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Technology Industry / 
Finnish Economic 
Situation and Outlook 
September 2014
The Technology Industry Is Comprised 
9.9.2014 2 
of Five Sub-sectors 
Metals Industry 
Boliden, Componenta, Kuusakoski, 
...
Metals Industry 
• Steel products, non-ferrous 
metals, castings 
• Turnover (2013): 8.8 billion euros 
• Personnel (2013)...
• 50 % of total Finnish exports. 
• 75 % of private-sector 
R&D investment. 
• Some 280,000 employed 
directly in the sect...
Turnover of the Technology Industry in Finland 
9.9.2014 5 
36 
34 
32 
30 
28 
26 
24 
22 
20 
18 
16 
14 
12 
10 
8 
6 
...
Export of Technology Industry Goods from Finland 
by Area in 2013 
Total goods exports 24.8 billion euros* 
*) In addition...
Turnover of the Industry and Technology Industry 
in Finland 
150 
140 
130 
120 
110 
100 
90 
80 
2005 = 100 
Industry 
...
Turnover of the Technology Industry in Finland 
210 
200 
190 
180 
170 
160 
150 
140 
130 
120 
110 
100 
90 
80 
70 
60...
Value of New Orders in the Technology Industry* in 
Finland 
9.9.2014 
12,000 
11,000 
10,000 
9,000 
8,000 
7,000 
6,000 ...
Value of Order Books in the Technology Industry* in 
Finland 
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 
9.9.2014 ...
Tender Requests* Received by Technology Industry 
Companies in Finland 
40 
30 
20 
10 
0 
-10 
-20 
-30 
-40 
-50 
2005 2...
9.9.2014 
Value of New Orders in the Electronics and 
Electrotechnical Industry in Finland 
7,000 
6,500 
6,000 
5,500 
5,...
9.9.2014 
8,000 
7,500 
7,000 
6,500 
6,000 
5,500 
5,000 
4,500 
4,000 
3,500 
3,000 
2,500 
2,000 
1,500 
1,000 
500 
0 ...
Value of New Orders in the Mechanical Engineering in 
Finland 
9.9.2014 
4,500 
4,000 
3,500 
3,000 
2,500 
2,000 
1,500 
...
9.9.2014 
15,000 
14,000 
13,000 
12,000 
11,000 
10,000 
9,000 
8,000 
7,000 
6,000 
5,000 
4,000 
3,000 
2,000 
1,000 
0...
Value of New Orders in the Consulting Engineering in 
Finland 
9.9.2014 
320 
300 
280 
260 
240 
220 
200 
180 
160 
140 ...
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 
9.9.2014 
550 
500 
450 
400 
350 
300 
250 
200 
150 
100 
50 
0 
Expo...
9.9.2014 
Value of New Orders in the Information 
Technology in Finland 
800 
750 
700 
650 
600 
550 
500 
450 
400 
350 ...
9.9.2014 
Value of Order Books in the Information 
Technology in Finland 
1,600 
1,500 
1,400 
1,300 
1,200 
1,100 
1,000 ...
Change in Value of Order Books in the Technology 
Industry in Finland Compared with a Year Earlier 
200 % 
180 % 
160 % 
1...
Personnel in the Technology Industry 
340,000 
320,000 
300,000 
280,000 
260,000 
240,000 
220,000 
200,000 
180,000 
160...
Technology Industry Personnel in Finland 
160,000 
140,000 
120,000 
100,000 
80,000 
60,000 
40,000 
20,000 
0 
1998 1999...
Technology Industry Personnel in Subsidiaries Abroad 
180,000 
160,000 
140,000 
120,000 
100,000 
80,000 
60,000 
40,000 ...
Retirement of Technology Industry Personnel 
9.9.2014 24 
9000 
8000 
7000 
6000 
5000 
4000 
3000 
2000 
1000 
0 
Individ...
Retirement of Technology Industry Blue Collar 
Employees 
9.9.2014 25 
3500 
3000 
2500 
2000 
1500 
1000 
500 
0 
Individ...
