Weiss Engineering

German EMS industry with best growth rate for the past ten years

The German electronics manufacturing services (EMS) industry achieved its best revenue growth for the past ten years with an increase of 7.4% (prev. year +3.4%) and calculated in USD 12.2%. This number has been achieved by the in4ma annual survey, in which 127 EMS companies participated, which represent more than 68% of the total German revenues for this industry. Every second company had a two-digit growth rate.  German revenues grew more than double the percentage than the export revenues. For 2019, the participants of the annual survey anticipate a growth of 6.2%. Employment grew by 4.2%; the reporting companies hired 840 additional employees. It therefor can be assumed, that the whole German EMS industry created about 1,400 new jobs in 2018. Meanwhile the 2018 figures of all EMS are nearly finished and indicate a growth of 5,4% for 2018 (as usual, companies with lousy results normally do not participate in the annual survey and publish there results as late as possible).

Order intake grew 22% (prev. year 11%) more than revenues representing a B2B factor of 1.22. This further increased the order backlog and leads to a theoretical range of coverage of 209 working days. This development is primarily due to allocation problems with some components, which caused 10% of companies to suffer a decline in revenues against the previous year. Customers are now prompted to release orders with a longer planning horizon. In total 19% of all EMS companies had a lower revenue than in 2017. While in former years the export rate was at 30%, by now a distinct decline is to be observed – especially at larger companies. The average export rate in 2018 stood at 19.7% (Prev. year 20.4%).

In Austria, revenue growth was subdued with 2.6% in 2018 according to 11 reporting companies, which represent about 50% of Austrian EMS revenues. The EMS industry in Austria already had achieved a record revenue in 2017 with plus 9.6%.  But Optimism is unbroken as the industry hired 5.6% more employees. Order intake exceeded revenues by 15% (13%). The export ratio increased slightly. For 2019, the industry is forecasting a further revenue growth of 4.9%.

After a longer hard time, Switzerland surprised with a growth of 10.5% (in Swiss Franc), reported by EMS companies, which represent about 39% of the Swiss EMS revenues. Due to currency shifts this equals to 6.4% (0.9%) calculated in Euro (and 11.7% in USD).  Employment grew by 11.2% (-3.6%). %). Bookings were lower than revenues (B2B 0.90) which caused a reduction in order backlog. The forecast for 2019 is cautious with plus 3.3%.

Total revenues of all EMS companies in Germany, Austria and Switzerland are estimated to reach close to 9 billion Euro (2017 8.38 billion Euro) in 2018, which equals to about 10.6 billion USD. First results published by European public listed EMS companies indicate a similar growth rate, which, if their growth rate is assumed valid in general, would allow a total volume of about 38.6 billion Euro (45.6 billion USD) for the whole European industry in 2018.

It is too early to take this for granted, as the global EMS companies like Foxconn, Flex and Jabil, which generate about 30.5% of the European EMS revenues are unpredictable in their revenue development in Europe. Their customers are multinational OEMs, which manufacture in Europe only because of customs and tax reasons and because of proximity to their customers. Unexpected wage increases, (like it was the case with an 18% wage hike at Audi in Hungary in January 2019) can easily change production strategies of these global EMS companies.

The annual EMS survey together with research in the country company registers forms the basis for the European EMS statistics. It is deemed to be the most reliable source for market data by many EMS companies, as in4ma works in the bottom up strategy, analyzing 1,788 EMS companies in Europa individually.

(Numbers in brackets for 2017)

in4ma EMS annual statistics

 For many years Weiss  Engineering analyzed the PCBA market (OEM, ODM, EMS) for a German association. During this time, we learned that there are huge differences between OEM and EMS, not only in growth rates but as well in the business figures as well as it doesn't make sense to limit participation to members of the association. In addition it makes no sense to just divide the companies in two groups (>50 Mil. Euro and <50 Mil. Euro) as this does not properly show the performance/difference of companies with less than 10 Mil. Euro in revenues.

 This lead to a total change of the annual survey by Weiss Engineering in 2016. The success of new annual survey proves us right. 127 EMS companies from D-A-CH participated in the annual EMS survey in 2018.

103 EMS companies from Germany represented about 63% of the annual revenues in Germany, 11 EMS companies from Austria represented about 50% of the revenues in Austria and 13 EMS companies from Switzerland represented about 37% of the Swiss revenues.

The revenue sizes of the participating companies are all very different, there were companies with 2 Mil. Euro in revenues as well as companies with more than 100 Mil. Euro in revenues. More than 85% of the participants are reporting their numbers every year, leading to a very reliable database when calculating changes from one year to the next.

The questionnaire is very detailed and asks for:

revenue inland and export by market segment

Number of employees

Orderbook as of end of year

Purchasing volume (materials and services)

revenue prognosis for running year and next year 

EMS share of revenues (other than own products)

Due to the confidentiality of the data supplied, Weiss Engineering maintains confidentiality agreements with nearly half of the reporting companies. The others trust Weiss Engineering without NDA. All incoming data agree checked for plausibility before going into the database in order to detect reporting faults.

In the analysis, companies are divided into five different revenue groups and then summarized. It is not possible from the analysis to track back individual figures which have been reported. In addition no names of the participating companies is not disclosed.

The reporting sheets are send out in the first week of January, closing date is the first week of February. By mid of February all participants get a very detailed report (41 pages pdf file) and have the most accurate analysis about the EMS industry for the previous year, which is available in the market. The report gives a very representative overview of the EMS industry in D-A-CH and allows the participants to compare their own performance against competitors in the same revenue group. There is no better benchmark and on top it is free of charge. The advantage for Weiss Engineering is, that numbers come in already much earlier than they become available in the country company registers.

Last year for the first time Weiss Engineering sent questionnaires as well to EMS companies in the UK, France, the Benelux and Italy but with poor returns. Only seven companies responded. This is probably due to the fact, that the in4ma statistics still need more marketing in order to become better known. It was therefore discontinued for 2018 and a proper marketing plan is under work to convince the European EMS industry outside D-A-CH to participate in the EMS annual survey as well.  

Today Weiss Engineering already has a close working relation with the Estonian Electronics Industries association and is in discussion with several other Association who are open minded and see the benefit for their members to work with Weiss Engineering.