The situation for export companies remains difficult: Number of lay-offs has increased significantly in the technology industry
The order books of companies in Finland's largest export industry are continuing to shrink at a rapid clip, and the number of people who have been laid off has risen substantially. It is a relief that the sharp drop in new orders in the third quarter did not repeat at the end of the year according to the recent order book and personnel survey by Technology Industries of Finland.
The latest data on the trend in demand and the order intakes of companies in the Finnish technology industry predicts a challenging start to the year for the Finnish economy. The turnover of technology industry companies is expected to contract further over the next six months. The number of personnel, which reached a record high a year ago, has begun to decline and the number of people laid off has risen considerably, according to the recent order book and personnel survey by Technology Industries of Finland.
“Many companies will face difficulties this year. Good order books have kept them afloat, but even those have shrunk rapidly in recent months. One positive glimmer is that the new order intake has improved substantially on the previous quarter, although it remains worse than the average for recent years,” says Chief Economist and Director Petteri Rautaporras.
According to preliminary data, the turnover of technology industry companies in Finland decreased by approximately two per cent in 2023 from 2022.
Rautaporras thinks that it is possible that a dramatic fall in production volumes and slump in employment, which had been feared at the end of last year, can be avoided in the first months of 2024.
“Thanks to the orders that have come in, production has been running commendably in the technology industry — but despite this pick-up, the order intake cannot yet even be described as satisfactory. It seems inevitable that production volumes will decline somewhat in early 2024,” he says.
The monetary value of new orders received by technology industry companies in the October-December period was 33 per cent higher than in the previous quarter, but 19 per cent lower year-on-year. At the end of December, the total value of order books was three per cent lower than at the end of September and 16 per cent lower than in December 2022.
In mechanical engineering, which is the largest technology industry sector, the value of new orders increased by 48 per cent in the October-December period from the previous quarter. Year-on-year, the value of new orders decreased by 16 per cent.
“The excellent news for companies is that it looks like the very weak order intake in the third quarter will be an exception.The recovery of new orders indicates that the temporary factors that significantly dampened demand towards the end of 2023 have eased, at least partly. That said, even if it seems that we’ll avoid the crisis we feared at the end of last year, we shouldn’t expect a sudden turn for the better. We still have to adapt to rather anaemic zero growth,” Rautaporras says.
The tender request balance figure for the entire technology industry was -23 in January. The data collected in January indicates that demand remained weak overall despite the pick-up in new orders.
Worrying Signals about Finland Must Be Avoided
There has been a slight drop in the number of personnel in the technology industry. At the end of December, the industry employed 334,000 people.
The number of people laid off has grown considerably in the industry. According to the personnel survey, the number of employees affected by lay-off procedures at the end of December was approximately 16,000, in comparison to only a few thousand in the summer.
“Industrial production has stagnated in all of Europe and companies have been in an extremely worrying position, but they have wanted to hold on to their personnel. Although there is some light at the end of the tunnel in the economy, early winter will be a difficult time for companies in the technology industry. The situation should now not be destabilised in any way. The massive wave of strikes targeting industrial companies sends a very concerning signal to foreign customers and investors,” says CEO Jaakko Hirvola.
The Finnish government is committed to balancing public sector finances, such as by reforming labour market structures. At the same time, it has pledged to strengthen high-level research and innovation policies, for instance.
“Dozens of member companies of Technology Industries of Finland have signed a commitment to increase their research, development and innovation investments in Finland. In spite of the difficult economic situation, this work is well under way. A sufficient share of the additional funding must be allocated to company-led research so that we can stay on track for growth of four per cent. Corporate investments generate new sustainable growth and employment for Finland, and companies need a very wide variety of experts. This is how Finland now stands — and I hope that we won’t shoot ourselves in the foot,” Hirvola says.
