Contract manufacturing thriving in Silicon Valley

SAN JOSE, Calif. – The region’s contract manufacturers and design service firms are a much valued commodity in new product innovation, emerging as a vital component in Silicon Valley’s innovation ecosystem, according to the work2future commissioned study. Interviews with key executives indicate contract manufacturers as an important driver of the local economy, playing a unique role in the development and introduction of new products in the clean tech, information technology, and medical device industries.

“Manufacturing is paving the way for economic resurgence in Silicon Valley,” said Kim Walesh, Director of Economic Development. “Contract manufacturers of all sizes are expanding their activity in San Jose and the surrounding area. Their client companies are tapping the Valley’s deep manufacturing expertise to design and produce the very latest innovations here—before they do high-volume production globally.”

Contract manufacturing refers to the process whereby companies partner with manufacturing services companies to support the production of prototypes, components, or finished products. Typically, companies will provide the product design and engage a contract manufacturer to serve as their factory for production, assembly, supply chain management and shipping logistics.

The work2future study used existing labor market and educational data, together with interviews of 16 executives from contract manufacturers, to identify opportunities for continued local growth of this industry. The report pointed to the proximity to customers, the rapid pace of innovation and new product development, and access to talent as the key drivers for the expansive growth of this industry in Silicon Valley.

“Silicon Valley has always been a hub for intellectual property and the introduction of new innovative products to the world,” said Mike Andrade, Senior Vice President, Diversified Markets, Celestica. “Electronics Manufacturing Services companies have the engineering strength and global supply chain expertise to support innovation by turning ideas into great products and launching them on a global scale.”

The report found that Santa Clara County is home to nearly 100 contract manufacturing firms which employ approximately 7,600 workers – about five percent of all manufacturing employment in the County. In addition, there are 40+ small product design services firms, which are closely related to contract manufacturers.

“A new wave of innovation is emerging in Silicon Valley,” said Joel Bustos, Vice President & General Manager of SMTC San Jose, “and we are seeing growing interest from new companies looking to develop and manufacture these high tech products right here in the Capital of Silicon Valley. This next generation of innovators is utilizing our expertise in early development stages from design for excellence (DFx) to product prototyping and then production. We become their virtual manufacturing partner and a key element of getting their product to market quickly and effectively.”

The products and technologies that have supported Silicon Valley’s innovation economy– including the emergence of clean technologies – have been supported by the region’s contract manufacturers. The study confirmed they will continue to play a critical role in supporting the emerging technologies that rely on getting a product to market quickly and effectively.

ABOUT work2future

work2future is the Local Workforce Investment Board serving the communities of Campbell, Gilroy, Los Altos Hills, Los Gatos, Morgan Hill, San Jose, Saratoga and the unincorporated areas of Santa Clara County. Funded by the U.S. government through the Workforce Investment Act, work2future is operated by the City of San Jose as part of its Office of Economic Development. For more information about work2future, contact Jeff Ruster, work2future Director, at (408) 794-1121 or jeff.ruster@sanjoseca.gov.

ABOUT THE CITY OF SAN JOSE’S OFFICE OF ECONOMIC DEVELOPMENT

The City of San Jose’s Office of Economic Development (OED), part of the San Jose Office of the City Manager, catalyzes job and revenue growth, assists business success, connects employers with trained workers, and enhances cultural amenities. For more information, please visit www.sjeconomy.com.

ABOUT THE CITY OF SAN JOSE

From its founding in 1777 as California’s first city, San Jose has been a leader, driven by its spirit of innovation. Today, San Jose stands as the largest city in Northern California and the Capital of Silicon Valley – the world’s leading center of innovation. The city, the 10th largest in the U.S., is committed to remaining a top-ranked place to do business, to work and to live. For more information, visit, www.sanjoseca.gov.

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