Europe’s electronics industry: soon number one?

Joshua Jampol. Journalist. The Time

26 May 2003

Experts are predicting that in the next five years, Europe’s electronics industry will overtake the United States’ and claim the number-one spot as world producer.

These experts augur that demand will pick up for electronics sometime this year. The recession that sapped the industry in 2001 brought saturation to the computer market and slowed growth in mobile phones and aeronautics. The worldwide economic slump and after-effects of terrorism didn’t help – pushing the slack-off into 2002.

Industry gurus say this coming uptick should last until 2005, bringing an average yearly growth of nearly 5 percent in the market overall. The horizon, they say, looks particularly bright for mobile telephones. Operators, heavily in debt after UMTS license purchasing and imprudent spending, should begin to emerge from the red. Demand for digital television and DVD reader-recorders is expected to fuel the consumer-electronics market beginning next year.

One yet unanswered question is whether increased subcontracting will force electronics manufacturers to relocate to lower-cost production sites abroad. Eastern and central Europe and China are favored candidates. A long list of products – from flat screens and digital parts to mobile phones - makes migration a possibility. Like Portugal and Ireland used to be, these new nations represent attractive, cheaper production sites. Will they make Europe a sweeter draw than China?

However, some European nations are already too developed for low-production status, according to local managers. John Lightfoot, organizational development director at SBA, a furniture and clothing manufacturer in Lithuania, says, “Belarus, Ukraine and Russia will fill that role – not Lithuania”. Missing the low-cost boat could be fortunate. “Lithuania has a great future, but not as cheap labor” Lightfoot predicts.

Thanks to GSM, which is the European norm, Europe already boasts world leadership in mobile telephones. But enlargement of the European Union could spark a new dynamism and push Europe even farther ahead. The 10 new countries that are joining the EU next year will represent €50 million in electronics production by 2006. This may propel the new Europe of 25 member states into the spot as number-one electronics producer, past the United States. Europe will then truly see the benefits of its unity.

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