European EMS industry 2008-2013

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With revenues forecast to decline by over 13 percent in 2009 the European EMS industry is facing a period of uncertainty and rapid change. In Western Europe the leading Tier 1 EMS providers have already relocated volume manufacturing to lower cost locations.

They have however retained a manufacturing presence and are looking to compete in the growth markets of aerospace & defence, medical, control and instrumentation, automotive and industrial as they recover in the 2010/2011 timeframe.

It is here that the real battle for the vast majority of the around 700 EMS companies in Europe will take place. Competition is expected to intensify with the emergence of regional players with multiple locations and strong focus on the growth markets. It is also the market being served by the large number, over 600, of national EMS providers with a single manufacturing facility and small but long established customer base.

Increased competition will lead to consolidation as companies are acquired or close due to ever increasing financial pressures, although it is not expected that there will be a mass exodus of companies in the period to 2013. There is a more than distinct possibility that one or possibly two of the major Tier 1 EMS companies will merge. Mergers between the major European EMS providers, is also a possibility although this is expected to be either on a national or sub-regional basis rather than pan-European.

A key trend in recent years has been the migration in EMS production from Western Europe to Central and Eastern Europe (CEE) resulting in the CEE accounting for just under 55 percent of European EMS revenues in 2008. This is expected to fall slightly in 2009 as the major Tier 1 EMS providers cut back production to meet lower demand, EMS revenues in the CEE forecast to decline by 17 percent during the year.

As end demand recovers so will the share the CEE accounts of the EMS market although the previous double-digit annual growth will reduce to a more pedestrian pace of 5-6 percent from 2010 to 2013. The transfer of production from Western Europe will continue to be an important factor in the region’s growth in particular in lower volume high mix products.

The ninth edition of The European EMS Industry report 2008-2013 highlights the issues impacting the European EMS industry.