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Finnish technology industry, December 2018

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Economic outlook: Finnish technology industry and economy, monthly statistics

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Finnish technology industry, December 2018

  1. 1. Technology Industry / Finnish Economic Outlook December 2018 112/10/2018 Technology Industries of Finland
  2. 2. Overcoming the Gap in GDP Will Require 3.0% Growth in Finland Annually in 2018-2023 2*) The IMF forecast for the euro area in April 2018: 2.4% in 2018, 2.0% in 2019, 1.7% in 2020, 1.5% in 2021, 1.5% in 2022, 1.4% in 2023 Source: Macrobond, IMF, Federation of Finnish Technology Industry 12/10/2018 Technology Industries of Finland
  3. 3. The Finnish Technology Industry Is Comprised of Five Sub-Sectors 312/10/2018 Technology Industries of Finland ELEKTRONICS AND ELECTROTECHNICAL INDUSTRY ABB, Ensto, Microsoft Mobile, Murata Electronics, Nokia, Planmeca, Polar Electro, Suunto, Vacon, Vaisala… METALS INDUSTRY Boliden, Componenta, Kuusakoski, Luvata, Outokumpu, Outotec, Ovako, Sacotec, SSAB … MECHANICAL ENGINEERING Abloy, Cargotec, Finn-Power, Fiskars, Glaston, Kone, Konecranes, Metso, Meyer Turku, Normet, Oras, Patria, Pemamek, Ponsse, Stala, Valmet, Valtra, Wärtsilä… INFORMATION TECHNOLOGY Affecto, Basware, Bilot, CGI, Comptel, Digia, Efecte, Enfo, F-Secure, Fujitsu Finland, IBM, Innofactor, Knowit, Microsoft, Nixu, Tieto… CONSULTING ENGINEERING A-Insinöörit, Citec, Elomatic, Etteplan, FCG, Granlund, Neste Jacobs, Pöyry, Ramboll, Rejlers, SITO, SWECO, WSP…
  4. 4. The Finnish Technology Industry Is Comprised of Five Sub-Sectors 4 ELEKTRONICS AND ELECTROTECHNICAL INDUSTRY • Data communications equipment, electrical machinery, medical technology • Turnover (2017): 14.4 billion euros • Personnel (2017): 37,800 METALS INDUSTRY • Steel products, non-ferrous metals, castings, metallic minerals • Turnover (2017): 10.1 billion euros • Personnel (2017): 16,100 MECHANICAL ENGINEERING • Machinery, metal products, vehicles • Turnover (2017): 29.9 billion euros • Personnel (2017): 127,900 INFORMATION TECHNOLOGY • IT services, applications and programming • Turnover (2017): 12.3 billion euros • Personnel (2017): 66,900 CONSULTING ENGINEERING • Expertise for construction industry and infrastructure • Turnover (2017): 6.0 billion euros • Personnel (2017): 50,900 12/10/2018 Technology Industries of Finland
  5. 5. The Technology Industry – the Largest Export Sector in Finland 5 • 51 % of total exports. • Almost 315,000 employed directly in the sector, including indirect effects 665,000 people. • Effect on value added totaling € 55 billion, or 28% of GDP value added. • Bring to Finland € 18 billion tax revenue annually. • Investments about EUR 5.0 billion annually in Finland. • 70 % of private-sector R&D investment. 12/10/2018 Technology Industries of Finland
  6. 6. Value Added to the Economy Generated by the Technology Industry Is EUR 55 Billion, or over 28% of GDP * (2017) 610.12.2018 Teknologiateollisuus 28.8, 53% 15.6, 29% 10.1, 18% A total of EUR 54.5 billion Impact on technology industry (direct influence) Impact on other industries (indirect influence) Impact on private consumption (income effect) *) GDP value added was EUR 193.3 billion in 2017. Source: Economic Impact of the Technology Industry in Finland 11/2018
  7. 7. Technology Industry Generates nearly 650,000 Jobs in Finland (over 25% of All Employees) (2017) 710.12.2018 Teknologiateollisuus 304,600, 47% 225,800, 35% 114,600, 18% A total of 644 900 employees Impact on technology industry (direct influence) Impact on other industries (indirect influence) Impact on private consumption (income effect) 10 jobs in the technology industry bring 11 jobs to the rest of the economy Source: Economic Impact of the Technology Industry in Finland 11/2018
  8. 8. Every Job in the Technology Industry Generates almost another Job in the Services den työpaikan palveluissa 810.12.2018 Teknologiateollisuus 295,100, 87% 12,200, 3% 33,100, 10% Impact on other industries and on private consumption: 340,300 employees Services* Primary production Processing* *) Excl. the services industries in the technology industry. Source: Economic Impact of the Technology Industry in Finland 11/2018
