Finnish Technology Industry Dec 2013, statistics

The Federation of Finnish Technology Industries December 2013

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The Technology Industry Is Comprised of Five Sub-sectors

Metals Industry Boliden, Componenta, Kuusakoski, Luvata, Norilsk Nickel, Outokumpu, Outotec, Ovako, Rautaruukki, Sacotec…

Mechanical Engineering Abloy, Cargotec, Fiskars, Glaston, Kone, Konecranes, Metso, Normet, Oras, Patria, Pemamek, Ponsse, Prima Power, Stala, STX Finland, Valtra, Wärtsilä...

Electronics and Electrotechnical Industry ABB, Ensto, Murata Electronics, Nokia, Nokia Siemens Networks, Planmeca, Polar Electro, Suunto, Vacon, Vaisala...

Information Technology Affecto Finland, Basware, CGI, Codebakers, Codenomicon, Comptel, Digia, Efecte, Enfo, F-Secure, Fujitsu Finland, IBM, Knowit, Microsoft, Nixu, Tieto…

Consulting Engineering A-insinöörit, Citec, Elomatic, Etteplan, FCG, Finnmap, Granlund, Neste Jacobs, Pöyry, Ramboll, Sito, SWECO, Vahanen, WSP…

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The Technology Industry in Finland

Mechanical Engineering • Machinery, metal products, vehicles • Turnover (2012): 27.9 billion euros • Personnel (30.9.2013): 129 100

Electronics and Electrotechnical Industry • Data communications equipment, instruments, electrical machinery • Turnover (2012): 16.3 billion euros • Personnel (30.9.2013): 46 000

Information Technology • IT services, applications and programming • Turnover (2012): 7.5 billion euros • Personnel (30.9.2013): 54 000

Metals Industry • Steel products, non-ferrous metals, castings • Turnover (2012): 10.2 billion euros • Personnel (30.9.2013): 16 000

Consulting Engineering • Expertise for construction industry and infrastructure • Turnover (2012): 5.2 billion euros • Personnel (30.9.2013): 43 000

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• 55% of total Finnish exports.

• 80% of private-sector R&D investment.

• Almost 290,000 employed directly in the sector, 720,000 employed in total, equalling about 30% of the entire Finnish labour force.

• The Federation of Finnish Technology Industries has some 1,600 member companies.

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The Technology Industry – the Most Important Sector in Finland

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02468

10121416182022242628303234

2005 2006 2007 2008 2009 2010 2011 2012

Metals industry

Mechanical engineering

Electronics and electrotechnicalindustry

Information technology

Consulting engineering

Turnover of the Technology Industry in Finland

Source: Statistics Finland

Billion euros,at current prices

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Export of Technology Industry Goods from Finland by Area in 2012 Total goods exports 26.5 billion euros*

*) In addition to goods exports the sector exports services worth about 12 billion euros. Source: National Board of Customs, Statistics Finland

North America 2.2 billion € 8.2 %

Western Europe 12.0 billion € 45.2 %

the Middle East 0.6 billion € 2.3 % Asia

4.1 billion € 15.6 %

Africa 0.8 billion € 3.0 %

South and Central America 1.5 billion € 5.5 %

Central and Eastern Europe 5.3 billion € 20.2 %

Turnover of the Industry and Technology Industry in Finland

80

90

100

110

120

130

140

1502005 = 100

Industry

Technologyindustry

2005 2006 2007 2008 2009 2010 2011 2012 2013

Change: 1-8, 2013 / 1-8, 2012, %

Seasonally adjusted turnover index, latest information 8/2013.

Source: Statistics Finland

-6 %

-4 %

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Turnover of the Technology Industry in Finland

5060708090

100110120130140150160170180190200

2005 = 100

Information technology

Consulting engineering

Mechanical engineering

Metals industry

Electronics and electrotechnicalindustry

2005 2006 2007 2008 2009 2010 2011 2012 2013

Change: 1-8,2013 / 1-8,2012, %

Source: Statistics Finland

Seasonally adjusted turnover index, latest information 8/2013. Share of total turnover in 2012: mechanical engineering 41 %, electronics and electrotechnical industry 26 %, metals industry 14 %, information technology 11 %, consulting engineering 8 %.

