The market for Electronics Manufacturing Services (EMS) is highly competitive and will continue to grow in the future - if only because of increasing digitization. Kontron will actively position itself here with its new subsidiaries and many years of expertise in the individual development of electronic products for mass production. Jochen Gimple, Managing Director of Kontron Electronics GmbH, reports on how Kontron intends to approach the ODM/EMS market.
What is changing at Kontron in the area of services for development and manufacturing?
The decision for Kontron to offer EMS and ODM (Original Design Manufacturing) in a network was made only recently. This alliance includes the new subsidiary Iskratel in Slovenia, Kontron Electronics in Germany, Kontron Electronics in Hungary and Kontron Austria.
Why does Kontron expect to do well in this market?
One unique selling point is the breadth of our portfolio, which ranges from standard and customised modules, boards and industrial PCs to HMI and display systems (Human Machine Interface) and complete solutions including software. In this environment, many companies need electronics that are custom-developed internally or externally and manufactured by service providers. EMS is therefore a very important addition to the previous ODM services. Customers can now obtain both development and manufacturing services from Kontron from a single source, in addition to the existing portfolio. Thanks to the existing structures with production facilities in Europe, we are very well positioned in the manufacturing environment in addition to our many years of know-how in development and design. At Kontron Electronics in Germany alone, more than 1,500 projects have been developed since its foundation in 1995, resulting in a broad expertise for the most diverse requirements in the industrial environment. This includes automation, mechanical engineering, building automation and, as a growing segment, environmental technology. Another focus is on medical technology. In addition to ISO 9001 and ISO 14001, the following certifications also exist in the group: ISO13485, TL9000, ISO27001, AS9100 (D), IRIS, ITAR, EASA145, FAA Repair Station, UL, ATEX and Apple MFI.
What characterises the ODM/EMS market? And why might a major European player come along at just the right time?
From Kontron's point of view, the ODM/EMS sector is an important growth market, primarily due to increasing digitalization. Many new business models are based on IoT, and own devices are increasingly being developed for this purpose. In addition, at the latest since the beginning of the Corona crisis, the trend has been to prefer purchasing in Europe rather than in Asia. The disruption of global supply chains has consequences that become painfully apparent in production delays. Many companies are therefore now addressing the issue of shorter supply chains. Kontron has proven its ability to deliver continuously even in times of crisis, for instance to leading companies in the medical technology sector.
What is the situation in the German market in particular?
Observing the ODM/EMS market, it becomes apparent that a clear consolidation process towards larger players is taking place. In Germany alone there are more than 300 EMS providers. It is becoming more and more difficult for the smaller ones because they do not have the necessary ability to invest, which is currently characteristic of the market. New equipment is always needed to keep up with the advancing miniaturization and automatization in electronics. At the same time, customer expectations are increasing with regard to stocking and topics such as just-in-time, kanban or the maintenance of consignment stocks.
In this respect, we are well positioned. At Kontron, customers benefit from the advantages of a large procurement volume: More specifically, this means economies of scale in global sourcing at Kontron as part of the financially strong s&t Group, which generates annual sales of over one billion euros.
That was the first part of our interview with Mr. Gimple, look forward to another part in two weeks here on the blog.