  9. 9. Technology Industry Generates over 18 Billion Euros in Tax Revenue Annually in Finland 910.12.2018 Teknologiateollisuus 9.2, 50% 4.3, 24% 4.7, 26% A total of EUR 18.2 billion Impact on technology industry (direct influence) Impact on other industries (indirect influence) Impact on private consumption (income effect) Source: Economic Impact of the Technology Industry in Finland 11/2018
  10. 10. Turnover of the Technology Industry in Finland 10Source: Macrobond, Statistics Finland, Technology Industries of Finland12/10/2018 Technology Industries of Finland
  11. 11. 11*) In addition to goods exports the sector exported services worth some 13 billion euros. Source: National Board of Customs, Statistics Finland Export of Technology Industry Goods from Finland by Area in 2017 Total goods exports 30.6 billion euros* North America 2.79 billion € 9.1 % Western Europe 16.44 billion € 53.7 % South and Middle America 0.84 billion € 2.8 % Central and Eastern Europe 5.11 billion € 16.6 % Africa 0.43 billion € 1.4 % Middle and Central East 0.51 billion € 1.7 % Asia 4.51 billion € 14.7 % 12/10/2018 Technology Industries of Finland
  12. 12. Technology, Forest and Chemical Industries Provide 81 % of Finland's Goods and Services Exports Revenue Goods and service exports: billion euros and the share of Finnish exports in 2017 12*) Service exports industry-specific data for the year 2017 are preliminary information. Source: Board of Customs, Statistics Finland (National Accounts, Foreign trade in services), Federation of Finnish Technology Industries 12/10/2018 Technology Industries of Finland Technology industry, 43.6, 51% Forest industry; 12.9; 15% Chemical industry; 13; 15% Other branches; 16.1; 19%
  13. 13. Turnover of the Industry and Technology Industry in Finland 13Source: Macrobond, Statistics Finland12/10/2018 Technology Industries of Finland
  14. 14. Turnover of the Technology Industry in Finland 14Source: Macrobond, Statistics Finland12/10/2018 Technology Industries of Finland
  15. 15. Value of New Orders in the Technology Industry* in Finland 15 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000 12,000 13,000 Combined Export Domestic 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Million euros, at current prices Change: III,2018 / III,2017 III,2018 / II,2018 Export: +27 % +4 % Domestic: +3 % -10 % Combined: +22 % 0 % *) Excl. metals industry, game industry and data center companies Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest observation July-September 2018. 12/10/2018 Technology Industries of Finland
  16. 16. Value of Order Books in the Technology Industry* in Finland 16 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 22,000 24,000 26,000 28,000 Export Domestic 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Million euros, at current prices Change: 30.9.2018 / 30.9.2017 30.9.2018 / 30.6.2018 Export: +22 % +8 % Domestic: +11 % -1 % Combined: +20 % +6 % *) *) Excl. metals industry, game industry and data center companies Combined Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest observation 30th September 2018. 12/10/2018 Technology Industries of Finland
  17. 17. Tender Requests* Received by Technology Industry Companies in Finland 17Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, the last questionnaire in October 2018 -60 -50 -40 -30 -20 -10 0 10 20 30 40 Balance figure 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 *) ”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.” 12/10/2018 Technology Industries of Finland
  18. 18. Tender Requests* Received by Technology Industry Anticipate Weaker Order Development in Winter 18*) Four quarters moving average. Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies 50 60 70 80 90 100 110 120 -60 -50 -40 -30 -20 -10 0 10 20 30 40 Balance figure* (left scale) New orders*, index 2008=100 (right scale) 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 12/10/2018 Technology Industries of Finland
