In the first half of 2010, custom cable manufacturing industry in the US increased its production output in comparison to the substantial drop in 2009. Fiber optic cables have significantly contributed to the gross industry output due to the high demand in both the domestic US and global markets. Another high demand item is HDMI cables, which have quickly become a standard in high volume data transfers in modern TV sets, computer monitors and video receivers and transmitters.
Custom cable manufacturing products have exceeded 2009 production outputs by over 32% according to various data sources. Most of this growth is attributed to the sharply increased demand in fiber optic cable which is one of the main US cable product exports.
United States cable product import has increased by 15% in comparison with previous year. This was quite unexpected due to stagnant automotive market and reduced market demand for consumer electronics. Some of the economists attribute this increase to the growing volume of cable assembly outsourcing in Mexico and China. Market research shows that the majority of domestic custom cable assembly manufacturing is geared towards low volume, highly specialized types of cable products.
One of the main concerns of OEMs, while dealing with custom cable assemblies outsourcing, is to ensure that tight delivery schedules are followed and production is not affected by supply delays. This can become a real challenge, especially when manufacturers are aiming at the reduction of on-hand inventories. While larger US manufacturers have been doing most of their custom cable and wire harness outsourcing in China and Mexico for years, many smaller companies are just starting to explore global outsourcing.
“Large companies have established long-term relations with quality cable assembly manufacturers in China because when you are dealing with hundreds of thousands of pieces of an individual unique assembled cable product, cost becomes a major consideration. Smaller manufacturers also could safely outsource offshore but in some cases savings are not significant due to small order quantities”, says a director at Saison Electronics Ltd, one of the leading Japanese custom cable manufacturers with production facilities based in China. “To make custom cable outsourcing in China worthwhile, OEM has to consider two things; a large enough order quantity to justify the outsourcing efforts and a skillful procurement department to get the job done right.” Many outsourcing experts agree that dealing with offshore suppliers takes more skill, experience, time and research.
The difference between mega companies and small to medium companies is that most of the multinational corporations have established their presence in China a long time ago. Most have various manufacturing facilities and outsourcing centers and therefore they are not faced with the same issues as smaller companies who are trying to outsource offshore. For example, recently HP has opened a new hub of its global outsourcing service Best Hub in Suzhou, China which also serves as an information center accommodating multiple outsourcing activities.
Some of the components manufacturers, in this case, cable assembly and wire harness makers help local US companies to outsource by establishing their offices in the continental United States. This allows bridging the time and communication gaps and better assisting local US clients.
While the 2010 data shows that the cable industry is making a comeback, it is evident that new trends will emerge due to the shift in demand for certain types of cable assembly products, tighter brand competition, not-quite-predictable market demand for consumer products and the emergence of new technologies.