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Electronics Production | April 02, 2009

Slovakian EMS-Market to sustain rapid growth despite economic slowdown

The current economic crisis and the imminent adoption of the Euro in 2009 by Slovakia are set to impact electronics manufacturing in the country. However, its strategic location, an economical labour force and robust national growth rates will support the continued expansion of the Slovakian electronics manufacturing market.
New analysis from Frost & Sullivan Slovakian Electronics Manufacturing Market finds that the market earned revenues of $4.13 billion in 2008 and estimates this to reach $6.14 billion in 2015. "The global economic slowdown, which has spread to emerging markets in Central and Eastern Europe (CEE), has had a sizeable impact on foreign direct investment (FDI) flowing into the country in the electronics manufacturing segment," observes Frost & Sullivan Research Analyst Harish Natesan. "Further, with Slovakia adopting the Euro in 2009, manufacturers and suppliers alike are keeping their fingers crossed as to what impact this transition will have on the country's electronics manufacturing sector."

Slovakia, with its rapid economic growth rates and low labour costs, has become a preferred location for many original equipment manufacturers (OEMs) and electronic manufacturing services (EMS) companies operating in Central Europe. Low competition coupled with Slovakia's strategic proximity to Western Europe has also given the country an edge over other rival destinations in Central Europe.

Slovakia has been significantly affected by the economic slowdown, which spread to Europe in 2008. Decreasing demand from key end-user segments has negatively impacted market revenues since 2008. This trend threatens to continue in 2009 as well. "Thus, market growth rates are expected to fall appreciably in 2009," cautions Natesan. "Further, the adoption of the Euro in 2009 is expected to result in an increase in operating expenses, motivating electronics assemblers to downsize labour and volumes to save on operating expenses and maintain profitability."

Slovakia is increasingly becoming a manufacturing hub for liquid crystal display (LCD), with many OEMs finding the low competition favourable for investment. Further, closeness to Western European markets and shorter supply chains has made Slovakia an irresistible location for industrial EMS participants.

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