For many OEMs manufacturing in China, operating margins have trended down. One common reason for margin pressure is rising labor costs in China. OEMs seeking alternative ASEAN locations can read more here.
Anytime OEMs move production, OEM analysis for relocating EMS manufacturing must look at impact to P&L and earnings. For P&L, look at net sales, MCOGs, gross profit, operating profit, pre-tax v net income.
For earnings impact, analysis of gross profit, operating profit, net income, plus review of depreciation costs and labor and tie in efficiency losses v previous EMS factory cost figures.
SEE ALSO
Manufacturing costs across Asia
How OEMs cut costs for EMS manufacturing
Why EMS manufacturers wrongly determine labor costs in OEM fees
EMS manufacturing internal factory costs vs OEM RFQ quote pricing
OEMs can do a careful analysis of relocating EMS production using our outsourcing calculator. (Log in is required) Out cost-benefit calculator can help OEMs possibly uncover some costs, and potentially increase OEM savings, as you evaluate electronics solutions around the globe.
The biggest cost for OEMs engaging EMS manufacturing partners is materials cost of goods sold (MCOGs). With our calculator, you can input cost and rate variables provided by your EMS partners. Then you can change variables to see how different scenarios impact your business. Try outsourcing calculator. (Requires OEM log in)
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