EMS provider Venture Manufacturing fights economic headwinds

By Staff

EMS provider Venture Manufacturing has been relying on a lower effective tax rate and reducing its R&D tech spend to help fight the firm’s declining net profit margin. Changes on the horizon with China’s economy, a looming global slowdown, cash fleeing Europe for the US dollar, and ill-defined tariff outcomes still taking shape with the US and China are not helping Venture’s prospects. In 2018 Venture received more than 70% of sales from the Asia-Pacific region.

To fight this, Venture Manufacturing is also trying to tap into Silicon Valley opportunities (and compete against 200+ other Valley centric EMS providers) offering proximity support for engineering, prototyping, and small volume manufacturing services.

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To help combat economic uncertainty, Venture Manufacturing, like dozens of other contract EMS/ODM companies, is trying to rely more on engineering services for more of its business appeal, targeting more high value-add program opportunities like modules, and pursuing customers in industries like life sciences.

While Venture’s R&D spending is off its highs from 2017, its quarterly gross materials margins are also declining considerably to figures not seen since 2016.

Relying on customers

Meanwhile, Venture Manufacturing is relying on new program wins and hopeful additional business from existing customers like Raytheon, Waters, Oracle, Medtronic, Illumina, and ABB to name just a few, to help grow its top line. To better understand customer targets please contact us.

In the not too distant past, Venture Manufacturing’s receivables were roughly 34% of assets, which is high for EMS industry and could reflect risk of improper credit management. The problem arises should a full-blown economic slowdown explode into considerable drop in business…Venture Manufacturing could then have increased chances of creditor defaults, which would further impact Venture Manufacturing financially. For other, effective ways to help evaluate and audit EMS provider financial stability take a look here.

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