SOURCE: Frost & Sullivan

Frost & Sullivan

March 24, 2011 13:04 ET

Total EMS Solutions Continue to Fuel Outsourcing Plans for OEMs in the North American Aerospace and Defense Market, Finds Frost & Sullivan

MOUNTAIN VIEW, CA--(Marketwire - March 24, 2011) -  Cost-effective and highly efficient manufacturing solutions are helping to boost the outsourcing plans of the North American electronic manufacturing services (EMS) aerospace and defense market. The demand for more integrated electronics in the aerospace sector and implementation of modernization plans by the Department of Defense (DoD) have opened up new avenues for EMS providers. OEMs including defense prime contractors are constantly seeking EMS providers for outsourcing activity due to tensions in Iraq and Afghanistan and expansion plans of the DoD. These factors require higher defense spending, resulting in more opportunities for EMS providers.

Analysis from Frost & Sullivan (, North American EMS Aerospace and Defense Market, finds that the market earned revenues of over $5.52 billion in 2009 and estimates these to reach $8.42 billion in 2014.

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"The current economic situation has put cost efficiency on the top of the agenda for OEMs," says Frost & Sullivan Research Analyst Julian Harris. "OEMs are seeking EMS providers that offer additional manufacturing benefits and cost-effective solutions while keeping up with the demand for advanced electronic products and systems."

As EMS providers offer more innovative manufacturing technology and design expertise, OEMs will continue to turn to EMS providers for outsourcing opportunities.

Although the prospects for the market look upbeat, there are some impediments stalling its progression. Fierce competition dominates the North American EMS aerospace and defense market, where the EMS providers compete on two primary factors, namely performance and price. As competition continues to intensify, OEMs are more likely to gain assistance from EMS providers concerning best-in-class manufacturing technology, design proficiency and aftermarket services.

Lack of adequate knowledge about regulations in the aerospace and defense industry is another factor hindering market development. For this reason, OEMs are forced to restrict outsourcing to EMS providers who can comply with regulations. This can be detrimental for some EMS providers because it can create a barrier for OEM business opportunities. Conforming to stringent aerospace and defense regulatory standards will enhance the chances for an EMS provider to deliver the most advantageous manufacturing process for customers.

To remain successful in this space, EMS service providers must align their business models and manufacturing services with the needs of OEM customers. This entails new product introduction (NPI) prototypes that offer full scalability and improvements over conventional manufacturing strategies.

"Financial stability, on-time delivery, procurement and materials management are factors that are just as imperative as the manufacturing process itself," says Harris. "An EMS provider needs to proactively emphasize each factor to optimize company best practices."

EMS providers need to collaborate closely with OEM customers and supply chain partners to ramp up the supply chain infrastructure.

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North American EMS Aerospace and Defense Market

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