News
26.2.2010 Federation’s environmental policy initiative encourages enterprises to become pioneers
25.2.2010 A flexible approach needed to the recruitment of educators in the field of technology
10.2.2010 Subcontracting in the technology industry set to recover gradually
2.2.2010 Turnover remains extremely low, staffing changes continue
Subcontracting in the technology industry set to recover gradually
Demand for subcontracting in the technology industry low at the end of 2009. Situation forecast to gradually improve by the summer.
In January, the Federation of Finnish Technology Industries conducted a survey of member companies who supply or use subcontractor services on the effect of the economic cycle on subcontracting in the technology industry. The survey was based on the situation in companies in December 2009.
Demand for subcontracting was at low ebb at the end of 2009. However, the fall in demand was not as wide-spread as was feared in the spring. Over 40 % of main contractors announced that their use of subcontractors had fallen, whereas, in the spring, 85 % expected a decrease in their use of subcontractors. On the subcontractor side, 52 % announced a decrease in business, while in the spring, 94 % expected business to decline.
According to main contractors, earlier improvements in the price competitiveness and reliability of subcontractors came to a halt at the end of the year.
Spare capacity has led to a fall in prices. Over 60 % of subcontractors surveyed said they had lowered their prices for new orders.
40 % of subcontractors surveyed said that main contractors had not provided sufficient information on changes to their production programmes. Slightly over 10 % of subcontractors felt that they had received sufficient information. Over 40 % of those surveyed reported that their main contractors had terminated earlier contracts and/or long-term collaboration.
Falling demand has eroded profitability. 12 % of subcontractors surveyed said that profitability was good. In contrast, the proportion of subcontractors reporting weak profitability rose to 55 % from a figure of 45 % in the spring.
Subcontracting forecast to recover gradually
According to the survey, main contractors believe their use of subcontractors will begin to increase. Over a third of main contractors surveyed predicted such an increase. Of subcontractors surveyed, one quarter predicted such an increase.
However, business will pick up slowly. 28 % of subcontractors reported they were cutting production and 43% said they were planning temporary lay-offs. 10 % reported they were increasing production.
One half of subcontractors believed that profitability would remain stable at the beginning of 2010. One quarter believed profitability would improve and slightly over one fifth that it would worsen.
Additional information
Matti Spolander, tel. 09 192 3366
matti.spolander(at)teknologiateollisuus.fi
