Issue link: https://iconnect007.uberflip.com/i/1493797
10 SMT007 MAGAZINE I MARCH 2023 Feature Article by Mark Wolfe IPC e role of electronics manufacturing ser- vices (EMS) companies is very oen misun- derstood. Some perspectives, however, are helpful in framing the question of what's on their minds, especially in the current global environment. EMS companies build products but they are not really "product" companies. While they may provide design services, the designs are still owned by their customers. As a result, they do not have the right to select or change com- ponents. In most cases, the EMS company will still be responsible for purchasing these com- ponents which are typically 70–90% of their cost to produce the end products. ey also do not determine what volumes should be built. At the same time, they are in an extremely competitive market, with over 1,000 EMS com- panies in North America alone. Large, pub- licly-traded EMS companies report gross mar- gins in the high single digits. Smaller and niche EMS companies typically have slightly higher margins but are generally more constrained by working capital availability. In either case, to make this work in a sustainable, profitable manner, they must be able to manage materials and add value to create products as efficiently as possible. ey need to convert component inventory to cash; to achieve this, it's essential to have dependable supply chains and a trained labor force. Consequences of the Past Two Years Anyone who has been in the electronics industry for any length of time knows that the past two years have seen an unprecedented Five Issues Troubling EMS Companies