Technology industry outlook: New orders disappoint, strong demand continues
This information is based on the recent order book and personnel survey published by Technology Industries of Finland.
The development of the cyclical situation of the Finnish technology industry is aligned with that of its European and worldwide counterparts.
“The industry outlook is clouded in particular by the serious shortages of raw materials and components, cost increases and skills shortages. Significant increase in costs may also have a negative impact on the profitability of companies,” says Petteri Rautaporras, Director, Chief Economist at Technology Industries of Finland.
The monetary value of new technology industry orders in the July-September period was 6 per cent lower than in the previous quarter. More than half of the companies that participated in the survey reported that their order intake had contracted. Nevertheless, order intake for the third quarter of the year was 7 per cent higher year-on-year.
At the end of September, the value of order books was 5 per cent higher than at the end of June and 16 per cent higher than in September 2020. Shipyards’ share of the total value of books remains large. In addition, order books are currently inflated by the delivery problems caused by material and component shortages.
The number of personnel employed by technology industry companies in Finland increased further in the third quarter. At the end of September, the industry employed approximately 319,000 people in Finland, up 2,000 from the previous quarter.
Momentum for investments, quick action to address labour shortages
According to Jaakko Hirvola, the CEO of Technology Industries of Finland, while the cyclical situation continues to be good, we cannot ignore the fact that growth is levelling. The recent growth spurt has not done away with any of the old challenges of Finnish economy.
“Finland needs to invest into research and development as well as machinery and equipment. We now have tangible evidence that the cyclical situation is levelling, and several long-term forecasts also point to slower growth in the future. We need additional RDI funding, flexible licensing processes and an overall development of the operating environment to make sure that companies invest in Finland and not somewhere else. Green transition and digitalisation also require new investments, and Finnish companies have a lot to contribute to this area,” Hirvola points out.
According to Hirvola, the parliamentary working group that is discussing RDI funding has a great responsibility in its hands. It is of utmost importance that the group finds a long-term solution that increases RDI expenditure in Finland to the target level of 4 per cent of GDP. It is also important to maintain the achieved consensus in the future, regardless of the composition of the government.
Hirvola also urges the government to take a quick action to address the increasing labour shortages.
“Labour shortages are impeding the growth of companies. This combined with a high unemployment rate of more than 7 per cent, ageing population and increasing public sector indebtedness puts Finland in an impossible situation. It is time to wake up and smell the coffee: employment measures are required urgently. At the same time, we must make sure we can quickly recruit skilled foreign workers, because our domestic supply is not enough to meet the demand,” Hirvola concludes.
Jaakko Hirvola, CEO, phone +358 40 063 3751
Petteri Rautaporras, Director, Chief Economist, phone +358 50 304 2220