Finnish Technology Industry Situation and Outlook, September 2014
Finnish technology industry, September 2017
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Transcript of Finnish technology industry, September 2017
Technology Industry /Finnish Economic Outlook
September 2017
19/15/2017 Technology Industriesof Finland
The Finnish Technology Industry Is Comprised of
Five Sub-Sectors
29/15/2017 Technology Industriesof Finland
ELEKTRONICS AND ELECTROTECHNICAL INDUSTRYABB, Ensto, Microsoft Mobile,
Murata Electronics, Nokia, Planmeca,
Polar Electro, Suunto, Vacon, Vaisala…
METALS INDUSTRY
Boliden, Componenta, Kuusakoski,
Luvata, Outokumpu, Outotec,
Ovako, Sacotec, SSAB …
MECHANICAL ENGINEERING
Abloy, Cargotec, Finn-Power, Fiskars,
Glaston, Kone, Konecranes, Metso,
Meyer Turku, Normet, Oras, Patria,
Pemamek, Ponsse, Stala, Valmet,
Valtra, Wärtsilä…
INFORMATION TECHNOLOGY
Affecto, Basware, Bilot, CGI, Comptel,
Digia, Efecte, Enfo, F-Secure, Fujitsu
Finland, IBM, Innofactor, Knowit,
Microsoft, Nixu, Tieto…
CONSULTING ENGINEERING
A-Insinöörit, Citec, Elomatic, Etteplan, FCG,
Granlund, Neste Jacobs, Pöyry, Ramboll,
Rejlers, SITO, SWECO, WSP…
The Finnish Technology Industry Is Comprised of
Five Sub-Sectors
3
ELEKTRONICS AND ELECTROTECHNICAL INDUSTRY• Data communications equipment, electricalmachinery, medical technology
• Turnover (2016): 13.3 billion euros• Personnel (2016): 38,000
METALS INDUSTRY• Steel products, non-ferrous metals, castings, metallic minerals
• Turnover (2016): 9.0 billion euros• Personnel (2016): 15,400
MECHANICAL ENGINEERING• Machinery, metal products, vehicles• Turnover (2016): 27.7 billion euros• Personnel (2016): 122,400
INFORMATION TECHNOLOGY• IT services, applications and programming
• Turnover (2016): 11.5 billion euros• Personnel (2016): 60,400
CONSULTING ENGINEERING• Expertise for construction industry and infrastructure
• Turnover (2016): 5.8 billion euros• Personnel (2016): 49,800
9/15/2017 Technology Industriesof Finland
The Technology Industry –
the Largest Export Sector in Finland
4
• 50 % of total Finnish exports.
• Companies invest about EUR 5.0 billionannually in Finland.
• 70 % of private-sector R&D investment.
• Almost 295,000 employed directly in the sector, 700,000 employed in total, equalling about 30% of the entire Finnish labour force.
• Technology Industries of Finland has over1,600 member companies.
9/15/2017 Technology Industriesof Finland
Turnover of the Technology Industry in Finland
5Source: Macrobond, Statistics Finland, Technology Industries of Finland 9/15/2017 Technology Industriesof Finland
6*) In addition to goods exports the sector exported services worth some 12.3 billion euros (2015).Source: National Board of Customs, Statistics Finland
Export of Technology Industry Goods from Finland by Area in 2016
Total goods exports 25.2 billion euros*
North America2.5 billion €9.8 %
Western Europe13.7 billion €53.9 %
South and Middle America0.8 billion €3.2 %
Central and Eastern Europe3.8 billion €15.0 %
Africa0.4 billion €1.7 %
Middle and Central East0.5 billion €1.8 %
Asia3.7 billion €14.6 %
9/15/2017 Technology Industriesof Finland
Technology, Forest and Chemical Industries Provide 80 % of Finland's Goods and Services Exports Revenue Goods and service exports: billion euros and the share of Finnish exports in 2016*
7*) Service exports industry-specific data for the year 2015. Source: Board of Customs, Statistics Finland (National Accounts, Foreign trade in services)
Technology industry50%
Forest industry15%
Chemical industry15%
Other sectors20%
9/15/2017 Technology Industriesof Finland
Turnover of the Industry and Technology Industry
in Finland
8Source: Macrobond, Statistics Finland9/15/2017 Technology Industriesof Finland
Turnover of the Technology Industry in Finland
9Source: Macrobond, Statistics Finland9/15/2017 Technology Industriesof Finland
Value of New Orders in the Technology Industry*
in Finland
10Source: The Federation of Finnish Technology Industries’ order book survey’s respondentcompanies, latest observation April-June 2017
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
11,000
12,000
13,000
Combined
Export
Domestic
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Million euros, at current prices
Change: II,2017 / II,2016 II,2017 / I,2017
Export: +60 % +31 %
Domestic: +15 % +8 %
Combined: +47 % +25 %
*) Excl. metalsindustry and gameindustry companies
Technology Industries of Finland
9/15/2017
Value of Order Books in the Technology Industry*
in Finland
11Source: The Federation of Finnish Technology Industries’ order book survey’s respondentcompanies, latest observation 30.6.2017
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
22,000
24,000
26,000
Export
Domestic
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Million euros, at current prices
Change: 30.6.2017 / 30.6.2016 30.6.2017 / 31.3.2017
Export: +25 % +14 %
Domestic: -1 % +2 %
Combined: +18 % +10 %
*) Excl. metalsindustry and gameindustry companies
Combined
Technology Industries of Finland
9/15/2017
Tender Requests* Received by Technology
Industry Companies in Finland
1215.9.2017 Teknologiateollisuus Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies,the last questionnaire is April 2017
-60
-50
-40
-30
-20
-10
0
10
20
30
40
Balance figure
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
*) Have you experienced a notable increase or decrease in the number of requests for tenders in recent weeks in comparison to the situation threemonths ago?”. Balance figure = the number of companies receiving more requests - the number of companies receiving less requests.