  19. 19. Value of New Orders in the Electronics and Electrotechnical Industry in Finland 19 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500 6,000 6,500 7,000 7,500 Combined Export Domestic 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Million euros, at current prices Change: III, 18 / III,2017 III,2018 / II,2018 Export: +18 % +2 % Domestic: -10 % +1 % Combined: +11 % +1 % Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest observation July-September 2018. 12/10/2018 Technology Industries of Finland
  20. 20. Value of Order Books in the Electronics and Electrotechnical Industry in Finland 20 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500 6,000 6,500 7,000 7,500 8,000 8,500 Export Domestic Million euros, at current prices Change: 30.9.2018 / 30.9.2017 30.9.2018 / 30.6.2018 Export: +12 % +3 % Domestic: -8 % +2 % Combined: +7 % +3 % Combined 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest observation 30th September 2018. 12/10/2018 Technology Industries of Finland
  21. 21. Value of New Orders in the Mechanical Engineering in Finland 21 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500 6,000 6,500 7,000 7,500 Combined Export Domestic 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Million euros, at current prices Change: III,2018 / III,2017 III,2018 / II,2018 Export: +34 % +5 % Domestic: +5 % -14 % Combined: +29 % +2 % Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest observation July-September 2018. 12/10/2018 Technology Industries of Finland
  22. 22. Value of Order Books in the Mechanical Engineering in Finland 22 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 Export Domestic Million euros, at current prices Change: 30.9.2018 / 30.9.2017 30.9.2018 / 30.6.2018 Export: +26 % +9 % Domestic: +22 % -2 % Combined: +25 % +7 % Combined 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest observation 30th September 2018. 12/10/2018 Technology Industries of Finland
  23. 23. Value of New Orders in the Consulting Engineering in Finland 23 0 50 100 150 200 250 300 Combined Export Domestic 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Million euros, at current prices Change: III,2018 / III,2017 III,2018 / II,2018 Export: +110 % +77 % Domestic: +41 % -20 % Combined: +49 % -12 % Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest observation July-September 2018. 12/10/2018 Technology Industries of Finland
  24. 24. Value of Order Books in the Consulting Engineering in Finland 24 0 100 200 300 400 500 600 700 800 Export Domestic 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Million euros, at current prices Change: 30.9.2018 / 30.9.2017 30.9.2018 / 30.6.2018 Export: -14 % +7 % Domestic: +46 % +11 % Combined: +32 % +11 % Combined Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest observation 30th September 2018. 12/10/2018 Technology Industries of Finland
  25. 25. Value of New Orders in the Information Technology* in Finland 25 0 100 200 300 400 500 600 700 800 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Million euros, at current prices Change: III,2018 / III,2017 III,2018 / II,2018 Combined: +35 % -20 % *) Excl. game industry and data center companies Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest observation July-September 2018. 12/10/2018 Technology Industries of Finland
  26. 26. Value of Order Books in the Information Technology* in Finland 26 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Million euros, at current prices Change: 30.9.2018 / 30.9.2017 30.9.2018 / 30.6.2018 Combined: +1 % -6 % *) Excl. game industry and data center companies. Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest observation 30th September 2018. 12/10/2018 Technology Industries of Finland
  27. 27. Technology Industry Personnel in Finland Has Grown by nearly 15,000 this Year 27 150,000 170,000 190,000 210,000 230,000 250,000 270,000 290,000 310,000 330,000 350,000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 (30.9) Personnel in Finland Personnel in foreign subsidiaries Source: Statistics Finland, The Federation of Finnish Technology Industries’ labour force survey12/10/2018 Technology Industries of Finland
