The EMS Companies Leading a European Manufacturing Renaissance

There are numerous tales of woe from 2020, but alongside the tragedy and hardship of the pandemic are the grassroots of a real manufacturing renaissance occurring in Europe. Some EMS companies have not only survived the crisis, some have managed to thrive and are starting to see a dividend for the persistence and long term approach to developing a solid digitally enabled manufacturing footprint in Europe, close to the brands and the consumers they serve.

One such company is ALL Circuits, France’s largest and one of the global top fifty EMS companies. Bruno Racault, their president and CEO, told me, “2020 was an exceptionally hard year that ended with us winning three substantial projects, all from French companies, and all to be manufactured in France.” The three french companies that Bruno mentioned include a major car maker, a tier one automotive manufacturer and a french startup with a successful educational innovation. According to Bruno, and several other EMS executives in Europe, more and more brands are looking to localise their supply chains to reduce risk and increase resilience to disruption, agility and speed to market. In fact, Bruno went as far as to say he feels they are on the cusp of a manufacturing renaissance in France and perhaps throughout Europe.

 Another company thriving in the face of adversity is Germany’s rising EMS star, KATEK Group, who as well as growing organically in 2020, acquired two new companies. KATEK are already Germany’s second largest EMS and number six in Europe, and have made no secret of their lofty ambitions. Their CEO and Co-Founder, Rainer Koppitz explained that, “we needed to acquire the right businesses to achieve our critical mass, to get to the size where we could be at the negotiating table, able to offer the right solutions, and to have the scale needed to be able to buy parts at the most competitive prices”. Rainer added that, “going forward we will continue with a mix of tactical acquisition and organic growth, ensuring we add the right technologies and the right footprint, especially to strengthen our growth businesses like eMobility, renewables and Healthcare..”

Like ALL Circuits’ Bruno Racault, Rainer Kopppitz sees a European manufacturing renaissance gaining momentum as brands look for a local supply chain that delivers adaptability, flexibility and resilience. And that’s not where the similarities end. Both CEOs share a vision of an agile group of companies that are more like a fleet of speedboats and less like a supertanker. This vision of a flexible and agile fleet seems much more suitable for the future demands of brands who need their partners to be much more demand focussed and less capacity driven.

A Practical Renaissance

There are numerous reasons that this renaissance makes sense. It’s not just the brands that see the value in a strong and sustainable European manufacturing ecosystem. Governments have recognised that a solid manufacturing base will be a key part of the post-pandemic recovery. Indeed they have gone to a lot of trouble and expense to support these companies through the crisis and to incentivise them to grow on the way out. ALL Circuits have been a beneficiary of such incentives, winning financial assistance from the French government.

The drivers for this manufacturing renaissance are as complex as the demands it put on those companies wishing to participate. 

First and foremost, the key driver in the short term has been the need to create supply chains that are shorter, more agile, more resilient, yet remain economically competitive. Brands and consumers want to see their favourite products made locally, but they rarely want to pay a large premium. 

But the pandemic is not the only reason for this desire for shorter supply chains and locally made products. In fact many would argue is not a reason at all, it merely underlined the problems that we all knew existed in traditional global solutions dominated by low cost labor, acting as a catalyst to accelerate change. Before 2020 the world was acutely aware of challenges to manufacturing globalization and the dominance of China, recognizing the trade war between China and the USA as a clear symptom of this problem. Now, more than ever, supply chain is a matter of national security and pride!

But it’s not just about looking for a better solution instead of chasing low cost labor around the world! It’s about having a sustainable industry that provides sustainable solutions, and millions of sustainable and well paid manufacturing jobs. These come from industries that are competitive first and well supported second. 

Europe is becoming more competitive because manufacturers like ALL Circuits and KATEK understand the needs of both brand and consumer. Because they have the drive to improve manufacturing excellence, and exploit the economies that come from automation and digital transformation. These forward thinking companies will be the ones who lead and help deliver a European Manufacturing Renaissance.