OXON, UK -- Europe's EMS industry is forecast to reach euro 32 billion by 2021, led by increased production at sites in Central and Eastern Europe.
Reed Electronics Research says revenues at Western Europe EMS companies rose to 11.2 billion euros in 2017 and are forecast to grow at a compound average annual rate of 2.8% through 2021. The sector will be driven by aerospace ans defense, automotive, medical, industrial and instrumentation, and telecom. The forecast reverses what had been several years of flat or negative growth.
The research firm expects production to continue to migrate from Western Europe to plants in Central/Eastern Europe (CEE) and Middle East/North Africa (MENA) due to labor costs and demand for local manufacturing.
CEE will focus on higher-volume products in the consumer, computing and communications (3C) sectors, led by Tier 1 EMS/ODMs. Foxconn (25%), Flex and Jabil combined for 44% of the total EMS revenues in Europe in 2016, about 89% of which came from their factories in CEE.
Acquisitions among European-owned EMS providers, including Scanfil’s purchase of PartnerTech and Neways’ takeover over BuS Elektronik, have created larger companies capable of competing across European markets as well as globally. These larger European entities are competing with Tier 1 EMS firms such as Flex, Jabil, Sanmina, Celestica and Zollner. With the exception of Zollner, the others have significantly scaled back activities in Western Europe in favor of lower-cost facilities elsewhere in Europe.
Kimball Electronics, Plexus, Fabrinet and Benchmark of the US and Integrated Micro-Electronics (IMI) and SVI Public Co. have either strengthened their position or entered the European EMS market.