  28. 28. Technology Industry Personnel in Finland by Branch 2812/10/2018 Technology Industries of Finland Source: Statistics Finland, The Federation of Finnish Technology Industries’ labour force survey, Macrobond (Sep 30)
  29. 29. Technology Industry Personnel in Subsidiaries Abroad by Branch 2912/10/2018 Technology Industries of Finland Source: The Federation of Finnish Technology Industries’ labour force survey, Macrobond
  30. 30. Retirement of Technology Industry Personnel in Finland 30 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 Number of individuals retired Number of individuals retiring (estimation) Salaried employees Blue collar employees Individuals per year Source: Wage inquiry of the Techonology Industries of Finland, Finnish Centre for Pensions, Statistics FinlandTechnology Industries of Finland 12/10/2018
  31. 31. Retirement of Technology Industry Blue Collar Employees in Finland 31 0 500 1000 1500 2000 2500 3000 3500 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 Mechanical engineering Metals industry Electronics and electrotechnical industry Individuals per year Source: Wage inquiry of the Techonology Industries of Finland, Finnish Centre for Pensions, Statistics FinlandTechnology Industries of Finland 12/10/2018
  32. 32. Overview of the Situation in the Technology Industry and Outlook for the Rest of 2018 32 - Turnover in Finland totalled some EUR 72.7 billion in 2017. In January-August 2018, the turnover was up 5 % year-on-year. In 2008, prior to the financial crises, the corresponding figure was EUR 86 billion. - The monetary value of new orders reported between July-September 2018 was at the same level as in the preceding quarter, but 22 % higher than in the corresponding period in 2017. - At the end of September, the value of order books was 6 % higher than at the end of June, and 20 % higher than in September 2017. - The turnover of technology industry companies during the rest of 2018 is expected to be slightly higher than in the corresponding period last year. - The number of personnel in Finland increased strongly during January-September 2018. Personnel increased by slightly less than 5 %, or by almost 15,000 employees from the average number in 2017. On average, the industry employed some 314,000 people. In 2008, the industry employed a total of 326,000 people in Finland. - The recruitment activities picked up markedly between January and September. The companies recruited a total of 40,000 new employees, in 2017 a total of 42,500 employees. 12/10/2018 Technology Industries of Finland
  33. 33. World Economic Outlook - Finland as a Part of Global Economy 3312/10/2018 Technology Industries of Finland
  34. 34. GDP also Grows in Finland, but the Backlog for the Other Euro Area Countries Is up to 8% 34Lähde: MacrobondTechnology Industries of Finland 12/10/2018
  35. 35. Finnish Exports Growth Has Come to an End during 2018, Backlog for the Other Euro Area Countries is 40% 35Source: Macrobond, Eurostat12/10/2018 Technology Industries of Finland
  36. 36. Growth in Finland’s Exports and Private Consumption Has Declined during 2018 36Source: Macrobond, Statistics FinlandTechnology Industries of Finland 12/10/2018
  37. 37. Gross Domestic Product Has Grown Long in Europe and the USA, Finland is Lagging Behind 37Souce: MacrobondTechnology Industries of Finland 12/10/2018
  38. 38. 3812/10/2018 Lähde: Macrobond In China and India Growth Continues, also Brazil Is Now Growing Share of global GDP in China, India, Brazil and Russia is 31 % (adjusted for PP) Technology Industries of Finland
  39. 39. 3912/10/2018 Latest information November 2018 Source: Markit Economic Growth in the Euro Area Has Slowed Down Rapidly Purchase Managers’ Index (PMI), 50 = no change from previous month Technology Industries of Finland
  40. 40. Industrial Production Has also Grown in Finland, but the Backlog to EU Average Is 15% 4012/10/2018 Source: MacrobondTechnology Industries of Finland
  41. 41. Industrial Production Volume in the EU Countries 4112/10/2018 Source: MacrobondTechnology Industries of Finland
