Situation and Outlook for the Finnish Technology Industry 2/2014: New orders up – Recession in Russia a threat

Positive development continued in early 2014.

“It seems that the increased tender-request volume reported by companies in January has resulted in an increase in new orders,” says CEO Jorma Turunen of the Federation of Finnish Technology Industries.

The volume of tender requests increased further between January and April. “However, there were major differences between sectors and especially between individual companies,” he points out.

The turnover of companies in the Finnish technology industries fell by some five per cent in 2013, to EUR 64.2 billion. In January 2014, turnover was three per cent lower than twelve months earlier.

The monetary value of new orders reported by Finnish technology industry companies between January and March was seven per cent higher than in the corresponding period of 2013, but slightly lower than in the preceding quarter. At the end of March, the value of order books was two per cent lower year-on-year and slightly above the value reported at the end of December.

Based on the order trends in recent months, the turnover of technology industry companies is expected to remain relatively unchanged over the next few months from the level reported for the corresponding period last year.

Technology industry companies reduced their international staff by some five per cent in 2013, whereas domestic personnel fell by some 2.5 per cent. In 2013, Finnish companies employed a total of 581,000 people, 296,000 in Finland and 285,000 abroad.

Recovery in Western Europe, but recession in Russia increases risks

According to the IMF forecast, the global economy is expected to grow by 3.6 per cent in 2014. Most positive for exports is the recovery in Western Europe, although the growth rate is only 1.3 per cent. However, considering the recovery of some three per cent in North America and Eastern Europe, the overall outlook for Finnish exports is cautiously optimistic.

Technology industry exports from Finland to Russia amounted to a total of EUR 2.3 billion, or nine per cent of the total, in 2013. They already fell by six per cent year-on-year in 2013. Should the crisis in Ukraine spread, technology industry exports to Russia could drop by double-digit percentages. Technology industry companies and the Finnish economy will also face many indirect effects.

Successful manufacturing operations required to drive growth of services exports

Industrial services account for a significant portion of services exports from Finland.

“Even today, they account for 70 to 80 per cent," Jorma Turunen says. However, levels in the export of services have experienced a downward trend since 2008.

“Without the recent growth in the gaming industry, the export of services as a whole would have dropped.”

The structure of Finnish services exports leads to an important conclusion: successful manufacturing operations are required in Finland to prevent shrinking services exports.

Company-specific wage agreements gain ground, strong growth expected in the future

One-third of the member companies of the Federation of Finnish Technology Industries agreed on company-specific wage revisions last winter. More than 90 per cent of the companies also discussed their company’s economic, order book and employment development with their personnel. Most of the member companies aim to conduct company-specific wage revisions in the future.

“Technology industry companies face very different situations, making company-specific wage and employment agreements increasingly important,” says Risto Alanko, Executive Vice President of the federation.

For further information, please contact:                                        

Jorma Turunen, CEO, tel. +358 9 192 3310, +358 500 445 444

Risto Alanko, Executive Vice President, tel. +358 9 192 3347, +358 40 502 6411

Jukka Palokangas, Chief Economist, tel. +358 9 1923 3358, +358 40 750 5469

Situation and Outlook for the Finnish Technology Industry 2/2014 (Report, pdf)