Value of New Orders in the Electronics and Electrotechnical Industry in Finland
13Source: The Federation of Finnish Technology Industries’ order book survey’s respondentcompanies, latest observation April-June 2017
0500
1,0001,5002,0002,5003,0003,5004,0004,5005,0005,5006,0006,5007,0007,5008,000
Combined
Export
Domestic
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Million euros, at current prices
Change: II,2017 / II,2016 II,2017 / I,2017
Export: +11 % +4 %
Domestic: +45 % +30 %
Combined: +18 % +9 %
Technology Industries of Finland
9/15/2017
Value of Order Books in the Electronics and
Electrotechnical Industry in Finland
14Source: The Federation of Finnish Technology Industries’ order book survey’s respondentcompanies, latest observation 30.6.2017
0500
1,0001,5002,0002,5003,0003,5004,0004,5005,0005,5006,0006,5007,0007,5008,0008,500
Export
Domestic
Million euros, at current prices
Change: 30.6.2017 / 30.6.2016 30.6.2017 / 31.3.2017
Export: +8 % +4 %
Domestic: +26 % +27 %
Combined: +11 % +8 %
Combined
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Technology Industries of Finland
9/15/2017
Value of New Orders in the MechanicalEngineering in Finland
15Source: The Federation of Finnish Technology Industries’ order book survey’s respondentcompanies, latest observation April-June 2017
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
5,500
6,000
Combined
Export
Domestic
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Million euros, at current prices
Change: II,2017 / II,2016 II,2017 / I,2017
Export: +113 % +53 %
Domestic: +3 % +7 %
Combined: +86 % +45 %
Technology Industries of Finland
9/15/2017
Value of Order Books in the Mechanical
Engineering in Finland
16Source: The Federation of Finnish Technology Industries’ order book survey’s respondentcompanies, latest observation 30.6.2017
01,0002,0003,0004,0005,0006,0007,0008,0009,000
10,00011,00012,00013,00014,00015,00016,000
Export
Domestic
Million euros, at current prices
Change: 30.6.2017 / 30.6.2016 30.6.2017 / 31.3.2017
Export: +31 % +17 %
Domestic: -10 % -2 %
Combinedä: +23 % +14 %
Combined
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Technology Industries of Finland
9/15/2017
Value of New Orders in the Consulting Engineering
in Finland
17Source: The Federation of Finnish Technology Industries’ order book survey’s respondentcompanies, latest observation April-June 2017
0
50
100
150
200
250
300
350
Combined
Export
Domestic
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Million euros, at current prices
Change: II,2017 / II,2016 II,2017 / I,2017
Export: -28 % -46 %
Domestic: +11 % +1 %
Combined: +5 % -8 %
Technology Industries of Finland
9/15/2017
Value of Order Books in the Consulting
Engineering in Finland
18Source: The Federation of Finnish Technology Industries’ order book survey’s respondentcompanies, latest observation 30.6.2017
0
100
200
300
400
500
600
700
800
Export
Domestic
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Million euros, at current prices
Change: 30.6.2017 / 30.6.2016 30.6.2017 / 31.3.2017
Export: +78 % +2 %
Domestic: +4 % +2 %
Combined: +15 % +2 %
Combined
Technology Industries of Finland
9/15/2017
Value of New Orders in the Information
Technology* in Finland
19Source: The Federation of Finnish Technology Industries’ order book survey’s respondentcompanies, latest observation April-June 2017
050
100150200250300350400450500550600650700750800850
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Million euros, at current prices
Change: II,2017 / II,2016 II,2017 / I,2017
Combined: -1 % -12 %
*) Excl. game industry companies
Technology Industries of Finland
9/15/2017
Value of Order Books in the Information
Technology* in Finland
20Source: The Federation of Finnish Technology Industries’ order book survey’s respondentcompanies, latest observation 30.6.2017
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Million euros, at current prices
Change: 30.6.2017 / 30.6.2017 30.6.2017 / 31.3.2017
Combined: -2 % -5 %
*) Excl. game industry companies
Technology Industries of Finland
9/15/2017
Technology Industry Personnel
219/15/2017 Technology Industries of Finland Source: Statistics Finland, The Federation of Finnish Technology Industries’ labour force survey, Macrobond
(30.6)
