Vtech 2002 Annual Report Download - page 21

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Annual Report 2002 19
VTech’s CMS manufacturing facilities in mainland China received ISO14001 certification
1999 2000 2001 2003 2005
80
110 100
120
160
0
50
25
75
125
175
100
150
ranging from handling of disposable materials to controlling
by-products, our CMS facilities in June 2001 received
ISO14001 certification.
Outlook
With companies rebuilding inventory from early 2002 and
overall economic growth looking more positive, the industry
is forecasting a rise of 10% in contract manufacturing orders
for the calendar year. Risk to this forecast is instability of the
global economy, which may once again influence the demand
for contract manufacturing services.
The recovery in orders in 2002 should be followed by a more
robust performance thereafter, in line with historical norms,
that would see the total contract manufacturing market
expand by more than 50% of its present level, to US$160
billion by 2005.
VTech intends at least to mirror this growth in turnover, while
maintaining stable margins. Unlike many other top 50
companies in the industry, our strategy is to grow organically
rather than by acquisition, in order to compete less on volume
than through creating tailored solutions.
To this end, in November 2001, we had a major expansion of
our facilities in Dongguan, increasing the factory capacity to
337,000 square feet. We also made use of the decline in
demand for components in 2001 to negotiate improved terms
with suppliers and deepen relationships with them. This
should reduce the impact of an eventual rise in components
prices as world demand picks up. These developments,
together with a continued improvement to our internal
supply chains and the NPI program, will help us to achieve our
goal of steady top line and bottom line growth, through
expanding and diversifying our customer base.
The Worldwide CM Market (Figures in US$billion)
Source:
Manufacturing Market
Insider – May 2002 issue
Review of Operations