Finnish techcnology industry: Situation and Outlook (June 2014)

Technology Industry /Finnish Economic Situation and Outlook

June 2014

07.04.2023 2

The Technology Industry Is Comprised of Five Sub-sectors

Metals IndustryBoliden, Componenta, Kuusakoski, Luvata, Norilsk Nickel, Outokumpu, Outotec, Ovako, Rautaruukki, Sacotec…

Mechanical EngineeringAbloy, Cargotec, Fiskars, Glaston, Kone, Konecranes, Metso, Normet, Oras, Patria, Pemamek, Ponsse, Prima Power, Stala, STX Finland, Valtra, Wärtsilä...

Electronics and Electrotechnical IndustryABB, Ensto, Microsoft Mobile, Murata Electronics, Nokia, Planmeca, Polar Electro, Suunto, Vacon, Vaisala…

Information TechnologyAffecto Finland, Basware, CGI, Codebakers, Codenomicon, Comptel, Digia, Efecte, Enfo, F-Secure, Fujitsu Finland, IBM, Knowit, Microsoft, Nixu, Tieto…

Consulting EngineeringA-insinöörit, Citec, Elomatic, Etteplan, FCG, Finnmap, Granlund, Neste Jacobs, Pöyry, Ramboll, Sito, SWECO, Vahanen, WSP…

07.04.2023 3

The Technology Industry in Finland

Mechanical Engineering• Machinery, metal products, vehicles• Turnover (2013): 26.5 billion euros• Personnel (2013): 132 600

Electronics and Electrotechnical Industry• Data communications equipment, instruments, electrical machinery• Turnover (2013): 14.3 billion euros• Personnel (2013): 46 600

Information Technology• IT services, applications and programming• Turnover (2013): 8.4 billion euros• Personnel (2013): 55 200

Metals Industry• Steel products, non-ferrous metals, castings• Turnover (2013): 9.5 billion euros• Personnel (2013): 15 900

Consulting Engineering• Expertise for construction industry and infrastructure• Turnover (2013): 5.5 billion euros• Personnel (2013): 45 700

• 55% of total Finnish exports.

• 80% of private-sector R&D investment.

• Almost 290,000 employed directly in the sector, 720,000 employed in total, equalling about 30% of the entire Finnish labour force.

• The Federation of Finnish Technology Industries has over 1,600 member companies.

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The Technology Industry – the Most Important Sector in Finland

07.04.2023 5

2005 2006 2007 2008 2009 2010 2011 2012 201302468

10121416182022242628303234

Mechanical engineering

Electronics and elec-trotechnical industry

Metals industry

Information technology

Consulting engineering

Turnover of the Technology Industry in Finland

Source: Statistics Finland, The Federation of Finnish Technology Industries

Billion euros, at current prices

07.04.2023 6

Export of Technology Industry Goods from Finland by Area in 2013Total goods exports 24.8 billion euros*

*) In addition to goods exports the sector exports services worth about 12 billion euros.Source: National Board of Customs, Statistics Finland

North America2.2 billion €8.8 %

Western Europe11.4 billion €46.1 %

Middle and Central East0.7 billion € 2.8 %

Asia4.1 billion €16.5 %

Africa0.5 billion €2.1 %

South and Middle America1.0 billion €4.1 %

Central and Eastern Europe4.9 billion €19.6 %

07.04.2023 7

Turnover of the Industry and Technology Industry in Finland

80

90

100

110

120

130

140

150

Industry

Technology indus-try

2005 = 100

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Change: 1-2,2014 / 1-2,2013, %

Seasonally adjusted turnover index, latest information 2/2014.