Situational overview and outlook 
• - Finland is in the grip of structural change. Development remains 
uneven between com...
9.9.2014 27 
Situation in Russia and 
Ukraine Hindering 
Europe’s Revival
Industrial Production Volume 
9.9.2014 28
Industrial Production Volume in EU Countries 
9.9.2014 29
Euro Countries Are Developing Unevenly 
Manufacturing and Services Sector Purchasing Managers’ Index 
Purchasing Magers’ I...
World Economic Growth in 2014e 
GDP growth in 2014, % 
Average growth: +3,4 % 
Western Europe Japan 
Source: IMF (July 201...
World Economic Growth in 2014e with the 
Export Shares 
GDP growth in 2014, % 
Average growth: +2,3 % 
Western Europe Japa...
9.9.2014 33 
Breakdown of World Industrial Production 
50 
45 
40 
35 
30 
25 
20 
15 
10 
5 
0 
1950 1955 1960 1965 1970 ...
9.9.2014 
Industrial Production Development by Year 
320 
300 
280 
260 
240 
220 
200 
180 
160 
140 
120 
100 
80 
2005 ...
9.9.2014 35 
The Big Challenge for 
Finland after 2008
Finnish Exports up to EUR 20 – 30 Billion Short of 
Annual Target Level 
9.9.2014 
28 
27 
26 
25 
24 
23 
22 
21 
20 
19 ...
Finnish Exports lagging Behind Competitors 
9.9.2014 37
The Share of Industry in GDP in Finland 1900-2013 
35% 
30% 
25% 
20% 
15% 
10% 
5% 
0% 
Industry Industry + service secto...
Finland’s Industrial Production and Exports Will not 
Regain the Level of 2008 with the Present Production 
Capacity 
Finl...
Growth of Public Debt and Tax Rate Out of Control 
Increased cost burden requires cuts to public sector 
9.9.2014 40
Industrial Investments Alarmingly Low 
Industrial fixed and R&D Investments in Finland 
10,000 
9,000 
8,000 
7,000 
6,000...
Finland not Attracting Companies’ Investment 
Companies’ Fixed Investments in Different Countries 
9.9.2014 42 
140 
135 
...
Turning Point of Productivity Development in 
Finland in 2008 
After 2008 Finland has lost considerable volume production ...
Unit Labour Costs at the National Economy Level 
(Including the Effective Exchange Rates) 
120 
115 
110 
105 
100 
95 
90...
Compact of Growth and Jobs Has at the Most Slight 
Effect on Finland’s Cost Competitiveness 
Finland’s relative unit labou...
What should be done? 
• Support the renewal of the industry 
• Taxes should support growth and investment in Finland 
• Su...
Long-Term Outlook and Challenges 
• Global Structural Change Set to Continue Apace 
– Industrial production and services w...