  42. 42. Finland’s Industrial Production Has Lagged Behind the Competition Countries 42Source: Macrobond, The CPB Netherlands Bureau for Economic Policy AnalysisTechnology Industries of Finland 12/10/2018
  43. 43. 4312/10/2018 Latest information November 2018 Source: Markit Industrial Production in China is Unchanged Purchase Managers’ Index (PMI) in manufacturing industry in China Technology Industries of Finland
  44. 44. 4412/10/2018 Latest information November 2018 Source: Markit Industrial Production in Russia Is Growing Purchase Managers’ Index (PMI) in manufacturing industry in Russia Technology Industries of Finland
  45. 45. 4512/10/2018 Latest information November 2018 Source: Markit Industrial Production in Brazil Is Growing Purchase Managers’ Index (PMI) in manufacturing industry in Brazil Technology Industries of Finland
  46. 46. 46Source: Macrobond Industrial Production in the USA is Growing Purchase Managers’ Index (PMI) in manufacturing industry 50 = no change from previous month Technology Industries of Finland 12/10/2018
  47. 47. Changes in Foreign Exchange Rates Reflect Uncertainty about Customs and Economic Sanctions 47Source: Macrobond12/10/2018 Technology Industries of Finland
  48. 48. 48Souce: Macrobond Fixed Investments Have also Grown in Brazil Technology Industries of Finland 12/10/2018
  49. 49. 49Source: Macrobond, The CPB Netherlands Bureau for Economic Policy Analysis Strongest Growth in World Trade Is already Behind Export volume 12/10/2018 Technology Industries of Finland
  50. 50. Imports to China Have Increased from Several Countries 50Source: MacrobondTechnology Industries of Finland 12/10/2018
  51. 51. EU Exports to Russia Have Recovered only Slightly 51Source: MacrobondTechnology Industries of Finland 12/10/2018
  52. 52. Russia’s Share* of Technology Industry Exports from Finland Has Lowered to Some 5 Per Cent 52*) Soviet Union up to 1991 Source: Finnish Customs 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018(1-8) Technology Industries of Finland 12/10/2018 %
  53. 53. 53Source: IMF (October 2018) The World Economy Is Projected to Grow by 3.7% in 2018 GDP growth in 2018 / 2017, % -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 0 10 20 30 40 50 60 70 80 90 100 North America Western Europe Japan China India RestofEastern Europe Russia Brazil Mexico RestofLatin America MiddleEast andAfrica Average growth: +3,7 % The width of the bar indicates the share of global GDP in 2017 (adjusted for purchasing power parity), % Rest of Asia Technology Industries of Finland 12/10/2018
  54. 54. 54Source: IMF (October 2018), Finnish Customs Demand in the Finnish Technology Industry Export Market is Expected to Grow by 2.7 % in 2018 GDP growth in 2018 / 2017, % -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 0 10 20 30 40 50 60 70 80 90 100 North America Western Europe Japan China India Rest of Asia Restof Eastern Europe Russia Brazil RestofLatinAmerica MiddleEastandAfrica Average growth: +2,7 % Mexico The width of the bar indicates the export share of technology industry from Finland in 2016, % Technology Industries of Finland 12/10/2018
  55. 55. Finland’s Economic Growth Relies on Exports and Investments 55Technology Industries of Finland 12/10/2018
  56. 56. Finnish Exports Have Lagged Behind the Competition Countries 56Source: Macrobond, EurostatTechnology Industries of Finland 12/10/2018
  57. 57. Growth Paradox: the Downsized Industry Has Limited Opportunities to Increase Finnish Exports 57Source: Statistics Finland / industrial production volume index 55% 60% 65% 70% 75% 80% 85% 90% 95% 100% 70 75 80 85 90 95 100 105 110 115 120 125 Industrial production, with capacity in full use (theoretical level), left axis Industrial production, at fixed prices (2008 = 100), left axis Industrial capacity utilization,%, right axis-17 % 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 -18 % Technology Industries of Finland 12/10/2018
  58. 58. 58Source: Macrobond, Eurostat The Decline in Exports and Recession: the Public Debt and Total Tax Rate Increased Significantly Increased cost burden requires cuts to public sector Technology Industries of Finland 12/10/2018
