European EMS industry forecast to reach Euro 30 billion in 2020
After declining in 2014 the European EMS industry is forecast to reach Euro 27.4 billion in 2016, its second year of consecutive growth, according to Reed Electronics Research’s annual survey of the European EMS industry and then reach Euro 30 billion in 2020.
In Western Europe EMS revenues are forecast to reach Euro 11.7 billion in 2020, up from Euro 10.8 billion in 2015, with the market focused on the Aerospace, Defence, Automotive, Medical, Control & Instrumentation, Industrial and Telecom (ADAMCIT) segments of the market.
Pricing pressures and the benefits of lower costs through the transfer of production to manufacturing facilities in Central and Eastern Europe and Middle East/North Africa (CEE/MENA) 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.
In the period to 2020, the CEE/MENA region will continue to be focused on higher volume products in the consumer, computing and communications, or 3C, segments of the market with production dominated by the Global Group 1 companies. In 2015, the Top 3 Global players – Foxconn, Flex and Jabil Circuit – accounted for around 70% of the region’s EMS revenues.
Assuming that the leading global EMS providers remain committed to retaining a major manufacturing presence in the region revenues are forecast to reach Euro 18.3 billion by 2020, up from Euro 16.6 billion in 2015. Over the period to 2020 the 3C markets will continue to dominate but their overall share will be eroded as the leading Group 2 and 3 European companies, with their focus on the ADAMCIT markets, expand their production capabilities in the region often to meet customer requirements.
Approaching 77% of the total European revenues in 2015 (Euro 21.0 billion) were achieved by the leading 50 companies or 5% of the total number. We are expecting that there will be further consolidation across the industry due to the downward price pressure, slow economic growth and requirement to broaden and deepen the design, development and aftercare services to customers.
Although recent acquisitions has resulted in the emergence of a number of larger European Groups, with low cost operations in CEE/MENA and Asia and increasingly a presence in North America, within Western Europe individual country markets continue to be dominated by domestic players.