European EMS Industry Poised for Growth

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After declining in 2014, the European electronics manufacturing services (EMS) industry is forecast to reach €27.4 billion in 2016, its second year of consecutive growth. This is according to a new report titled "The European EMS Industry – A Strategic Study of the European EMS Industry 2015-2020" by Reed Electronics Research.

Looking forward, however, the uncertainties surrounding the impact of “Brexit” and the election result in the US is expected to subdue growth in the first half of 2017, but assuming that the impact on the global economy is limited and short-term, the market should regain momentum in the second half of the year and then accelerate over the forecast period.

EMS revenues in Western Europe are forecast to reach €11.7 billion in 2020, up from €10.8 billion in 2015, with the market increasingly focused on the aerospace, defense, automotive, medical, control & instrumentation, industrial and telecom (ADAMCIT) segments of the market.

Pricing pressures and the transfer of production to manufacturing facilities in CEE/MENA to reduce costs and the increasing demand by OEMs for EMS to offer local manufacturing in key global markets will dampen growth in Western Europe during the period to 2020.

The reverse applies to CEE/MENA, where growth will be boosted by the transfer of production from Western Europe and, in particular, lower volume high mix products in the ADAMCIT segments. However, despite the migration of production from Western Europe, in revenue terms the CEE/MENA region will continue to be focused on higher volume products in the consumer, computing and communications, or 3C, segments. Assuming that the leading global EMS providers remain committed to retaining a major manufacturing presence in the region, revenues are forecast to reach €18.3 billion by 2020, up from €16.6 billion in 2015.

Although made up of over 1,000 companies, the industry is dominated by a small number of global players with the Top 3 – Foxconn, Flextronics and Jabil – accounting for around 44% of revenues in 2015.