New winds
The downward trend in the economic conditions has had a strong impact on the electronics telecommunications business, used to seeing enormous growth rates. Not only the system suppliers see reductions in sales due to the weak economy, but also the mobile phone manufacturers see a decrease in the sales of phones to consumers. This means that the telecommunication giants — Nokia, Ericsson, Motorola and Siemens — who have interests in both markets are hit twofold.
The result of announcing either reduced expectations in growth from 40% per year to 15% per year or by the release of a loss in the latest quarter has had the same effect to investors — they react by punishing the companies very hard, and the share values drop quite dramatically.
The reaction to this has been seen in renewed focusing on core business, reductions in the number of employees and a general feeling of panic. A snowball effect is seen from the OEMs to their ECMs (Electronics Contract Manufacturers) and their sub-subcontractors.
Reductions in the labour force from 10-25% are reported. But when it is analysed who is doing what and how much, the result shows many differences.
Nokia who is the leading mobile phone manufacturer has only announced a 2% reduction in the workforce and it is furthermore targeting an increase of their marketshare for mobile phones to reach 40%. This should be seen in the light that the majority of the Nokia Mobile Phone production is in-house based. This should give rise to some reflections amongst their competitors and in the ECM business, that the previously magic word outsourcing maybe not is as magic as believed. High volumes, manufacturing skills, control of resources and a cost-conscious behaviour can make it very profitable to manufacture in-house.
Having a tight link to manufacturing eases the introduction of new technologies and can offer a fast time to market for new generations of products. Furthermore outsourcing of process and product development or even worse, R&D, can be a dangerous route if made to satisfy short-term interests of the investors. Quite often you pass the point of no return.
Why will this influence IMAPS and our activities?
Well, obviously the members who are affected by the reductions are threatened on their livelihood.
But also for the IMAPS society we can fear the reactions.
It is well known that a popular and easy way to save costs immediately is to turn down the R&D expenses. So we have to be aware that the travelling costs will be restricted, the expenditure on qualifying courses and education will likewise be reduced.
Of course we shall not give up organising our symposia. On the contrary, we should put even more focus on these and make them even better and more attractive.
We all know or hope that this slow-down will be temporary, so we shall all do our best to have the best qualified speakers with trend setting sessions on topics of importance for tomorrowís business. We shall encourage and make it easy for our members to fight for approval of their budgets to come to our conferences.
Therefore please study our Calendar of events and pick the right choice — and go for it!
Søren Nørlyng
noerlyng@micronsult.dk
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