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According to Reed Electronics Research's latest strategic study on the European EMS industry, 2014 was a tough year for most EMS companies with revenues in Western Europe declining by almost 3% while an increase of 3.4% in Central and Eastern Europe (CEE) and Middle East/North Africa (MENA) helped the overall European market post growth of 0.5%. Although the market is expected to recover, growth is forecast to remain flat in 2015/2016 before gaining some traction in the later part of the forecast period. EMS revenues in Western Europe are forecast to reach €11.16 billion in 2019, up from €10.37 million in 2014, with the market increasingly focused on the Aerospace, Defence, Automotive, Medical, Control & Instrumentation, Industrial and Telecom (ADAMCIT) segments of the market.
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 2019. 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. This is expected to be offset in part by the migration of higher volume products in the consumer, computing and communications, or 3C, segment to Asia as the major global EMS companies come under increasing pricing pressure. Assuming that the leading global EMS providers remain committed to retaining a major manufacturing presence in the region revenues are forecast to reach €16.21 billion by 2019, up from €15.15 billion in 2014.
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 44.5% of revenues in 2014, with nearly 90% from plants in CEE focused on the 3C segment. Approaching 75% of the total sales (€19.1 billion) are 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.
Reed Electronics Research's latest strategic study on the European EMS industry, the Thirteenth, provides an in-depth analysis on one of the key sectors of the European electronics industry. In addition to the market projections through to 2019, the report highlights the key trends impacting the industry and the major players, both on a European and country level.