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Finnish Technology Industry Situation and Outlook, September 2014

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Situation and outlook of Finnish Technology Industry, latest statistics

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Finnish Technology Industry Situation and Outlook, September 2014

  1. 1. Technology Industry / Finnish Economic Situation and Outlook September 2014
  2. 2. The Technology Industry Is Comprised 9.9.2014 2 of Five Sub-sectors Metals Industry Boliden, Componenta, Kuusakoski, Luvata, Norilsk Nickel, Outokumpu, Outotec, Ovako, Rautaruukki, Sacotec… Electronics and Electrotechnical Industry ABB, Ensto, Microsoft Mobile, Murata Electronics, Nokia, Planmeca, Polar Electro, Suunto, Vacon, Vaisala… Mechanical Engineering Abloy, Cargotec, Fiskars, Glaston, Kone, Konecranes, Metso, Normet, Oras, Patria, Pemamek, Ponsse, Prima Power, Stala, STX Finland, Valtra, Wärtsilä... Information Technology Affecto Finland, Basware, CGI, Codebakers, Codenomicon, Comptel, Digia, Efecte, Enfo, F-Secure, Fujitsu Finland, IBM, Knowit, Microsoft, Nixu, Tieto… Consulting Engineering A-insinöörit, Citec, Elomatic, Etteplan, FCG, Finnmap, Granlund, Neste Jacobs, Pöyry, Ramboll, Sito, SWECO, Vahanen, WSP…
  3. 3. Metals Industry • Steel products, non-ferrous metals, castings • Turnover (2013): 8.8 billion euros • Personnel (2013): 15 800 3 The Technology Industry in Finland Electronics and Electrotechnical Industry • Data communications equipment, electrical machinery, medical technology products • Turnover (2013): 15.8 billion euros • Personnel (2013): 43 200 Mechanical Engineering • Machinery, metal products, vehicles • Turnover (2013): 27.2 billion euros • Personnel (2013): 125 500 Information Technology • IT services, applications and programming • Turnover (2013): 8.3 billion euros • Personnel (2013): 54 500 Consulting Engineering • Expertise for construction industry and infrastructure • Turnover (2013): 5.0 billion euros • Personnel (2013): 46 300 9.9.2014
  4. 4. • 50 % of total Finnish exports. • 75 % of private-sector R&D investment. • Some 280,000 employed directly in the sector, 700,000 employed in total, equalling about 30% of the entire Finnish labour force. • The Federation of Finnish Technology Industries has over 1,600 member companies. 9.9.2014 4 The Technology Industry – the Most Important Sector in Finland
  5. 5. Turnover of the Technology Industry in Finland 9.9.2014 5 36 34 32 30 28 26 24 22 20 18 16 14 12 10 8 6 4 2 0 Billion euros, at current prices 2005 2006 2007 2008 2009 2010 2011 2012 2013 Mechanical engineering Electronics and electrotechnical industry Metals industry Information technology Consulting engineering Source: Statistics Finland
  6. 6. Export of Technology Industry Goods from Finland by Area in 2013 Total goods exports 24.8 billion euros* *) In addition to goods exports the sector exports services worth about 11 billion euros. Source: National Board of Customs, Statistics Finland 9.9.2014 6 North America 2.2 billion € 8.8 % Western Europe 11.4 billion € 46.1 % Middle and Central East 0.7 billion € 2.8 % Asia 4.1 billion € 16.5 % Africa 0.5 billion € 2.1 % South and Middle America 1.0 billion € 4.1 % Central and Eastern Europe 4.9 billion € 19.6 %
  7. 7. Turnover of the Industry and Technology Industry in Finland 150 140 130 120 110 100 90 80 2005 = 100 Industry -2 % Technology industry Change: 1-5,2014 / 1-5,2013, % 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Seasonally adjusted turnover index, latest information 5/2014. Source: Statistics Finland -1 % 9.9.2014 7
  8. 8. Turnover of the Technology Industry in Finland 210 200 190 180 170 160 150 140 130 120 110 100 90 80 70 60 50 2005 = 100 Information technology +15 % Consulting engineering Mechanical engineering Metals industry Electronics and electrotechnical industry Change: 1-5,2014 / 1-5,2013, % 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Seasonally adjusted turnover index, latest information 5/2014. Share of total turnover in 2013: mechanical engineering 42 %, electronics and electrotechnical industry 24 %, metals industry 13 %, information technology 13 %, consulting engineering 8 % Source: Statistics Finland -1 % -2 % -5 % -4 % 9.9.2014 8
  9. 9. Value of New Orders in the Technology Industry* in Finland 9.9.2014 12,000 11,000 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Combined Export Domestic Million euros, at current prices 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Change: II,2014 / II,2013 II,2014 / I,2014 Export: -1 % +1 % Domestic: +3 % -9 % Combined: 0 % -1 % *) Excluding metals industry and game industry companies. Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest information April-June 2014 9
