"The need to maintain profit margins in the face of declining pricing trends and high competition has made low-cost manufacturing a necessity," notes Frost & Sullivan Research Analyst Santosh Kumar P. "This is encouraging the continuing migration of manufacturing processes in the electronics industry to low-cost Asian countries and, lately, to eastern Europe."
The development of the outsourcing model by original equipment manufacturers (OEMs) and electronics manufacturing service (EMS) providers is essentially driving the growth of the EMS market in eastern Europe. In fact, the recession of 2001 has led to the establishment of many manufacturing units in this region and countries like Hungary and the Czech Republic have significantly exploited these opportunities to strengthen their economies.
The eastward expansion of the European Union (EU) also offers significant potential for future growth and investment opportunities, considering the proximity of these manufacturing locations to the various end-user markets. Despite the encouraging growth context that is prevailing in eastern Europe, countries in the region are being challenged to transform an under-developed supplier base into a fully developed one that is adequate for supporting manufacturing facilities.
"Domestic companies to be cost-competitive and capable of producing similar quality products as that of global suppliers in the volumes required by OEM and EMS companies to improve the indigenous supply base," explains Kumar. "In addition, factors such as government policies and proximity to western Europe need to be adequately addressed to facilitate the development of eastern Europe into a key global location for electronics manufacturing."