Source: Statistics Finland

-3 %

-5 %

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Turnover of the Technology Industry in Finland

50

60

70

80

90

100

110

120

130

140

150

160

170

180

190

200

Information technology

Consulting engineering

Mechanical engineering

Metals industry

Electronics and electrotechnical industry

2005 = 100

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Change: 1-2,2014 / 1-2,2013, %

Source: Statistics Finland

Seasonally adjusted turnover index, latest information 2/2014. Share of total turnover in 2012: mechanical engineering 41 %, electronics and electrotechnical industry 26 %, metals industry 14 %, information technology 11 %, consulting engineering 8 %

+4 %

+14 %

-6 %

-10 %

-4 %

07.04.2023 9

Value of New Orders in the Technology Industry* in Finland

01,0002,0003,0004,0005,0006,0007,0008,0009,000

10,00011,00012,000

Combined

Export

Domestic

Million euros, at current prices

Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest information January-March 2014

*) Excluding metals industry and game industry companies.

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014Change: I,2014 / I,2013 I,2014 / IV,2013Export: +5 % -8 %Domestic: +13 % +22 %Combined: +7 % -1 %

1007.04.2023

02,0004,0006,0008,000

10,00012,00014,00016,00018,00020,00022,00024,000

Series3 Export

Value of Order Books in the Technology Industry* in Finland


Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest information 31.3.2014

*) Excluding metals industry and game industry companies.

Combined

Change: 31.3.2014 / 31.3.2013 31.3.2014 / 31.12.2013Export: -5 % -2 %Domestic: +6 % +11 %Combined: -2 % +1 %

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

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Tender Requests* Received by Technology Industry Companies

Source: The Federation of Finnish Technology Industries’ order book survey, latest information: April 2014.

”Have you experienced a notable increase or decrease in the number of requests for tenders in recent weeks in comparison to the situation three months ago?”. Balance figure = the number of companies receiving more requests - the number of companies receiving less requests

-60

-50

-40

-30

-20

-10

0

10

20

30

40

Balance figure

11

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

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Value of New Orders in the Electronics and Electrotechnical Industry in Finland

0500

1,0001,5002,0002,5003,0003,5004,0004,5005,0005,5006,0006,5007,000

Combined

Export

Domestic


2005 2006 2007 2008 2009 2010 2011 2012 2013 2014Change: I,2014 / I,2013 I,2014 / IV,2013Export: -5 % -25 %Domestic: -4 % +30 %Combined: -5 % -21 %


1307.04.2023

0500

1,0001,5002,0002,5003,0003,5004,0004,5005,0005,5006,0006,5007,0007,5008,0008,500

Export

Domestic

Value of Order Books in the Electronics and Electrotechnical Industry in Finland

Combined


Change: 31.3.2014 / 31.3.2013 31.3.2014 / 31.12.2013Export: -6 % -21 %Domestic: -17 % +22 %Combined: -7 % -18 %


2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

07.04.2023 14

Value of New Orders in the Mechanical Engineering in Finland

0500

1,0001,5002,0002,5003,0003,5004,0004,5005,000

Combined

Export

Domestic


2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Change: I,2014 / I,2013 I,2014 / IV,2013Export: +19 % +22 %Domestic: +46 % +35 %Combined: +24 % +24 %


1507.04.2023

01,0002,0003,0004,0005,0006,0007,0008,0009,000

10,00011,00012,00013,00014,00015,00016,000

Series3

Export

Value of Order Books in the Mechanical Engineering in Finland

Combined


Change: 31.3.2014 / 31.3.2013 31.3.2014 / 31.12.2013Export: -4 % +9 %Domestic: +10 % +15 %Combined: -2 % +10 %

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014


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Value of New Orders in the Consulting Engineering in Finland

0

40

80

120

160

200

240

280

320

Combined

Export

Domestic


2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Change: I,2014 / I,2013 I,2014 / IV,2013Export: -11 % -9 %Domestic: +11 % +5 %Combined: +8 % +3 %


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0

50

100

150

200

250

300

350

400

450

500

550

600

Export

Domestic

Value of Order Books in the Consulting Engineering in Finland

Combined



2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Change: 31.3.2014 / 31.3.2013 31.3.2014 / 31.12.2013Export: -1 % -3 %Domestic: +18 % +10 %Combined: +15 % +8 %

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Value of New Orders in the Information Technology in Finland

050

100150200250300350400450500550600650700750800


2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Change: I,2014 / I,2013 I,2014 / IV,2013Combined: -5 % +7 %


*) Excl. game industry companies.

