Order growth due to isolated large deals – market situation remains uncertain

The turnover of companies in the technology industries in Finland totalled EUR 65.2 billion in 2013. Between January and July of this year, turnover was roughly equal as twelve months earlier. The turnovers of electronics, machinery and steel product industry companies in particular decreased while the greatest growth was posted in the vehicle, software and metal ore mining industries. In 2008, the Finnish technology industry's turnover was EUR 85.7 billion.

Both new orders and order books grew in July–September. This growth is based on individual high-value orders. There are major differences between individual companies.

The companies that took part in the Federation of Finnish Technology Industries’ survey of order books reported that the monetary value of new orders between July and September was 33 per cent greater than in the corresponding period of 2013, and 17 per cent greater than in the preceding quarter. Of the respondents, 62 per cent said the quantity of new orders had fallen since April–June, 33 per cent said it had grown, and 5 per cent said it had remained stable.

At the end of September, the value of order books was 13 per cent greater year on year, and also 13 per cent above the value reported at the end of June.

Situation in Russia increases uncertainty

Judging from order trends in recent months, the turnover of technology companies is expected to be higher in the next few months than in the corresponding period year earlier.

However, the reduction in calls for tenders in the industry in autumn, for the first time this year, speaks to the uncertainty of the market situation. The crisis in Ukraine and recession in Russia, in addition to the economic sanctions imposed on the country, are hindering the growth potential of several technology industry companies.

The reduction in personnel employed in the technology industry has continued between January and September of this year, and the number of employees was approximately 275,500 at the end of September. In 2008, the industry employed a total of 326,000 people in Finland.

Support for growth-oriented renewal required

The growth-oriented renewal of industry is of paramount importance to Finland. Finland has potential to prosper as an industrial internet user. The national data exchange layer, data centre business, and implementation of cable projects in the Baltic Sea and North-East Passage would attract investments and internationally networked top experts to Finland.

“This is an opportunity that Finland cannot afford to miss,” says CEO Jorma Turunen of the Federation of Finnish Technology Industries.

This development can be supported through measures for enhancing the tapping of expertise, research activities and new technologies, and their commercialisation into new business, products and services.

The significance of SMEs as drivers of growth and employment has increased in recent years. However, there are few SMEs engaged in direct export in Finland. The development of internationalisation and export promotion services and the capital market should therefore take the needs of SMEs into account. 

“We must reverse the declining trend in research, development and innovation investment. Cooperation between companies, research institutes and educational establishments can also be reinforced in many ways,” says Mervi Karikorpi, Director of Innovation and Renewal.

Karikorpi also encourages companies to make better use of the available sources of EU funding. According to the Horizon 2020 programme, Finland is entitled to a minimum of EUR 250 million in annual research funding. Increasing this allotment requires making participation easy for companies.

“Finland must finally begin to understand the importance of the export industry for funding the welfare state. The public sector must be cut back to a size we are able to support. Less cuts will be required if we can once again increase the share of exports in the GDP,” Turunen concludes.

Economic Situation and Outlook 4/2014 Publication (pdf)

Further information:         
Jorma Turunen, CEO, tel. +358 500 445 444
Mervi Karikorpi, Director, tel. +358 40 741 9801 
Jukka Palokangas, Chief Economist, tel. +358 40 750 5469
firstname.lastname@techind.fi