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© Gelab Electronics Production | October 10, 2011

Nordic EMS industry to provide growth opportunities

Overall electronic production, excluding components, in the Nordic countries (Norway, Sweden, Denmark and Finland) is expected to increase from EUR 13.88 billion in 2010 to EUR 14.53 billion in 2014, according to figures released by Reed Electronics Research (RER).
Communications equipment, both fixed line and wireless is the key sector primarily due to the dominant positions held by Ericsson and Nokia and also a high number of small to medium sized companies serving niche segments of the market. Communications accounted for 65% of the market in 2010 at EUR 9.06 billion with Industrial electronic equipment (including Medical, control & instrumentation and rail/traffic signalling) taking 31% or EUR 4.27 billion.

Both the Communication and Industrial sectors experienced a sharp downturn in 2009 but rebounded in 2010 and although growth is expected to slow in the second half of 2011 and into the first months of 2012 should achieve low single digit growth for the next few years. It is expected we will see the continued migration of electronic production to lower cost countries.

In the context of low single digit growth for the electronics industry as a whole RER expects Nordic EMS revenues to rise at an average annual rate of 2.6% from EUR 1.91 billion in 2010 to EUR 2.16 by 2015. These values do not include significant EMS revenues which are generated by Nordic companies through their operations in low cost countries, typically Lithuania, Estonia, Latvia and Poland, but also further afield.

Although we forecast that more OEM’s in the Nordic area will outsource some or all of their production to EMS, we expect that much of this value will move to the low cost operations and it is unlikely that indigenous EMS Nordic revenues will reach those of 2007 before the end of the reporting period. (2015).

In common with much of Western Europe, most of the Consumer, Computer and Mobile Communication production has been lost to lower cost countries and the global Group 1 EMS companies, typically with sales turnover in the billions of EUR, have largely moved their manufacturing facilities from the region.

In the context of low single digit growth for the electronics industry as a whole RER expects Nordic EMS revenues to rise at an average annual rate of 2.6% from EUR 1.91 billion in 2010 to EUR 2.16 by 2015.
Group 2 EMS companies, typically with annual sales turnover between EUR 100 to 550 million in the region will experience strong competition, not only from other companies in their group but also from Group 1 EMS, seeking to increase their penetration in the higher margin Automotive, Control & Instrumentation, Industrial and Telecoms (AMCIT) sectors. Indeed these sectors are also the target of Group 3 EMS companies, typically with annual sales of EUR 25-100 million and who operate on a sub-regional or national level.

Many EMS in Nordic as elsewhere, will be offering their customers ‘value-added’ services across the product lifecycle in addition to the straightforward electronic assembly which is at the heart of the business. There is likely to be significant gains for both EMS and their customers in increasing their cooperation in the product design phase, and in refurbishment and repair.

The past few years have seen acquisitions and mergers within Nordic EMS and we expect that this will continue over the next few years as the pressure on costs combines with the need to offer customers an inclusive service across the product lifecycle.
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More information on the subject matter can be found in The 2011 edition of European EMS Industry report from Reed Electronics Research.

Image: © Hanza

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