East-West contrasts shape Europe’s EMS landscape

Weiss reported that three of the largest EMS companies in Europe – Foxconn, Flex, and Jabil – account for 26-30% of all European EMS revenues. Foxconn, with its six European factories, suffered a significant 20% revenue loss in 2023. Weiss attributed these losses partly to global trends, noting that “Foxconn on a global scale lost more than 10% in revenues in 2023. But in Europe, it was even 20%.”

Uneven profitability across regions

There are currently 1764 EMS companies residing in Western Europe, according to in4ma’s database. These companies together generated 53.9% of the European revenues in 2023. On the other side, to the east, 461 EMS companies generated 46.1% of all European EMS revenues in 2023.

Of these, 35 are subsidiaries of global non-European companies, like Foxconn, Flex and Jabil. Weiss points out that some of these factories make EUR 1.8 billion in revenue every year.

Weiss highlighted significant profitability differences between Western and Eastern European EMS companies. He noted that lower labour costs in Eastern Europe contribute to substantially higher profit margins, with some firms achieving double the rates of Western EMS companies.

Addressing workforce challenges, Weiss illustrated a stark contrast between countries like Poland, which have a relatively high labour availability, and Romania, where a significant population decline is impacting labour supply. Aware of these issues, EMS companies are often attracted to regions with a larger workforce pool, as seen with a new factory project in Poland by an international EMS provider.

The inventory dilemma and “chip crisis”

The ongoing impact of the so-called “chip crisis” was central to Weiss's analysis. He described how a cascade of panic-buying inflated demand beyond real needs, leading to significant inventory build-ups across Europe. A comparable situation, dubbed “bottleneck poker,” saw procurement managers doubling orders to secure allocations, exacerbating supply chain strain. Weiss asked the question – “Was this real demand?”

The answer is unfortunately rather straightforward: No, it was not. It was artificial demand that was generated by the supply chain poker.

Now the question everyone asks is “Where have all the orders gone?”

“Well, you manufactured them already. In 2021, 2022 and in the first half of 2023. So don't complain about it. Your customers will only start reordering once they have eliminated that excessive stock at their own shelves,” Dieter G. Weiss says from the stage.

The European PCB industry: A sector at risk

Another urgent issue is the precarious state of the European PCB manufacturing industry, which has been shrinking due to competition from low-cost imports. Weiss warned that Europe’s diminishing PCB production capacity could undermine its strategic independence, especially as military applications increasingly mandate non-Chinese suppliers. Highlighting this concern, he cited a recent US defence penalty of USD 200 million to Collins Aerospace due to unauthorised Chinese PCB use, which underscores the industry’s critical need to maintain local suppliers.

Looking ahead – cautious optimism for 2025

Weiss concluded with an outlook that suggests European EMS may begin recovering by early 2025, following a challenging year. While demand is expected to gradually rebound, Weiss’s data indicates that continued adaptation in the face of market consolidation and operational inefficiencies will be essential.

The Warsaw presentation underscored that Europe’s EMS industry, though resilient, must adopt strategic foresight and flexible supply chain practices to remain competitive in an increasingly globalised market.

The final Evertiq Expo of the year has officially concluded, marking the end of another successful series of events. But the wait won't be long — Evertiq Expo returns in 2025, kicking off with an exciting event in Sophia Antipolis, France, on February 6. We look forward to welcoming you back for more networking, innovation, and industry insights in the new year.