Contract manufacturer

Contract manufacturer describes a firm that makes products or assemblies for another company, which then sells them. The Encyclopedia.com account of manufacturing places the practice within outsourcing, where a producer sends work that was once done in its own plant to outside plants so that it need not build or buy plants and equipment. In the 1970s such contractors were typically small operations offering a single service, such as assembling circuit boards for a larger firm. Since then they have grown into multiservice specialists that can assemble, manufacture, design and distribute products. The stated reason for using them is saving on materials, labor and expenses. The same source records the costs: production jobs moved to contractors in lower-wage countries, a matter of concern to labor and human-rights groups, and a hiring firm gives up some control, which makes extensive engineering changes harder. It is judged best for firms with steady demand and no very complicated assembly processes or equipment.