+4 %

+13 %

-7 %

-7 %

-14 %

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Value of New Orders in the Technology Industry* in Finland

0100020003000400050006000700080009000

100001100012000

Combined

Export

Domestic

Million euros, at current prices

Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest information July-September 2013

*) Excluding metals industry.

2005 2006 2007 2008 2009 2010 2011 2012 2013 Change: III,2013 / III,2012 III,2013 / II,2013 Export: -30 % -24 % Domestic: +1 % -21 % Combined: -24 % -23 %

9

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02000400060008000

1000012000140001600018000200002200024000

Export

Domestic

Value of Order Books in the Technology Industry* in Finland

Million euros, at current prices

Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest information 30.9.2013

*) Excluding metals industry.

Combined

Change: 30.9.2013 / 30.9.2012 30.9.2013 / 30.6.2013 Export: -12 % -10 % Domestic: -3 % -2 % Combined: -10 % -8 %

2005 2006 2007 2008 2009 2010 2011 2012 2013

10

-100 %

-80 %

-60 %

-40 %

-20 %

0 %

20 %

40 %

60 %

80 %

100 %

120 %

140 %

160 %

180 %

200 %

Change in Value of Order Books in the Technology Industry in Finland Compared with a Year Earlier

Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest information 30.9.2013

Change by companies: 30.9.2013 / 30.9.2012

Average: -10 %

Companies in random order

Median: 0 %

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Value of New Orders in the Electronics and Electrotechnical Industry in Finland

0500

1000150020002500300035004000450050005500600065007000

Combined

Export

Domestic

Million euros, at current prices

2005 2006 2007 2008 2009 2010 2011 2012 2013 Change: III,2013 / III,2012 III,2013 / II,2013 Export: -51 % -42 % Domestic: -10 % -11 % Combined: -48 % -39 %

Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest information July-September 2013

12

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0500

100015002000250030003500400045005000550060006500700075008000

Export

Domestic

Value of Order Books in the Electronics and Electrotechnical Industry in Finland

Combined

Million euros, at current prices

2005 2006 2007 2008 2009 2010 2011 2012 2013

Change: 30.9.2013 / 30.9.2012 30.9.2013 / 30.6.2013 Export: -43 % -33 % Domestic: -18 % -10 % Combined: -41 % -32 %

Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest information 30.9.2013 13

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Value of New Orders in the Mechanical Engineering in Finland

0500

100015002000250030003500400045005000

Combined

Export

Domestic

Million euros, at current prices

2005 2006 2007 2008 2009 2010 2011 2012 2013

Change: III,2013 / III,2012 III,2013 / II,2013 Export: +4 % 0 % Domestic: -8 % -26 % Combined: +1 % -7 %

Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest information July-September 2013

14

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0100020003000400050006000700080009000

100001100012000130001400015000

Export

Domestic

Value of Order Books in the Mechanical Engineering in Finland

Combined

Million euros, at current prices

Change: 30.9.2013 / 30.9.2012 30.9.2013 / 30.6.2013 Export: +5 % +1 % Domestic: -5 % +1 % Combined: +3 % +1 %

2005 2006 2007 2008 2009 2010 2011 2012 2013

Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest information 30.9.2013 15

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Value of New Orders in the Consulting Engineering in Finland

020406080

100120140160180200220240260280300320

Combined

Export

Domestic

Million euros, at current prices

2005 2006 2007 2008 2009 2010 2011 2012 2013

Change: III,2013 / III,2012 III,2013 / II,2013 Export: -10 % -23 % Domestic: +9 % -4 % Combined: +6 % -7 %

Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest information July-September 2013

