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2.8.2012 Situation and Outlook of the Finnish Technology Industry 3/2012: Slow growth has stalled – competitiveness declines further
Situation and Outlook of the Finnish Technology Industry 3/2012: Slow growth has stalled – competitiveness declines further
In Finnish technology industries, both new orders and order book volumes have dropped over the past few months. Net sales are anticipated to fall short of last year’s level in the autumn. At the same time, Finland’s cost competitiveness has declined in comparison with its main competitors, and industry productivity has not developed as expected. The economic downturn further highlights the need to improve the competitiveness of Finland and the Finnish export industry.
Report: Situation and outlook of the Finnish Technology Industry 3/2012 (pdf)
Between January and April, the turnover of technology industry companies in Finland was one percent higher than in the corresponding period of 2011. However, new orders and order book volumes have dropped over the past few months. The turnover of technology industry companies is expected to be lower in the autumn than in the corresponding period of 2011.
“The slow growth has stalled, and the outlook for the remainder of the year seems weaker,” says CEO Jorma Turunen of the Federation of Finnish Technology Industries. “Of the main sectors, only information technology and consulting engineering have reported positive development. There are also some signs of positive development in mechanical engineering, but overall, development between companies remains very uneven.”
The companies that took part in the Federation of Finnish Technology Industries’ survey of order books reported that the monetary value of new orders in the industry between April and June was 16 per cent lower than in the corresponding period of 2011, and five per cent lower than in the preceding quarter. Compared to the pre-crisis level of autumn 2008, the volume of new orders was down almost 40 per cent between April–June 2012.
At the end of June, the value of order books was two per cent less year-on-year, and three per cent below the value reported at the end of March. Compared to the pre-crisis level, order book volume was down by more than 40 per cent at the end of June.
Between January and June, the number of technology industry personnel in Finland increased slightly from the beginning of the year. At the end of June, the industry employed more than 301,000 people and also provided some 15,000 summer jobs. In 2008, prior to the financial crisis, the industry employed 329,000 people.
European economic downturn spreading to Germany
The European economic downturn has deepened over the past few months. The manufacturing and service sector purchasing managers’ indices for May, June and July were at their lowest since the worst phase of the financial and economic crisis, indicating that the GDPs of several countries have been shrinking over the spring and summer.
The downturn seems to be spreading, catching up with the strongly competitive German economy. France, Italy, the UK, Spain and many other countries have continued to see their economies contract over the summer. The global economy is also affected by growing uncertainty. Most emerging countries are also seeing their economic growth slowing down. Even though the Finnish economy has not started to shrink yet, the risk is quickly increasing.
Competitiveness must be improved
In a challenging market situation, the state should make firm decisions to support the renewal of industry and commerce. Labour market policy should create incentives for companies and employees to improve their productivity.
Moreover, the competitiveness of Finnish corporate and income taxes must be improved by introducing a programme that spans several years. The state’s policy alignments on the promotion of company renewal and growth entrepreneurship should also be turned into decisions and implemented.
Companies cannot take any more burdens. “Growth and companies’ competitiveness should be the main concerns in political decision-making,” Jorma Turunen demands.
Further information:
Jorma Turunen, CEO, tel. +358 9 192 3310, +358 500 445 444
Jukka Palokangas, Chief Economist, tel. +358 9 1923 3358, +358 40 750 546
