One of the first indicators of the current global economic downturn was the collapse of the mobile telephone market in the second half of 2000. Various reports have been included on the subsequent impact on plastic part production (most recently in Plasteurope.com 10, 2001). Now that other electronic markets, and especially computer production, are also going into decline, new structures are emerging on the production market. These are similar to those in other markets but have pioneering features in respect of speed at which the change is being made and its intensity.

The changes have been prompted by the massive outsourcing of production steps by the big OEM electronics groups. During the boom, these companies built up huge capacities of their own, which are now recording high losses and acting as millstones around their necks. Only 13% of production has been outsourced so far but this figure could soon rise to 70%. The British newcomer on the mobile phone market, Sendo (GB-Birmingham; www.sendo.com) is currently providing the impetus for pure outsourcing here - unburdened by traditional structures. This company, which was only founded in 1999, is proving highly successful with a strategy that ultimately defines it as an intermediary between production and users. With its development know-how, Sendo “translates” its customers´ individual wishes – generally big network operators – into production requirements. These are then implemented by its production partner CCT Telecom (Hongkong; www.cct.com.hk), operating as an independent company.

Reports have also featured on the American-Asian production group Flextronics (Singapore; www.flextronics.com), with its successful strategy of all-in production for OEMs in central industrial parks located in low-wage countries (most recently in Plasteurope.com 15, 2001, “Hirsch Servo”). A snapshot of this company – which has grown by leaps and bounds – in the course of its rapid development, reveals more than 70,000 employees worldwide and sales of US 12 bn in 2001 (30.03) – up 74% over the previous year. Many plastics converters working directly or indirectly in the electronic supply sector are now forced to cooperate with this group, whose main capacities are concentrated in China, Mexico and Hungary. With way above 700 injection moulding machines located at 17 sites on four continents and estimated sales of some USD 500m, Flextronics Plastics is probably one of the world´s biggest independent injection moulding companies at present, and is still set for further growth.

“Enclosure systems” is the magic word at the companies, which produce electronic components of all different types. These are systems which unite components in a wide range of materials and with different functions in an overall system that is generally encased in plastic. The overall market for these systems is put at some USD 4 bn for 2003. In line with this strategy of focusing on application customers, Dow Chemical (Midland, MI/USA; www.dow.com) has set up its new Dow Inclosia Solutions business unit for the electronics industry. Just one day after the company was founded on 14 August, Finnish injection moulding company Eimo (FIN-15101 Lahti; www.eimo.com) – whose merger with the American Triple S Plastics (see Plasteurope.com 13, 2001) has now been completed – announced a development partnership with the new Dow division.

No clairvoyant skills are necessary to forecast further concentrations and deals. In the new, global market landscape, mergers, alliances and cooperation are vital for the survival of small and medium-sized companies, as is illustrated by the example of BaldaMikron in Germany / Switzerland. These processes are familiar from big groups in the automotive and chemical sectors. In big industry, changes are taking place (and particularly the trend towards bigger economic units) on a step-by-step basis over a prolonged period of time – in more of an “organic” and text-book manner. In smaller supplier markets, however, it can happen that large numbers of companies suddenly find themselves confronted with the requirements of global competition – requirements that they may have anticipated in abstract terms but ones that had scarcely played any role in practice to date. In some cases, as a series of examples from the automotive sector has shown, the steps that this calls for can bring a medium-sized company to the verge of ruin, or even beyond.