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Value of Order Books in the Information Technology in Finland

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000Million euros, at current prices

2007 2008 2009 2010 2011 2012 2013 2014

Change: 31.3.2014 / 31.3.2013 31.3.2014 / 31.12.2013Combined: +6 % +7 %


*) Excl. game industry companies.

-100 %

-80 %

-60 %

-40 %

-20 %

0 %

20 %

40 %

60 %

80 %

100 %

120 %

140 %

160 %

180 %

200 %

Change in Value of Order Books in the Technology Industry in Finland Compared with a Year Earlier


Change by companies: 31.3.2014 / 31.3.2013, %

Average: -2 %

Companies in random order

Median: +1 %

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07.04.2023 21

Personnel in the Technology Industry

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 (31.3)

020,00040,00060,00080,000

100,000120,000140,000160,000180,000200,000220,000240,000260,000280,000300,000320,000340,000

Personnel in Finland Personnel in subsidiaries abroad

Source: Statistics Finland, The Federation of Finnish Technology Industries’ labour force survey

Some 18 000 of employees affected by temporary or part-time lay-offs 31.3.2014

Technology Industry Personnel in Finland

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 (31.3.)

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

Electronics and electrotechnical industry Mechanical engineering Metals industry

Consulting engineering Information technology

Source: Statistics Finland, The Federation of Finnish Technology Industries’ labour force survey 07.04.2023 22

Technology Industry Personnel in Subsidiaries Abroad

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20130

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

Electronics and electrotechnical industry Mechanical engineering Metals industry

Consulting engineering Information technology

Source: The Federation of Finnish Technology Industries’ labour force survey

07.04.2023 23

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Retirement of Technology Industry Personnel

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

Number of individuals retiredNumber of individuals retiring (estimation)

Source: Wage inquiry of the Federation of Finnish Technology Industries, Finnish Centre for Pensions, Statistics Finland

Individuals per year

Salaried employees

Blue collar employees

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Retirement of Technology Industry Blue Collar Employees

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

0

500

1000

1500

2000

2500

3000

3500

Mechanical engineering Metals industry

Electronics and electrotechnical industry

Source: Wage inquiry of the Federation of Finnish Technology Industries, Finnish Centre for Pensions, Statistics Finland

Individuals per year

Situational overview and outlook

• - Finland is in the grip of structural change. Development remains uneven between companies.

• - Turnover in Finland in 2013 was some EUR 64 billion. Turnover in the pre-crisis year 2008 was EUR 82 billion.

• - The monetary value of new orders in January-March 2014 was 7 % higher than in the corresponding period of 2013, but slightly lower than at the level of the preceding quarter.

• - At the end of March, the value of order books was 2 % lower year on year, but slightly higher the value reported at the end of December.

• - The turnover of technology industry companies in the spring of 2014 is expected to be roughly equal in comparison with the corresponding period last year.

• - Since 2008, personnel numbers in Finland have shrunk by over 30,000 employees, totalling 288,000 at the end of March 2014.

07.04.2023 26

07.04.2023 27

Better growth outlook in Western Europe- Recession in Russia will have significant impacts in Finland

Industrial Production Volume

07.04.2023 28

Industrial Production Volume in EU Countries

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Improving Growth in Euro Area

Latest information May 2014. Source: Markit, Eurostat

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Growth Continues in Developing Countries,but Slower than During Last Years

Latest information April 2014. Source: Markit, HSBC

Teollisuuden ja palvelualojen ostopäällikköindeksi

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Russian Economy Has Entered a Recession

Latest information May 2014. Source: Markit, HSBC

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World Economic Growth in 2014e

Source: IMF (April 2014)

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100

-1

0

1

2

3

4

5

6

7

8

9

10

North America

Western Europe Japan

China

IndiaRest ofAsia

Res

t of E

aste

rn E

urop

e

Rus

sia B

razi

lM

exic

oR

est o

f Lat

in A

mer

ica

Mid

dle

East

, Afr

ica

GDP growth in 2014, %

The width of the bar indicates the share (purchasing power parity adjusted) of world GDP in 2013, %

