy, or do we go back to old fashioned cold calling and selling on a service platform. While pricing remains critical, I believe there’s been a shift towards selling on a service platform versus price alone – something that wasn’t necessarily a standard in the beginning of this year.


While I don’t think big EMS is dead, I certainly have witnessed first hand that there’s been a paradigm shift in how providers court and vet their customers. In my opinion, a more personable, hands on, ‘our customers first’  approach has been more successful and will likely continue to be for many.   I’ve seen both extremes, business development through simply buying a potential customer and in one instance, almost a reverse sale approach from an EMS provider to potential customers.


I had the pleasure of meeting with a board member of a global EMS provider that told me his company literally screens their potential customers prior to engaging with them. Imagine that. As a new business development professional in this industry, your company feels so strongly about ethics and morality and how a customer might treat their own suppliers, that they’re willing to walk away from a deal if the customer doesn’t fit as a long-term partner. For this European based provider, they’re actually seeing business grow by shifting their focus to the US versus other international sites.


I foresee 2020 as being a pivotal year for small and mid sized EMS players and certainly in this space we’ll see the most growth and excitement. 2020 may be the break out year for many in the tier 2, 3 and lower ranked EMS providers to rise up and build better margins and gain market share, by manufacturing in the US.   While there will always continue to be an appropriate need to find lower cost manufacturing solutions, perhaps tier ones may reconsider expansion offshore, especially within the APAC region.


The three main avenues to profitability in our industry have historically been price, materials and labor.   I believe all providers would be well served by evaluating how they attract and onboard talent, as well as nurture longer tenure of their existing workforce. To the surprise of many professionals making a career change, the days of oversized relocation packages, massive sign on bonuses and extended temporary housing are mostly gone. I’ve also seen many larger providers greatly reduce the number of Ex-patriots they support and in some cases, I’ve seen Ex-pat programs wiped out altogether in exchange for executives seeing a larger salary to cover their own costs.


It is my view that manufacturing in the US will increase in 2020. In order to fully benefit from offshoring volume manufacturing, our industry will need to continue to streamline recruitment and employee retention as well as what packages and benefits are offered. This coming year has massive potential for those who understand the new ground rules.


DCSI is an international executive development & solutions firm that simply provides exceptional relationship based professional services, talent acquisition, corporate organizational development, and resume SEO. Make no mistake about it, we’re in the service business and we strive to provide the absolute best possible service to everyone we come in contact with.

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