Electronics Production | January 29, 2008

Chart: Changes in the European EMS Industry

The European EMS Industry in total recorded just 1% sales growth in 2006; however, it requires a more detailed look to get the real picture. It is no surprise that the huge changes in the Czech Republic on the positive and Hungary on the negative side are due to actions by the large multinationals being present there.
In both countries there are just a few, but very large EMS companies. A shift of some orders to or from other global locations to those countries will always result in major changes.

Another example is Italy. Its EMS industry is led by the top-3 players, and by internal corporate decisions the country suffered a declining turnover (-17%) in 2006. Most other European countries, however, experienced good growth in 2006. Germany posted strong growth with an increase of 464 MEUR or 11% over 2005.

How did this development affect employment?
In countries with strong trade unions major changes or even closure of locations are made only after long and careful considerations. While in North America or in most Asian countries “hire and fire” is easier and quite common, in Europe the compulsory severance pay may prompt companies to think twice. Labour laws in Central and Eastern Europe are much more relaxed and companies quite often make use of the high unemployment rate in certain regions or of the “silent reserve”: housewives looking for temporary employment only.

We also should not forget that the EMS-boom started in Europe with the turn of the century. Many OEM companies tried to get rid of their inefficient and/or obsolete assembly facilities and in turn multinational EMS companies tried to get additional capacities (in exchange of long term commitments for orders). These contracts, secured 5 or 6 years ago are expiring now and the OEMs are free to decide whom to grant their business as the business climate has become much more competitive. Despite some investments by EMS providers to modernise the facilities taken over in 2000/2001 Western Europe remains too expensive in comparison with the east. Therefore, we can observe shifts that business moves from France to Hungary but at the same time other business is relocated from Hungary to Asia.

In general, European employment has risen from 177.350 by 2 % to 181.570 and turnover by 1 % or 324 million EUR to 27.055 million EUR. In Central and Eastern Europe, however, the number of staff remained constant; the turnover has dropped by 2 %.

Because of its structure The Pildal Directory allows evaluations for various purposes. For example, the user may search for a certain size of companies to identify potential customers or partners. Another search may involve certifications to identify a partner for subcontracting in a specialized industry. Whatever the topic may be it can be isolated to a particular country or region (sorted per post-codes).

The European EMS industry is represented by a large number of smaller companies with annual revenues of less than 10 million EUR, but they provide assembly service for specialised purposes. Medical, military, aeronautical or industrial applications are characterised by small volumes but complex technology. They involve a lot of know-how that is not to be transferred to other countries. Proximity to customers is a strong argument for the EMS industry present in Europe.

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