IndustriAll project "Strategic study on anticipation of changes in the European ICT sector. Phase 2 : Sub-sectoral analysis

Transcription

1 IndustriAll project "Strategic study on anticipation of changes in the European ICT sector Phase 2 : Sub-sectoral analysis 1st October 2015

2 Connectors industry

3 Sectoral trends : the Connectors industry has been significantly growing since the 2009 crisis Connectors global sales (M$) CAGR : 6 % Market retrieving growth after the sharp decrease of 2009 (loss of 10 B$ sales in one year). : CAGR of 4 % between 2010 and 2014 According to Bishop & Associates, the Connectors market represented in 2014 almost 54 billions of dollars (+ 7,8 % vs 2013) High level of profitability with an average of 12 % operating margin in 2013 Dynamic growth is expected towards 2020 with a 6% CAGR Industri ALL Timisoara Phase 2 3

4 World market goes on concentrating but still some place for niche competitors Worldwide turnover (M$) 51% 52% 54% 57% 59% 60% 40% 43% 43% Continuous growth of top ten competitors market share Still more than 1000 actors with a huge number of SME concentrated on niche markets. Numerous end markets : Computers, Automotive, Telecom/Datacom concentrated 60 % of total sales in 2014 Worldwide turnover (M$) Medical, Transportation, Aerospace, Industrial, top ten share Industri ALL Timisoara Phase 2 4

5 Industri ALL Timisoara Phase 2 5

6 Connectors industry ; a continued concentration through M&A The connectors sector is pursuing a continued concentration process concerning both main groups and the SMEs trying to find way to accelerate their growth and to buy niche competencies. We can quote the most recent and significant examples of M&A in the sector: The Deutsch acquisition by TE Connectivity in 2012 for 1,6 B in order to expand the portfolio and sector offer of the US group (especially Aerospace, Railway, Transports), The buyout of the Motorized division of FCI by Delphi Interconnect in 2012 for around 0,8 B, The FCT Connectors takeover by Molex in 2013 (acquisition of competencies in the industrial, telecom and aerospace industries). Or the acquisition by Amphenol of FEP (a German based company; mainly automotive) and more recently the proposal to buy FCI. Asia for 1,2 B$ (telecom, datacom, wireless communications and industrial markets). The last potential acquisition of FCI Asia by Amphenol raises an issue about what will happen to the remaining part of FCI Europe. Industri ALL Timisoara Phase 2 6

7 Main technological trends going through the Electronic industry but also clients markets impact the Connector industry The Connectors industry is also impacted by most of disruptive technologies crossing the electronic industry but also clients markets : Deceleration of the Moore s Law strategies, Internet of Things, industry 4.0, M2M trend, If some main technological trends may change the Connectors industry landscape, the Connectors suppliers will be very differently impacted according to their final market/specialization : The divide between high-tech segment and industrial specific applications (electro-mechanical, high-voltage, ergonomic, applications with very specific parameters) is likely to widen. For example, the connectors dedicated to the automotive industry may move from electromechanical to datacom applications which could change significantly the competitive situation. Industri ALL Timisoara Phase 2 7

8 Despite standard connectors relocation towards Asia, Europe is still the second outlet Connectors sales by regions (en M$) North America Europe Japan China Asia-Pacific Shift concerning the weight of regions in the global turnover mainly explained by Connectors groups (especially US or European groups) or clients choices to relocate their production in Asia: ROW This shift has mainly concerned Computers, Automotive, Telecom/Data markets, In the 1980 s, the United-States represented almost the half of the world turnover, Europe one third, the balance coming from Asia and mainly Japan, Europe still a main market with 21% of 2014 total sales (highly concentrated in Western countries : 82 % of the total in 2014). Industri ALL Timisoara Phase 2 8

9 European competitors are out of top ten but well positioned on niche markets Top 10 Manufacturer in World Top 10 Manufacturer in Europe in M$ Headquarters World Sales 2013 (M$) Headquarters World Sales 2013 (M$) World ranking European sales 2013 (M$) 1 TE Connectivity US Rosenberg Germany % 2 Amphenol US Harting Germany 642, % 3 Molex US Phoenix Contact Germany 412, ,9 44% 4 Delphi US Souriau France 363, ,1 59% 5 Foxconn China Radiall France 312, ,6 36% 6 Yazaki Japan Huber+Suhner Germany 310, % 7 JST Japan Multi-contact Switz. 290, ,5 70% 8 JAE Japan Kostal Contact Germany 275, ,1 52% 9 Sumitomo Japan Smiths Interconnect UK 252, ,3 35% 10 Hirose Japan Lemo Switz. 240, % Total top Total European top % All other Market share of European top 10 8% 19% Total market world Total market world European competitors position on specific markets Aerospace : Souriau (6th worlwide), Radiall (7th) Instrumentation : Rosenberger (4th), Multicontact (8th) Medical : Lemo (4th), Souriau (8th) Industrial Equipment : Harting (3rd), 3M (7th), Weidmuller (8th) Automotive: Rosenberger (8th) Transport : Souriau (10th), Multi-contact (8th) Weght of Europe Industri ALL Timisoara Phase 2 9

10 European Connectors production is mainly concentrated on three segments Most of Telecom & Computer Connectors production (standard connectors) has been relocated to low costs zones. The main part of the European Connectors production concerns Automotive, Industries and Military/Aerospace which have been growing in 2014 : Aerospace : fast incre with a strong European base even for US groups and especially in France, Industries : on a growth track, particularly for robotization and mechanization (in Germany) or railways (Germany but also France, Italy and Scandinavian countries), Automotive : constructors retrieving growth in Europe. Proximity to the clients production site is essential (to be close to the design center and to have logistic facilities next to the client factories). Clear recognition of the competencies located in Europe (ex. Aerospace for France) Industri ALL Timisoara Phase 2 10

11 European actors profiles Big groups located in Europe (mainly coming from the US : TE, Amphenol, Molex, Delphi) and European competitors rather specialized on specific applications and end markets Expansion through internal growth (mainly production sites outside Europe) and acquisitions (ex. Rosenberger) to enter new geographical zones or to buy competencies/portfolio Rather recent internationalization with a main part of sales and employment remaining in Europe Long term growth with a rather positive impact on European employment But trend to relocate a growing part of volumes towards low cost sites Different shareholder models in Germany and France : Mainly family owned companies in Germany, Changes in ownership and financialized model in France (cf. Souriau, FCI) Industri ALL Timisoara Phase 2 11

12 An employment above 35 K jobs likely to grow slightly in the mid-run Country Employment estimate Main sectors/actors Germany France Italy Spain Main sectors : industries, automotive, transportation Main sectors : industries, automotive, aerospace, transportation Main sectors : industries, automotive, aerospace Main sectors : aerospace, automotive Other WE Other EE Total Europe Industri ALL Timisoara Phase 2 12

13 Employment should continue to grow in Europe towards 2020 Business as usual scenario : +5% for employment in 2020 Strong growth perspectives Main European actors well positioned on niche segments Clients relocation strategies could harm small/medium actors Production relocation of standard volumes towards Asia European competencies well recognized New EU regulations which may have a negative impact on European production (REACH) Desired state scenario : +10% for employment in 2020 Manufacturing jobs increased, capacities investments in Europe R&D competencies stay in Europe Final markets strengthen their growth (aerospace, industries, automotive) No major M&A concerning European actors Positive indirect impacts of the 10/20/100 initiative (European Commission) Industri ALL Timisoara Phase 2 13