Basic equipment can be made by Electronic Manufacturing Services (EMS) or by Original Equipment Manufacturers (OEM). When the market is good, EMS are required to increase the production capabilities. When the market is not so vigorous our opportunities remain good, because during those market conditions OEMs tend to reduce their manufacturing facilities and rely on EMS. The opportunities for EMS manufacturers have been consistently good, as indicated by the growth of revenues for EMS. Growth of the EMS sector started in the 1970's. In 1988 revenues were $9.9 billion, rising to $34.9 billion in 1994 and to $78 billion by 1999. Starting as printed circuit board assembly (PCBA) providers on a consignment basis, the EMS industry began with surface mount and 'through hole' board assembly using material supplied by the customers. Over time, the sector moved into more complex manufacturing including 'box build' and sub-assemblies that would then go into a higher level manufacturing site of the OEM. We would manage the supply base of the customers, buying under their suppliers' contracts and reporting on their suppliers' performance, acting as the manufacturing arm of the customers. Today the EMS companies provide complete turnkey solutions from design engineering all the way through to fulfillment and distribution. Major growth for this sector comes from these areas. Design engineering brings in a lot of new products from new customers as well as current customers, large OEMs that don't want to necessarily put more investment into the design of the hardware, they want to spend more time on the software and the marketing of the product.
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