  10. 10. Value of Order Books in the Technology Industry* in Finland 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 9.9.2014 24,000 22,000 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Export Domestic Million euros, at current prices Change: 30.6.2014 / 30.6.2013 30.6.2014 / 31.3.2014 Export: -10 % -4 % Domestic: +2 % 0 % Combined: -7 % -3 % *) Excluding metals industry and game industry companies. Combined Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest information 30.6.2014 10
  11. 11. Tender Requests* Received by Technology Industry Companies in Finland 40 30 20 10 0 -10 -20 -30 -40 -50 2005 2006 2007 2008 2009 2010 2011 2012 2013 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. Source: The Federation of Finnish Technology Industries’ order book survey, latest information: July 2014. -60 Balance figure 9.9.2014 11
  12. 12. 9.9.2014 Value of New Orders in the Electronics and Electrotechnical Industry in Finland 7,000 6,500 6,000 5,500 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Combined Export Domestic Million euros, at current prices 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Muutos / Change: II,2014 / II,2013 II,2014 / I,2014 Vientiin / Export: -23 % -10 % Kotimaahan / Domestic: +7 % +3 % Yhteensä / Combined: -19 % -8 % Lähde/Source: Teknologiateollisuus ry:n tilauskantatiedustelun vastaajayritykset, viimeisin tieto huhti-kesäkuu 2014 / The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest information April-June 2014 12
  13. 13. 9.9.2014 8,000 7,500 7,000 6,500 6,000 5,500 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Export Domestic Value of Order Books in the Electronics and Electrotechnical Industry in Finland Combined Million euros, at current prices 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Change: 30.6.2014 / 30.6.2013 30.6.2014 / 31.3.2014 Export: -23 % -9 % Domestic: +8 % +8 % Combined: -20 % -7 % Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest information 30.6.2014 13
  14. 14. Value of New Orders in the Mechanical Engineering in Finland 9.9.2014 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Combined Export Domestic Million euros, at current prices 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Change: II,2014 / II,2013 II,2014 / I,2014 Export: +29 % +14 % Domestic: +16 % -3 % Combined: +26 % +10 % Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest information April-June 2014 14
  15. 15. 9.9.2014 15,000 14,000 13,000 12,000 11,000 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Export Domestic Value of Order Books in the Mechanical Engineering in Finland Combined Million euros, at current prices 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Change: 30.6.2014 / 30.6.2013 30.6.2014 / 31.3.2014 Export: -3 % -2 % Domestic: -1 % -3 % Combined: -3 % -2 % Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest information 30.6.2014 15
  16. 16. Value of New Orders in the Consulting Engineering in Finland 9.9.2014 320 300 280 260 240 220 200 180 160 140 120 100 80 60 40 20 0 Combined Export Domestic Million euros, at current prices 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Change: II,2014 / II,2013 II,2014 / I,2014 Export: -12 % -10 % Domestic: +20 % -4 % Combined: +16 % -5 % Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest information April-June 2014 16
  17. 17. 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 9.9.2014 550 500 450 400 350 300 250 200 150 100 50 0 Export Domestic Value of Order Books in the Consulting Engineering in Finland Combined Million euros, at current prices Change: 30.6.2014 / 30.6.2013 30.6.2014 / 31.3.2014 Export: -3 % +5 % Domestic: +14 % +6 % Combined: +11 % +6 % Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest information 30.6.2014 17
  18. 18. 9.9.2014 Value of New Orders in the Information Technology in Finland 800 750 700 650 600 550 500 450 400 350 300 250 200 150 100 50 0 Million euros, at current prices 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Change: II,2014 / II,2013 II,2014 / I,2014 Combined: -15 % -25 % Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest information April-June 2014 18 *) Excl. game industry companies.
  19. 19. 9.9.2014 Value of Order Books in the Information Technology in Finland 1,600 1,500 1,400 1,300 1,200 1,100 1,000 900 800 700 600 500 400 300 200 100 0 Million euros, at current prices 2007 2008 2009 2010 2011 2012 2013 2014 Change: 30.6.2014 / 30.6.2013 30.6.2014 / 31.3.2014 Combined: 0 % -1 % Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest information 30.6.2014 19 *) Excl. game industry companies.