Average growth: +3,6 %

07.04.2023 33

World Economic Growth in 2014e with the Export Shares

Source: IMF (April 2014), Board of Customs

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100

-1

0

1

2

3

4

5

6

7

8

9

10

North America

Western Europe Japan

China

India

Rest ofAsia

Res

t of E

aste

rn

Euro

pe

Rus

sia

Bra

zil

Mex

ico

Res

t of L

atin

Am

eric

a

Mid

dle

Eas

t, A

frica

GDP growth in 2014, %

The width of the bar indicates the export share of technology industry from Finland in 2013, %

Average growth: +2,4 %

07.04.2023 34

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Breakdown of World Industrial Production

0

5

10

15

20

25

30

35

40

45

50

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

Asia

North America

Europe

Purchasing power parity adjusted shares. Source: Maddison (Historical Statistics), IMF and ETLA

%

07.04.2023 36

2005 2006 2007 2008 2009 2010 2011 2012 2013e 2014e80

100

120

140

160

180

200

220

240

260

280

300

320

China Korea

India Russia

Finland Brazil

USA Euroarea

Japan

Source: Consensus Economics

Industrial Production Development by Year

2005=100

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The Big Challenge for Finland after 2008

07.04.2023

Finnish Exports up to EUR 20 – 30 Billion Short of Annual Target Level

10111213141516171819202122232425262728

Exports needed to avoid extra running into debt in the public sector

Exports, realized

Working day and seasonally adjusted index.Latest information October-December 2013. Source: Statistics Finland / National Accounts

Export of goods and services by quarter, billion euros, at current prices

38

2005 2006 2007 2008 2009 2010 2011 2012 2013

Finnish Exports lagging Behind Competitors

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The Share of Industry in GDP in Finland 1900-2012

1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 20100%

5%

10%

15%

20%

25%

30%

35%

Industry Industry + service sectors in the technology industry

Source: Statistics Finland 07.04.2023 40

4107.04.2023

2005 2006 2007 2008 2009 2010 2011 2012 2013e 2014e 2015e90

95

100

105

110

115

120

125

130

135

140

Germany

Netherlands

Sweden

USA

Switzerland

Finland

Finland not attracting Companies’ InvestmentCompanies’ Fixed Investments in Different Countries

Source: OECD, Economic Outlook, November 2013

Indeksi, 2005=100

Unit Labour Costs at the National Economy Level (Including the Effective Exchange Rates)

90

95

100

105

110

115

120

Compared to Germany Compared to Spain Compared to ItalyCompared to the Netherlands Compared to Austria Compared to Finland

*) In the ECB Harmonised Competitiveness Index, the average effective exchange rate of each country is calculated vis-à-vis 20 to 30 main trade partners, as well as the development of unit labour costs for the total economyLatest information IV/2013. Source: European Central Bank

Finland’s cost competitivenessdeclines

2005,I =100

Finland’s cost competitivenessimproves

07.04.2023 42

2005 2006 2007 2008 2009 2010 2011 2012 2013

What should be done?

• Support the renewal of the industry• Taxes should support growth and investment in Finland• Support decision making in companies related to

compensation and working time• No new European nor national burdens on companies,

which are deteriorating the competitiveness

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Long-Term Outlook and Challenges

• Global Structural Change Set to Continue Apace– Industrial production and services will relocate to rapidly developing

economic areas– Strong growth, large markets, cheap labour and increasing expertise will

increase the attractiveness of these regions.

• Competition over Skills and Raw Materials Set to Increase– Due to an increase in retirement, the sector’s annual recruitment need in

Finland will rise considerably in the coming years.– The availability of reasonably-priced energy also threatens to become an

investment bottleneck in Finland

• Combating Climate Change– A challenge as costs are set to grow faster than in competitor countries – An opportunity for new environmental and energy technologies

07.04.2023 44

Finnish techcnology industry: Situation and Outlook (June 2014)

Economy & Finance

Transcript of Finnish techcnology industry: Situation and Outlook (June 2014)