The electronics industry saw some bumps and bruises during the recession, but a recovery is well under way - and new clusters are emerging.
The consumer electronics industry will reach a new industry peak in 2011, with revenues exceeding $186 billion, according
to the Consumer Electronics Association (CEA). On the electronics manufacturing services (EMS) side, New Venture Research
predicts the industry will grow from $270 billion in 2009 to $479 billion in 2014.
The question is where will electronics companies locate or expand as they seek to amp up capacity and drive greater efficiencies across the supply chain? There are the usual suspects,
of course. Silicon Valley dominates the electronics scene, but Boston is known for its audio cluster. New Jersey has a strong electronics base with the Toshiba anchor, and the Southwest is still a strong force to be reckoned with. But recent developments are shining an electronics industry spotlight on Northeast Ohio, and the focus on lean manufacturing and logistics savings has put cities like Bentonville, Arkansas, in the center of the fray.
Innovation Spurs Growth
In terms of consumer electronics, innovative new products - like tablets, ereaders, and smartphones - helped spur consumer interest and brought stronger than expected growth throughout 2010, according to the CEA. The category will continue to grow in 2011, CEA predicts, with nearly 59 million units being shipped to dealers and revenues of $32 billion projected.
CEA also predicts the wireless handset category will see continued growth in 2011. Smartphones continue to lead the way. Revenues are expected to increase nearly 20 percent to more than $21 billion, and 72 million units are projected to ship to dealers.
Digital displays are a weak spot in the electronics industry, but the rise of Internet-connected TVs is picking up the slack, with 2011 sales expected to rise 63 percent over 2010 to exceed $5 billion. In addition, 3D TVs will see steady growth in 2011, with increased content from video games, Blu-ray movies, and TV events (especially sports) driving this growth. It is projected that 3D TV unit sales will grow 67 percent in 2011 to 1.9 million units.
For all the focus on Silicon Valley, Northeast Ohio's flexible electronics cluster experienced significant growth in 2010, attracting $14 million in capital, according to NorTech, a nonprofit technology-based economic development organization serving 21 counties in Northeast Ohio. Dubbed FlexMatters, the cluster of businesses, suppliers, service providers, and institutions is focused on low-cost electronic device manufacturing printed on flexible plastic materials.
Northeast Ohio is home to companies and research institutions with technical expertise in polymers and advanced materials, flexible displays, printed sensors and circuits, flexible photovoltaics, and organic light-emitting diode (OLED) technology, all of which are developing a new class of flexible electronic devices. The region's companies produce electronic writing tablets, switchable eyewear, printed batteries, and medical implants.
Standouts in Northeast Ohio include Blue Spark Technologies, which develops flexible, printed "green" proprietary power source solutions for battery-powered printed electronic systems. Kent Displays develops and manufactures Reflex™ No Power LCDs for consumer and OEM markets. Other innovators included in the FlexMatters cluster are AlphaMirror, Akron Polymer Systems, GrafTech International, and Five Star Technologies.
"We are building a robust innovation cluster in Northeast Ohio that is going to put our region at the forefront of the global flexible electronics industry," says Rebecca Bagley, president and CEO of NorTech. "The capital attracted this past year proves that we have strengths and assets in this sector. It's NorTech's role to seek additional opportunities and funding to help accelerate the growth of the FlexMatters Cluster."
South/Southwest Still Attractive
An old favorite on the electronics front, Austin made major headlines last year when Samsung announced plans to expand the capacity of its 12-inch semiconductor fabrication plant there with a $3.6 billion investment. The plant produces NAND Flash memory chips that are found in many of today's most popular electronics devices.
Central New Mexico, specifically Albuquerque, has a diverse electronics cluster. Anchored by Intel, central New Mexico is home to 50 electronics companies focusing on computer chips. The Sandia National Lab is there, along with the University of New Mexico with its Center for High Technology Materials.
"Intel has found New Mexico to be a great place to do business," says Terry McDermott, government relations manager at Intel New Mexico. "We've experienced a solid partnership with local government entities and local vendors and suppliers, and we've been able to tap into a good work-force-development pipeline."
Beyond the Southwest, cities like Meridian, Mississippi, are getting in on the action as companies like Peavey Electronics gain traction with their musical equipment, gear, and accessories. Indeed, smaller cities are making headway in the battle for electronics industry dollars from manufacturing to logistics.
The Logistics Play
Electronics manufacturers that do business with Wal-Mart have a strong presence in Bentonville, Arkansas, the retailing giant's corporate headquarters location. A quick look at job boards shows plenty of hiring for electronic technicians at companies like SDI and even Wal-Mart itself.
"Wal-Mart has specific rules about how they do business," says Shawn Dubravac, chief economist and director of research for the CEA. "Many electronics vendors have warehouses in Bentonville and even full-time employees to support this part of the channel."
Delta Group Electronics, an EMS company that provides assembly of custom wiring harnesses, printed circuitboards, and turnkey assembly services throughout the southern half of the United States, boosted Arkansas' electronics profile when it announced a new 36,000-square-foot facility in Fayetteville in late 2010. This expansion is expected to provide 75 new jobs to the area over the next several years.
"We are extremely excited to begin the next phase of our expansion into this region of the United States," says Harry Mueller, president and CEO of Delta Group Electronics. "The new building will allow us to provide the assembly capabilities our customers expect from its EMS contractor, as well as provide our employees with an attractive, convenient place to work."
Despite the fact that most electronics manufacturing is done overseas, America's electronics industry is gaining momentum as consumers stateside put a demand on the industry to build products closer to home for easier distribution.