  20. 20. Change in Value of Order Books in the Technology Industry in Finland Compared with a Year Earlier 200 % 180 % 160 % 140 % 120 % 100 % 80 % 60 % 40 % 20 % 0 % -20 % -40 % -60 % -80 % -100 % Change by companies: 30.6.2014 / 30.6.2013, % Median: 0 % Average: -7 % Companies in random order Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest information 30.6.2014 9.9.2014 20
  21. 21. Personnel in the Technology Industry 340,000 320,000 300,000 280,000 260,000 240,000 220,000 200,000 180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 Some 13 000 of employees affected by temporary or part-time lay-offs 30.6.2014 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 (30.6) Personnel in Finland Personnel in subsidiaries abroad Source: Statistics Finland, The Federation of Finnish Technology Industries’ labour force survey 9.9.2014 21
  22. 22. Technology Industry Personnel in Finland 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 (30.6) Electronics and electrotechnical industry Mechanical engineering Metals industry Consulting engineering Information technology Source: Statistics Finland, The Federation of Finnish Technology Industries’ labour force survey 9.9.2014 22
  23. 23. Technology Industry Personnel in Subsidiaries Abroad 180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Electronics and electrotechnical industry Mechanical engineering Metals industry Consulting engineering Information technology Source: The Federation of Finnish Technology Industries’ labour force survey 9.9.2014 23
  24. 24. Retirement of Technology Industry Personnel 9.9.2014 24 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 Individuals per year Salaried employees Blue collar employees 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) Source: Wage inquiry of the Federation of Finnish Technology Industries, Finnish Centre for Pensions, Statistics Finland
  25. 25. Retirement of Technology Industry Blue Collar Employees 9.9.2014 25 3500 3000 2500 2000 1500 1000 500 0 Individuals per year 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 Mechanical engineering Metals industry Electronics and electrotechnical industry Source: Wage inquiry of the Federation of Finnish Technology Industries, Finnish Centre for Pensions, Statistics Finland
  26. 26. 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 65 billion. Between January and April of this year, turnover was slightly lower than twelve months earlier. Turnover in the pre-crisis year 2008 was EUR 86 billion. • - The monetary value of new orders in April-June 2014 was remained unchanged from the corresponding period in 2013, but slightly lower than in the precending quarter. • - At the end of June, the value of order books was 7 % lower year-on-year, and 3 % below the value reported at the end of March. • - The turnover of technology industry companies in the autumn 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 48,000 employees, totalling 278,000 at the end of June 2014. 9.9.2014 26
  27. 27. 9.9.2014 27 Situation in Russia and Ukraine Hindering Europe’s Revival
  28. 28. Industrial Production Volume 9.9.2014 28
  29. 29. Industrial Production Volume in EU Countries 9.9.2014 29
  30. 30. Euro Countries Are Developing Unevenly Manufacturing and Services Sector Purchasing Managers’ Index Purchasing Magers’ Index Latest information August 2014. Source: Markit 9.9.2014 30 50 = no change on previous month
  31. 31. World Economic Growth in 2014e GDP growth in 2014, % Average growth: +3,4 % Western Europe Japan Source: IMF (July 2014) 10 9 8 7 6 5 4 3 2 1 0 -1 North America China India Rest of Asia Rest of Eastern Europe Russia Brazil Mexico Rest of Latin America Middle East, Africa 0 10 20 30 40 50 60 70 80 90 100 The width of the bar indicates the share (purchasing power parity adjusted) of world GDP in 2013, % 9.9.2014 31
  32. 32. World Economic Growth in 2014e with the Export Shares GDP growth in 2014, % Average growth: +2,3 % Western Europe Japan China Source: IMF (July 2014), Board of Customs 10 9 8 7 6 5 4 3 2 1 0 -1 North America India Rest of Asia Rest of Eastern Europe Russia MexicoBrazil Rest of Latin America Middle East, Africa 0 10 20 30 40 50 60 70 80 90 100 The width of the bar indicates the export share of technology industry from Finland in 2013, % 9.9.2014 32