16

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0

50

100

150

200

250

300

350

400

450

500

550

600

Export

Domestic

Value of Order Books in the Consulting Engineering in Finland

Combined

Million euros, at current prices

Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest information 30.9.2013

2005 2006 2007 2008 2009 2010 2011 2012 2013

Change: 30.9.2013 / 30.9.2012 30.9.2013 / 30.6.2013 Export: -3 % -13 % Domestic: +22 % -3 % Combined: +16 % -5 %

17

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Value of New Orders in the Information Technology in Finland

050

100150200250300350400450500550600650700750800

Million euros, at current prices

2005 2006 2007 2008 2009 2010 2011 2012 2013

Change: III,2013 / III,2012 III,2013 / II,2013 Combined: +29 % -18 %

Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest information July-September 2013

18

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Value of Order Books in the Information Technology in Finland

0

200

400

600

800

1000

1200

1400

1600

1800

2000Million euros, at current prices

2007 2008 2009 2010 2011 2012 2013

Change: 30.9.2013 / 30.9.2012 30.9.2013 / 30.6.2013 Combined: -3 % -2 %

Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest information 30.9.2013

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140 000

160 000

180 000

200 000

220 000

240 000

260 000

280 000

300 000

320 000

340 000

2008 2009 2010 2011 2012 2013 (30.9.)

Personnel in Finland Personnel in subsidiaries abroad

Source: Statistics Finland, The Federation of Finnish Technology Industries’ labour force survey

Personnel in the Technology Industry Some 15 000 of employees affected by temporary or part-time lay-offs

20

0

20 000

40 000

60 000

80 000

100 000

120 000

140 000

160 000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013(30.9)

Metals industry Mechanical engineering industry Electronics and Electrotechnical Industry

Information technology Consulting engineering

Technology Industry Personnel in Finland

Source: Statistics Finland, The Federation of Finnish Technology Industries’ labour force survey 11.12.2013 21

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Retirement of Technology Industry Personnel

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022

Number of individuals retiredNumber of individuals retiring (estimation)

Source:, Wage inquiry of the Federation of Finnish Technology Industries, Finnish Centre for Pensions, Statistics Finland

Individuals per year

Salaried employees

Blue collar employees

22

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Retirement of Technology Industry Blue Collar Employees

0

500

1000

1500

2000

2500

3000

3500

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022

Mechanical engineeringMetals industryElectronics and electrotechnical industry

Source: Wage inquiry of the Federation of Finnish Technology Industries, Finnish Centre for Pensions, Statistics Finland

Individuals per year

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Situational overview and outlook

• - Finland is in the grip of structural change. Development remains uneven between companies.

• - Turnover in Finland in 2012 was some EUR 67 billion. Turnover in the pre-crisis year 2008 was EUR 81 billion.

• - The monetary value of new orders in July-September was 24 % lower than in the corresponding period of 2012, and 23 % lower than at the level of the preceding quarter.

• - At the end of September, the value of order books was 10 % lower year on year, and 8 % lower the value reported at the end of June.

• - The turnover of technology industry companies could fall by as much as 10 per cent year-on-year, being significantly lower than in the times preceding the 2008 financial crises.

• - Since 2008, personnel numbers in Finland have shrunk by 30,000 employees, totalling 288,000 at the end of September.

• - Small and medium-sized enterprises in particular have reported weak development in profitability.

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European recovery will take time

65

70

75

80

85

90

95

100

105

110

USA

EU28countries

Japan

Finland

Industrial Production Volume Industrial production volume in EU countries 10 %, but in Finland 19 % lower since early 2008

2008=100

Seasonally adjusted volume index, latest information 9/2013 or 10/2013. Source: Eurostat, Federal Reserve (USA), Statistics Bereau and Statistics Center (Japan)