  59. 59. Unlike the Competition Countries, in Finland Business Investment Is Still Below the Level in 2008 59Source: OECD, Economic Outlook (June 2018) 70 75 80 85 90 95 100 105 110 115 120 125 130 135 140 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018e 2019e Corporate investments, at fixed prices, index 2008=100 USA Sweden Switzerland Netherlands Germany Finland 12/10/2018 Technology Industries of Finland
  60. 60. 60Source: Statistics Finland, (National Accounts), The Confederation of Finnish Industries* investment survey (June 2018) Investments in the Manufacturing and Technology Industry in Finland Do Not Promise Long-Term Strong Growth 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000 12,000 13,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018e Manufacturing industry (incl. technology industry) Technology industry (incl. information technology and consulting engineering) Production and R&D investments in Finland, million euros, at fixed 2017 prices Technology Industries of Finland 12/10/2018
  61. 61. Industrial Productive and R&D Investment in Finland Have Not Yet Reached the 2007-2008 Levels 61*) Including software investments. Source: Statistics Finland (National Accounts), Confederation of Finnish Industries’ Investment Survey June 2018 0 1 2 3 4 5 6 7 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018e Productive investment R&D investment* R&D investment (excl. electronics industry)* Billion euros, at fixed 2010 prices 12/10/2018 Technology Industries of Finland
  62. 62. Total Industry Investment in Finland Are Below the Consumption of Fixed Capital 62*) Including software investments. Source: Statistics Finland (National Accounts), Confederation of Finnish Industries’ Investment Survey June 2018 0 1 2 3 4 5 6 7 8 9 10 11 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018e Productive and R&D investment* Consumption of Fixed Capital Billion euros, at fixed 2010 prices 12/10/2018 Technology Industries of Finland
  63. 63. Industrial Productive Investment in Finland Have Reached the Level of Consumption of Productive Capital 63Source: Statistics Finland (National Accounts), Confederation of Finnish Industries’ Investment Survey June 2018 0 1 2 3 4 5 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018e Productive investment Consumption of productive capital Billion euros, at fixed 2010 prices 12/10/2018 Technology Industries of Finland
  64. 64. Industrial Production Capital in Finland Has Disappeared Significantly, Especially after 2008 64Source: Statistics Finland (National Accounts), Confederation of Finnish Industries’ Investment Survey June 2018 0 5 10 15 20 25 30 35 40 45 50 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018e Cumulative consumption of productive capital Cumulative productive investment Billion euros, at fixed 2010 prices 12/10/2018 Technology Industries of Finland
  65. 65. Investments and productivity* are Decisive for Finland’s Success 6512/10/2018 Technology Industries of Finland *) Productivity is measured as real value added per hours worked. When productivity grows (the curve rises) value added grows more than hours worked. Source: Statistics Finland
  66. 66. 66Latest information July-September 2018. Source: Eurostat: Quarterly National Accounts In Industrial Productivity Development, Finland Has a Gap of 20% Compared to EU Average and 15% Compared to Sweden and Germany Value added in manufacturing industry at fixed prices / hours worked 80 85 90 95 100 105 110 115 120 125 130 EU countries Sweden Germany Finland 2008=100 12/10/2018 Technology Industries of Finland
  67. 67. 67Latest information July-September 2018. Source: Eurostat: Quarterly National Accounts In GDP Productivity Development, Finland Has a Gap of 7% Compared to EU Average and 5% to Sweden and Germany GDP at fixed prices / hours worked 94 96 98 100 102 104 106 108 110 112 EU countries Sweden Germany Finland 2008=100 12/10/2018 Technology Industries of Finland
  68. 68. Investment Rate of Companies in Finland Is Lower in Finland than in Other Small European Countries 68Source: Eurostat 18 20 22 24 26 28 30 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Corporate fixed investment compared to value added, % (excl. financial sector) Sweden Belgium Austria Switzerland EU countries Denmark Finland Means 8 bill.€, as now in Finland 25 bill.€ 12/10/2018 Technology Industries of Finland