  33. 33. 9.9.2014 33 Breakdown of World Industrial Production 50 45 40 35 30 25 20 15 10 5 0 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 %
  34. 34. 9.9.2014 Industrial Production Development by Year 320 300 280 260 240 220 200 180 160 140 120 100 80 2005 2006 2007 2008 2009 2010 2011 2012 2013e 2014e China Korea India Russia Finland Brazil USA Euroarea Japan Source: Consensus Economics 2005=100 34
  35. 35. 9.9.2014 35 The Big Challenge for Finland after 2008
  36. 36. Finnish Exports up to EUR 20 – 30 Billion Short of Annual Target Level 9.9.2014 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 Exports needed to avoid extra running into debt in the public sector Exports, realized Export of goods and services by quarter, billion euros, at current prices Working day and seasonally adjusted index. Latest information January-March 2014. Source: Statistics Finland / National Accounts 36 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
  37. 37. Finnish Exports lagging Behind Competitors 9.9.2014 37
  38. 38. The Share of Industry in GDP in Finland 1900-2013 35% 30% 25% 20% 15% 10% 5% 0% Industry Industry + service sectors in the technology industry Source: Statistics Finland 9.9.2014 38
  39. 39. Finland’s Industrial Production and Exports Will not Regain the Level of 2008 with the Present Production Capacity Finland’s production capasity has decreased by 20 % 9.9.2014 125 120 115 110 105 100 95 90 85 80 75 70 Industrial production ability (production with capacity in full use) Finland's goods and services exports (2008=100) Industrial personnel (2008=100) Industrial production (2008=100) -21% -18% -16% -22% Working hours and seasonally adjusted time series. Source: Statistics Finland / National Accounts, Industrial volume index 39 2008 2009 2010 2011 2012 2013 2014
  40. 40. Growth of Public Debt and Tax Rate Out of Control Increased cost burden requires cuts to public sector 9.9.2014 40
  41. 41. Industrial Investments Alarmingly Low Industrial fixed and R&D Investments in Finland 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014e Industry Technology industry Source: Statistics Finland, Confederation of Finnish Industries’ Investment Survey (June 2014) 9.9.2014 41 Million euros, at current prices
  42. 42. Finland not Attracting Companies’ Investment Companies’ Fixed Investments in Different Countries 9.9.2014 42 140 135 130 125 120 115 110 105 100 95 90 2005 2006 2007 2008 2009 2010 2011 2012 2013e 2014e 2015e Germany Netherlands Sweden USA Switzerland Finland Source: OECD, Economic Outlook, May 2014 Index, 2005=100
  43. 43. Turning Point of Productivity Development in Finland in 2008 After 2008 Finland has lost considerable volume production in electronics, forest and machinery industries** 160 155 150 145 140 135 130 125 120 115 110 105 100 95 2000 = 100 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Manufacturing industry Technology industry National economy *) Productivity is measured as real value added per hours worked. When productivity grows (the curve rises) value added grows more than hours worked. Value added = turnover – purchasing of materials and services Value added = labour costs + rents + depreciations + profits Source: Statistics Finland / National Accounts 9.9.2014 43 **) The structure of current industry does not enable the similar productivity development as during the years 2000-2008.
  44. 44. Unit Labour Costs at the National Economy Level (Including the Effective Exchange Rates) 120 115 110 105 100 95 90 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Compared to Germany Compared to Spain Compared to Italy Compared to the Netherlands Compared to Austria Compared to Finland Finland’s cost competitiveness declines *) 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 economy Latest information I/2014. Source: European Central Bank 2005,I =100 Finland’s cost competitiveness improves 9.9.2014 44
  45. 45. Compact of Growth and Jobs Has at the Most Slight Effect on Finland’s Cost Competitiveness Finland’s relative unit labour costs compared to Germany 45 1.30 1.25 1.20 1.15 1.10 1.05 1.00 0.95 0.90 Finland Germany Finland New Source: Confederation of Finnish Industries 9.9.2014
  46. 46. 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 9.9.2014 46
  47. 47. 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 9.9.2014 47

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