Technology Industry Personnel in Finland by
Branch
229/15/2017 Technology Industries of Finland Source: Statistics Finland, The Federation of Finnish Technology Industries’ labour force survey, Macrobond
(30.6)
Technology Industry Personnel in Subsidiaries
Abroad by Branch
239/15/2017 Technology Industries of Finland Source: The Federation of Finnish Technology Industries’ labour force survey, Macrobond
Retirement of Technology Industry Personnel in
Finland
24
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
Number of individuals retired Number of individuals retiring (estimation)
Salaried employees
Blue collar employees
Individuals per year
Source: Wage inquiry of the Techonology Industries of Finland, Finnish Centre for Pensions, Statistics FinlandTechnology Industriesof Finland
9/15/2017
Retirement of Technology Industry Blue Collar
Employees in Finland
25
0
500
1000
1500
2000
2500
3000
3500
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
Mechanical engineering Metals industry Electronics and electrotechnical industry
Individuals per year
Source: Wage inquiry of the Techonology Industries of Finland, Finnish Centre for Pensions, Statistics FinlandTechnology Industriesof Finland
9/15/2017
Overview of the Situation in the Technology
Industry and Outlook for Autumn 2017
26
- Turnover in Finland totalled some EUR 67.3 billion in 2016. This is about half per cent higherthan in 2015. In January-June 2017 turnover was 11 % higher than last year at the same time. In 2008, prior to the financial crises, the corresponding figure was EUR 86 billion.
- The monetary value of new orders reported between April-June 2017 was 25 % higher thanin January-March, and 47 % higher than in the corresponding period in 2016.
- At the end of June, the value of order books was 10 % higher than at the end of March, and 18 % higher than in June 2016.
- The turnover of technology industry companies in autumn 2017 is expected to be higherthan in the corresponding period last year.
- The number of personnel in Finland increased somewhat in January-June 2017. Personnel increased by two per cent, or by 6,000 employees from the average number in 2016. On average, the industry employed 296,000 people in June. In 2008, the industry employed a total of 326,000 people in Finland.
- The recruitment activities have picked up markedly in 2017. The companies recruited a totalof 22,600 new employees between January and June.
9/15/2017 Technology Industries of Finland
World Economic Outlook
- Finland as a Part of Global Economy
279/15/2017 Technology Industries of Finland
Gross Domestic Product Has Grown in the Euro
Area for a Long Time, and Now also in Finland
28Lähde: MacrobondTechnology Industries of Finland
9/15/2017
Recently, Finland's Economic Growth Has also
Been Supported by an Increase in Exports
29Source: Macrobond, Statistics FinlandTechnology Industries of Finland
9/15/2017
GDP Has Grown for a Long Time in the Euro Area, Now Also in Finland
309/15/2017 Lähde: MacrobondTechnology Industriesof Finland
319/15/2017 Lähde: Macrobond
In China and India Growth Continues, also Brazil Is Returning to Growth Share of global GDP in China, India, Brazil and Russia is 31 % (adjusted for PP)
Technology Industriesof Finland
329/15/2017 Latest information August 2017 Source: Markit
GDP Growth in the Euro Area Has Picked up During the last MonthsPurchase Managers’ Index (PMI), 50 = no change from previous month
Technology Industriesof Finland
Industrial Production Volume
339/15/2017 Source: MacrobondTechnology Industriesof Finland
Industrial Production Volume in the EU Countries
349/15/2017 Source: MacrobondTechnology Industriesof Finland
Industrial Production is Growing in Particular in
Emerging Countries
359/15/2017 Source: Macrobond, The CPB Netherlands Bureau for Economic Policy AnalysisTechnology Industriesof Finland
369/15/2017 Latest information August 2017 Source: Markit
Industrial Production in China is Declining Slightly
Purchase Managers’ Index (PMI) in manufacturing industry in China
Technology Industriesof Finland
379/15/2017 Latest information August 2017 Source: Markit
Industrial Production in Russia is Growing
Purchase Managers’ Index (PMI) in manufacturing industry in China
Technology Industriesof Finland
