Domestic and global economic uncertainty has developed into a constant challenge for the Electronic Manufacturing Service (EMS) industry. Inflation, geopolitical turbulence, trade policy shifting, and unpredictable demand cycles are constantly exerting pressure on how EMS providers plan and operate. Stoten and DuBravac write “Market volatility and recession concerns have recently intensified, creating a challenging environment for long-term planning.” (Stoten and DuBravac, Mar 2025).

According to IPC’s Current Sentiment of the Global Electronics Manufacturing Supply Chain (Mar 2025), North American electronics manufacturers are currently experiencing strong demand growth and high-capacity utilization. However, continuing cost pressures and tight profit margins affect ongoing confidence. Labor and material costs remain elevated, while concerns about tariffs and U.S. trade policies continue shaping decisions regarding sourcing and production.

So what practical and proactive steps can a North American EMS take to stay competitive, improve resilience, and prepare for economic uncertainty?

The following seven key influence strategies support what you can control.

1. Supply Chain Strengthening and Diversification

According to IPC, 61% of manufacturers and considering renegotiation of supplier contracts, 31% invested in automation, and 28% have shifted to non-tariff suppliers. This reflects a growing recognized criticality of supply chain agility. Significant risk exists where North America relies on China for 29% of supply chain concentration.

Preemptive Measures:

• Negotiate flexible contracts where possible that include shared risk, dynamic pricing, and lead time adjustment for market volatility. Actively engage distribution to partner for mutual support
• Increase usage of data visibility tools using digital platforms for supplier performance, real time capacity, and lead times
• Diversity supplier base to reduce reliance risk. Build relationships with multiple regional suppliers to reduce potential overseas disruptions

2. Automation and Smart Manufacturing

Many EMS providers are increasing automation usage to meet demands without overextension of labor resources. Efficiency, consistency, and flexibility are all improved through automation.

Preemptive Measures:

• Carefully measure ROI through an examination of SMT lines, test stations, and quality assurance before automation expansion to receive highest return.
• Examine your flow relative to Industry 4.0 tools such as predictive maintenance, digital twins for projected influencing, and machine monitoring in real time.
• Automate repetitive tasks using robotics and intelligent inspection systems for soldering, assembly, and higher precision testing where appropriate

3. Workforce Agility and Retention focus

While the ease of recruiting skilled talent has improved, employers remain cautious with an 18% hiring freeze and 36% more considering no additional labor addition. Headcount expansion is avoided through staff retraining and the upskilling of existing staff.

Preemptive Measures:

• Training investment in areas such as automation preventive maintenance, data analytics, and process engineering that all directly support improvements in efficiency.
• Prioritize retention through predictable and consistent scheduling, skill-based incentives, and transparent communication.
• Employee cross-training of technicians for multiple task handling (i.e., SMT programming and AOI operation) offers increased flexibility in the event of schedule shifting.

4. Strategic Cost Pressure Management

IPC reports that 59% of manufacturers are facing rising material costs and 52% report higher labor costs while still experiencing declining profit margins. Smarter planning is essential for cost balancing and competitiveness more than just cutting expenses. Action can be taken.

Preemptive Measures:

• Partner with customers and OCMs regarding Design for Manufacturability (DFM) at initial design planning stages for design simplification, assembly step reduction, and component commonality.
• Through Lean and Six-Sigma approaches, identify and remove waste through continuous irmprovement and eliminating anything adding cost without value contribution.
• Supply Chain efficiency improvement through pricing lock-ins and alliances with other manufacturers for supplier term improvement

5. Financial Resilience Strengthening

Building financial resilience means maintaining liquidity while preparing for swings in demand. The IPC shows North American firms with strong KPIs, orders up 10 points and shipments up 12 month yet profit margins remain under pressure.

Preemptive Measures:

• Working capital optimization through receivable cycle shortening, supplier payment term extension where possible, and lean inventories but large enough to compensate for short-term disruptions
• Reexamine your customer relationships and identify those that remain profitable and those draining resources. Using this data, negotiate pricing or shift focus to higher margin partnerships.
• Use financial models to develop “what-if” scenarios. Use these models when making decisions of spending and hiring.

6. Trade and Policy Change Adaptation

Almost half (47%) of the manufacturers in North America are concerned about the overall impact of U.S. trade policies and 32% worry about these policies on business operations. Tariffs and shifting trade rules have direction operational consequences such as increasing costs and component availability delays. Laurie Harbor, a partner with the accounting and advisory firm WIPFLI, states “Tariff uncertainty is weighing heavily on decision-making…But we’re also seeing manufacturers take control where they can – through cost management, efficiency, and targeted investment.” (Harbour, Aug 2025).

Preemptive Measures:

• Move some assembly or subassembly operations closer to the United States for tariff exposure reduction with potentials Mexican or Canadian locations.
• Keep OEM clients constantly updated regarding cost or supply changes driven by trade shifts for strengthening long-term trust.
• Actively participate in industry associations to stay informed and ahead of changing policies and advocate for EMS friendly regulations.

7. Stay Ahead with Forecasting and Data

Over the next six months, according to IPC, orders and shipments are expected to rise while profit and ease of talent recruiting may stay challenging creating a combination of strong demands and thin margins. Forecasting is critical.

Preemptive Measures:

• Customer collaboration scheduling joint planning sessions with OCMs and ensure forecast alignment, excess inventory reduction, and reliability in delivery
• Use customer order patterns and market data for early change prediction and accordingly adjust schedules.
• Diversify carriers where appropriate and monitor transport bottlenecking for delay avoidance during high peak periods

The IPC Current Sentiment along with other industry monitoring groups all paint pictures best summarized as continuing cautious optimism for the North American market. Even with demand growth and operation efficiencies, rising costs, tighter margins, and geopolitical unrest affecting policy uncertainty still exist. North American EMS providers must strengthen financial and operational flexibility, upskill teams, diversify suppliers, invest in smart automation, and manage costs. EMS providers who embrace innovation, use data driven forecasting, and maintain transparent communication will not only survive but most likely become leaders of the industry’s next growth phase. So, stay calm and keep on soldering.

Sources:
DuBravac, S. (March 2025). “The Current Sentiment of the Global Electronics
Manufacturing Supply Chain”. IPC

Dubravac, S & Stoten, P. (May 2025). “EMS Industry Navigates Economic Uncertainty and Shifting Global Trade Policies”. EMS & The Economist Podcast. Retrieved from https://www.electronics.org/blog/ems-industry-navigates-economic-uncertainty-and-shifting-global-trade-policies

Harbour, L. (August 2025). “Manufacturers show resilience amid economic uncertainty, but challenges persist, according to Wipfli’s 2025 manufacturing benchmarking study”. WIPFLI. Retrieved from https://www.prnewswire.com/news-releases/manufacturers-show-resilience-amid-economic-uncertainty-but-challenges-persist-according-to-wipflis-2025-manufacturing-benchmarking-study-302534914.html.