OXON, UK -- European EMS revenues are forecast to reach 25.6 billion euros in 2015, boosted by rising demand in the lower-cost Central and Eastern countries.

Although three years into the current European recovery, a slowdown in emerging market economies, increased global uncertainty, and persistent geopolitical tensions have hampered growth in 2015 and will continue into 2016, Reed Economic Services said.

This year, companies in Central and Eastern Europe, the Middle East and North Africa, and other countries will see aggregate revenues of 15.15 billion euros, while Western Europe EMS companies will rise to 10.45 billion euros.

The modest recovery builds on last year, when the European EMS market inched up in 2014 as sales in Central and Eastern countries offset -- barely -- lower electronic production in Western Europe. Revenues for EMS companies in Western Europe fell 3% year-over-year, while the overall European EMS market grew 0.5% during the year.

Looking to 2019, Reed forecasts total European revenues will reach 27.37 billion euros on improving economic conditions. CEE/MENA will see a compound average annual growth rate of 1.4% to 16.21 billion euros, while EMS revenues in Western Europe will grow at a CAAGR of 1.48% to 11.16 billion euros from 2014 to 2019.

Although made up of over 1,000 companies in Europe, the industry is dominated by a small number of global players with the top 3 – Foxconn, Flextronics and Jabil – accounting for around 44.5% of revenues in 2014, with nearly 90% from plants in CEE focused on the Computer, Consumer and Communication (3C) sectors, Reed said. The top 50 EMS companies in Europe make up 75% (19.1 billion euros) of the total sales.

Reed predicts further consolidation across the industry due to the downward price pressure, slow economic growth and requirement to broaden and deepen the design, development and aftercare services to customers.

For EMS companies based in Western Europe, the most attractive market sectors are aerospace and defense, automotive, medical, controls and instrumentation, industrial, and telecom, with additional good growth in the energy, transportation, LED lighting and renewables areas. In the CEE and other low cost countries, the focus remains on the transfer of production of low- and medium-volume/high-mix electronics assembly from Western European EMS.

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