  69. 69. 69 Finland’s Price and Cost Competitiveness vis-à-vis the Euro Countries Is still to be Improved Unit labour costs in the whole economy = labour costs / productivity, including the influence of effective exchange rates 94 96 98 100 102 104 106 108 110 112 114 2000=100 2005=100 2008=100 Finland’s price and cost competitiveness declines Finland’s price and cost competitiveness improves 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 12/10/2018 Technology Industries of Finland *) In the ECB Harmonised Competitiveness Index, the average effective exchange rate of each country is calculated vis-à-vis 38 main trade partners, as well as the development of unit labour costs for the total economy. Latest information April-June 2018. Source: European Central Bank
  70. 70. What Should Be Done in Finland? 70 • 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. Technology Industries of Finland 12/10/2018
  71. 71. Long-Term Outlook and Challenges 71 • Global Structural Change Set to Continue Apace o Industrial production and services will relocate to rapidly developing economic areas o 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 o Due to an increase in retirement, the sector’s annual recruitment need in Finland will rise considerably in the coming years. o The availability of reasonably-priced energy also threatens to become an investment bottleneck in Finland • Combating Climate Change o A challenge as costs are set to grow faster than in competitor countries o An opportunity for new environmental and energy technologies Technology Industries of Finland 12/10/2018
  72. 72. Technology Industries of Finland 7212/10/2018 Technology Industries of Finland
  73. 73. The Federation’s Member Companies 2017 73 250–499 employees 68,763 39% 30,910 18% 26,576 15% 49,725 28% 1,439 92 % 86 5 % 38 2 % 24 1 % Number of enterprises / 1 587 Number of personnel / 175 974 1–249 employees 500–999 employees 1000– employees Technology Industries of Finland 12/10/2018
  74. 74. The Federation’s SME Member Companies 2017 74 485 34% 483 33 % 277 19% 194 13% Number of enterprises / 1 439 Number of personnel / 68 763 5,150 8% 15,456 22% 19,075 28% 29,082 42% 1–19 employees 20–49 employees 50–99 employees 100–249 employees 12/10/2018 Technology Industries of Finland
  75. 75. Operating Profit in the Member Companies of Technology Industries of Finland in 2017 Operating profit-% = operating result / turnover * 100 (before taxes and financial income and expenses) 75Source: Statistics Finland -30 -25 -20 -15 -10 -5 0 5 10 15 20 25 30 (Median: 4,7 %) Good (27 %) Satisfactory (22 %) Weak (29 %) Unprofitable (22 %) 12/10/2018 Technology Industries of Finland Companies in random order
  76. 76. Net Profit in the Member Companies of Technology Industries of Finland in 2017 Net profit -% = net profit / turnover * 100 (after tax and financial income and expenses) 76 -30 -25 -20 -15 -10 -5 0 5 10 15 20 25 30 (Median: 3,8 %) Unprofitable (24 %) Good (21 %) Satisfactory (23 %) Weak (32 %) Source: Statistics Finland12/10/2018 Technology Industries of Finland Companies in random order
  77. 77. Return on Assets in the Member Companies of Technology Industries of Finland in 2017 Return on assets -% = (net income + financial expenses + taxes) / (capital invested in the financial year) * 100 77 -30 -25 -20 -15 -10 -5 0 5 10 15 20 25 30 (Median: 11,8 %) Good (42 %) Satisfactory (15 %) Mediocre (23 %) Weak (20 %) Companies in random order Source: Statistics Finland12/10/2018 Technology Industries of Finland
  78. 78. Equity Ratio in the Member Companies of Technology Industries of Finland in 2017 Equity ratio -% = (total equity + total appropriations accrued) / adjusted balance sheet * 100 78 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 (Median: 40,9 %) Good (51 %) Satisfactory (24 %) Weak (25 %) Companies in random order Source: Statistics Finland12/10/2018 Technology Industries of Finland

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