Their economies are growing at a faster rate than the rest of Europe, leading to increased consumer demand for electronics products. These countries are currently recognised as attractive low-cost manufacturing regions for large EMS providers such as Jabil Circuit Inc, Flextronics International, Sanmina-SCI Corporation and Solectron.
The European Union's environmental legislations propelled steady growth in the market in 2004 and 2005, with several manufacturers replacing existing equipment with lead-free ones. However, currently, the market is experiencing slow growth rates as most of the manufacturers have met the RoHS mandate deadline in advance and have upgraded their old equipment. As a result, they are not likely to consider replacements in the next few years.
However, over the long term, the rise in technological innovations and trends, improving economies and end-user demand for flexible manufacturing equipment will propel market growth. The shift of electronics manufacturing to low-cost Southeast Asian countries has hindered growth in the European markets. Several manufacturers have started to close down production locally and moved their bases to China and to other low cost regions to gain cost benefits.
"China's large and flexible low-cost labour force, fast growing domestic market and access to high number of new engineering graduates are slowly causing the demise of high volume manufacturing in Europe," explains Sujatha. "Inflexible European labour laws are preventing manufacturers from responding quickly to changes and restricting Europe's strong capability in technology innovation."
Despite the shift of manufacturing bases to low-cost Asian countries, European manufacturers have the key advantage of developing high quality products. They would do well to implement new strategies that will allow for reduced operational costs and consequently pass on the benefits to the customer.