2008 2009 2010 2011 2012 2013

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70

75

80

85

90

95

100

105

110

115

120

125

Poland

Estonia

Belgium

Austria

Germany

Sweden

Finland

Italy

Spain

Industrial Production Volume in EU Countries

2008=100

2008 2009 2010 2011 2012 2013

Seasonally adjusted volume index, latest information 9/2013. Source: Eurostat 11.12.2013 27

The Share of Industry in GDP in Finland 1900-2012

0%

5%

10%

15%

20%

25%

30%

35%

Industry Industry + service sectors in the technology industry

Source: Statistics Finland 11.12.2013 28

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Breakdown of World Industrial Production

0

5

10

15

20

25

30

35

40

45

50

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

Asia

North America

Europe

Purchasing power parity adjusted shares. Source: Maddison (Historical Statistics), IMF and ETLA

%

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80

100

120

140

160

180

200

220

240

260

280

300

320

2005 2006 2007 2008 2009 2010 2011 2012 2013e 2014e

China

Korea

India

Russia

Finland

Brazil

USA

Euroarea

Japan

Source: Consensus Economics

Industrial Production Development by Year

2005=100

30

31

2030405060708090

100110120130140150160170180190200210

2005 2006 2007 2008 2009 2010 2011 2012e 2013e 2014e

Greece

Italy

Irland

Portugal

USA

Belgium

Germany

Spain

Finland

Sweden

Almost all Western Countries have Excessive Public Debt

Source: OECD, Economic Outlook, May 2013

Public debt / GDP, %

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The Big Challenge for Finland after 2008

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Finnish Exports up to EUR 20 – 30 Billion Short of Annual Target Level

10111213141516171819202122232425262728

Exports needed toavoid extra runninginto debt in thepublic sector

Exports, realized

Working day and seasonally adjusted index. Latest information April-June 2013. Source: Statistics Finland

Export of goods and services by quarter, billion euros, at current prices

33

2005 2006 2007 2008 2009 2010 2011 2012 2013

Finnish Exports lagging Behind Competitors

90100110120130140150160170180190200210220230

Estonia

Poland

ChechRepublicGermany

Netherlands

Belgium

Sweden

Finland

Working day and seasonally adjusted index. Latest information April-June 2013. Source: Eurostat

Export of goods and services by quarter, billion euros, at current prices, index

2005,I = 100

34 11.12.2013

2005 2006 2007 2008 2009 2010 2011 2012 2013

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90

95

100

105

110

115

120

125

130

135

2005 2006 2007 2008 2009 2010 2011 2012e 2013e 2014e

Germany

Switzerland

Sweden

USA

Belgium

Finland

Finland not attracting Companies’ Investment Companies’ Fixed Investments in Different Countries

Source: OECD, Economic Outlook, May 2013

Indeksi, 2005=100

Unit Labour Costs at the National Economy Level (Including the Effective Exchange Rates)

90

95

100

105

110

115

120

Compared to Germany Compared to Spain Compared to ItalyCompared to the Netherlands Compared to Austria Compared to Finland

*) In the ECB Harmonised Competitiveness Index, the average effective exchange rate of each country is calculated vis-à-vis 20 to 30 main trade partners, as well as the development of unit labour costs for the total economy Latest information II/2013. Source: European Central Bank

Finland’s cost competitiveness declines

2005,I =100

Finland’s cost competitiveness improves

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2005 2006 2007 2008 2009 2010 2011 2012 2013

What should be done?

• Support the renewal of the industry • Taxes should support growth and investment in Finland • Support decision making in companies related to

compensation and working time • No new European nor national burdens on companies,

which are deteriorating the competitiveness

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Long-Term Outlook and Challenges

• Global Structural Change Set to Continue Apace

– Industrial production and services will relocate to rapidly developing economic areas

– 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

– Due to an increase in retirement, the sector’s annual recruitment need in Finland will rise considerably in the coming years.

– The availability of reasonably-priced energy also threatens to become an investment bottleneck in Finland

• Combating Climate Change

– A challenge as costs are set to grow faster than in competitor countries – An opportunity for new environmental and energy technologies

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