389/15/2017 Latest information August 2017 Source: Markit
Industrial Production in Brazil Is IncreasingPurchase Managers’ Index (PMI) in manufacturing industry in China
Technology Industriesof Finland
39Source: Macrobond
Industrial Production in USA is GrowingPurchase Managers’ Index (PMI) in manufacturing industry
50 = no change from previous month
Technology Industriesof Finland
9/15/2017
40Source: Macrobond
Growth of Residence Construction Has Lowered in China Share of China in Asian GDP is 42% (adjusted for PP)
Technology Industriesof Finland
9/15/2017
41Souce: Macrobond
Fixed Investment in Brazil Continue to DecreaseShare of Russia in European GDP is 13 % (adjusted for PP)
Share of Brazil in Latin American GDP is 35 % (adjusted for PP)
Technology Industriesof Finland
9/15/2017
42Source: Macrobond, The CPB Netherlands Bureau for Economic Policy Analysis
World Trade Has Picked up Again Import volume development
Technology Industriesof Finland
9/15/2017
Imports to China Have Increased from Several
Countries, but Are Slowing Down
43Source: MacrobondTechnology Industriesof Finland
9/15/2017
Exports from EU Countries to Russia Have Fallen,
but Stabilized
44Source: MacrobondTechnology Industriesof Finland
9/15/2017
Russia’s Share* of Technology Industry Exports
from Finland Has Lowered to Some Five Per Cent
45*) Soviet Union up to 1991Source: Finnish Customs
02468
1012141618202224262830323436384042
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2017(1
-6)
Technology Industriesof Finland
9/15/2017
%
46Source: IMF (April 2017)
Global Economy is Expected to Grow by 3,5 % in
2017 GDP growth in 2017, %
-4
-3
-2
-1
0
1
2
3
4
5
6
7
8
9
0 10 20 30 40 50 60 70 80 90 100
North America
Western EuropeJapan
China India
Rest
of
Easte
rnEuro
pe
Russia
Bra
zil M
exic
o Rest
of
Latin
A,m
erica
Mid
dle
East
and A
fric
a
Average growth: +3,5 %
The width of the bar indicates the share of global GDP in 2015 (adjusted for purchasing power parity), %
Rest of Asia
9/15/2017 Technology Industries of Finland
47Source: IMF (April 2017), Board of Customs
Demand in the Finnish Technology Industry Export
Market is Expected to Grow by 2.2 % in 2017 GDP growth 2017 / 2016, %
-4
-3
-2
-1
0
1
2
3
4
5
6
7
8
9
0 10 20 30 40 50 60 70 80 90 100
North America
Western Europe
Japan
ChinaIndia
Rest ofAsia
Rest
of
Easte
rn E
uro
pe
Russia B
razil
Rest
of
Latin
Am
erica
Mid
dle
East
and A
fric
a
Average growth: +2.2 % M
exic
o
The width of the bar indicates the export share of technology industry from Finland in 2015, %
9/15/2017 Technology Industries of Finland
Finland’s Economic Growth Relies on Exports and Investments
48Technology Industriesof Finland
9/15/2017
49Source: Macrobond, Eurostat
Finland's Exports Are still Low and Insufficient to
Finance the Public Sector
Technology Industriesof Finland
9/15/2017
Finnish Exports Lagging Behind Competitors
50Source: Macrobond, EurostatTechnology Industriesof Finland
9/15/2017
Economic Growth is Constrained by the 20% Drop in Production Capacity and a High Rate of Utilization Investments are vital for the production and export recovery
51
55%
60%
65%
70%
75%
80%
85%
90%
95%
100%
70
75
80
85
90
95
100
105
110
115
120
125
Industrialproduction ability(production withcapacity in fulluse), left. Scale
Industrialproduction(2008=100), leftscale
Capacity utilizationrate, %, right scale
-19 %
2008 2009
2010 2011 2012 2013 2014 2015 2016 2017
-21 %
Source: Statistics Finland / National Accounts, Industrial volume indexTechnology Industriesof Finland
9/15/2017
52Source: Macrobond, Eurostat
Growth of Public Expenditures, Debt and Tax Ratio
in Finland Increased cost burden requires cuts to public sector
Technology Industriesof Finland
9/15/2017
Corporate Investments in Finland Are in Real Terms Almost 6 Billion Euros Lower than in 2008 Production and R&D investments in Finland
53Source: Statistics Finland, National Accounts
20
21
22
23
24
25
26
27
28
29
30
31
32
2008 2009 2010 2011 2012 2013 2014 2015 2016
Billion euros, in the 2016 price level
Technology Industries of Finland
9/15/2017
Companies in Finland Have Invested Significantly
Less than in Competing Countries
54Source: OECD, Economic Outlook (June 2017)
70
75
80
85
90
95
100
105
110
115
120
125
130
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018e
USA
Switzerland
Sweden
Netherlands
Germany
Finland
Corporate investments, index 2008 = 100
Technology Industries of Finland
9/15/2017
55Source: Statistics Finland, (National Accounts), The Confederation of Finnish Industries* investment survey (June 2017)
Investments in the Manufacturing and Technology
Industry in Finland Do Not Promise Long-Term
Strong Growth
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
11,000
12,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e
Manufacturing industry (incl. technology industry)Technology industry (incl. information technology and consulting engineering)
Production and R&D investments in Finland, million euros, at current prices
Technology Industries of Finland
9/15/2017
Investments and productivity* are Decisive for
Finland’s SuccessProductivity of export sector is 10 % lower than in 2007-2008, productivity of entirenational economy is 3 % lower
56*) Productivity is measured as real value added per hours worked. When productivity grows (the curve rises) value added growsmore than hours worked. Value added = turnover – purchasing of materials and servicesValue added = labour costs + rents + depreciations + profitsSource: Statistics Finland / National Accounts
Technology Industriesof Finland
9/15/2017
Rapid Growth in Labour Costs Has Weakened the Ability of Companies to Invest in Finland
57*) Both wages and R & D investments include R&D staff wage costs Source: Statistics Finland (National Accounts)
50
55
60
65
70
75
80
85
90
95
100
105
110
115
2008 2009 2010 2011 2012 2013 2014 2015 2016
Corporate wages andsocial security costs*
Corporate productionand R&D investments*
Corporate profits aftertaxes
At current prices, index 2008=100
Technology Industries of Finland
9/15/2017
58
Finland's Price and Cost Competitiveness Vis-à-vis
the Euro Area Has Improved RecentlyUnit labour costs in the whole economy = labour costs / productivity, including the influence of effective exchange rates
94
96
98
100
102
104
106
108
110
112
114
2000=100
2005=100
2008=100
Finland’s price and cost competitiveness declines
Finland’s priceand costcompetitivenessimproves
01 02 03 05 06 07 08 09 10 11 12 13 14 15 16 17
9/15/2017 Technology Industriesof Finland
*) In the ECB Harmonised Competitiveness Index, the average effective exchange rate of each country is calculated vis-à-vis 38 main trade partners, as well as the development of unit labour costs for the total economy.Latest information January-March 2017. Source: European Central Bank
What Should Be Done in Finland?
59
• Support the renewal of the industry.
• Taxes should support growth and investment in Finland.
• Support decision making in companies related to compensationand working time
• No new European nor national burdens on companies, whichare deteriorating the competitiveness.
Technology Industriesof Finland
9/15/2017
Long-Term Outlook and Challenges
60
• Global Structural Change Set to Continue Apace
o Industrial production and services will relocate to rapidly developing economic areas
o Strong growth, large markets, cheap labour and increasing expertise will increase the
attractiveness of these regions.
• Competition over Skills and Raw Materials Set to Increase
o Due to an increase in retirement, the sector’s annual recruitment need in Finland will
rise considerably in the coming years.
o The availability of reasonably-priced energy also threatens to become an investment
bottleneck in Finland
• Combating Climate Change
o A challenge as costs are set to grow faster than in competitor countries
o An opportunity for new environmental and energy technologies
Technology Industriesof Finland
9/15/2017
Technology Industries of Finland
61Teknologiateollisuus9/15/2017
The Federation’s Member Companies 2016
62
250–499 employees
69,03539%
29,78717%
28,01616%
50,68328%
1,42192 %
845 %
402 % 22
1 %
Number of enterprises / 1 567 Number of personnel / 177 521
1–249 employees 500–999 employees
1000– employees
Technology Industriesof Finland
9/15/2017
The Federation’s SME Member Companies 2016
63
48134%
479 33 %
25818%
20314%
Number of enterprises / 1 421 Number of personnel / 69 035
5,1097%
15,29022%
17,92426%
30,71245%
1–19 employees
20–49 employees
50–99 employees
100–249 employees
9/15/2017 Technology Industriesof Finland