1. Technology Industry / Finnish Economic Situation and Outlook March 2015

2. The Technology Industry Is Comprised of Five Sub-sectors
Electronics and Electrotechnical Industry
ABB, Ensto, Microsoft Mobile, Murata Electronics, Nokia, Planmeca, Polar Electro, Suunto, Vacon, Vaisala…
Metals Industry
Boliden, Componenta, Kuusakoski, Luvata, Norilsk Nickel, Outokumpu, Outotec, Ovako, Sacotec, SSAB
Mechanical Engineering
Abloy, Cargotec, Prima Power, Fiskars, Glaston, Kone, Konecranes, Metso, Meyer Turku, Normet, Oras, Patria, Pemamek, Ponsse, Stala, Valmet, Valtra, Wärtsilä...
Information Technology
Affecto, Basware, Bilot, CGI, Codebakers, Comptel, Digia, Efecte, Enfo, F-Secure, Fujitsu Finland, IBM, Innofactor, Knowit, Microsoft, Nixu, Tieto…
Consulting Engineering A-insinöörit, Citec, Elomatic, Etteplan, FCG, Finnmap, Granlund, Neste Jacobs, Pöyry, Ramboll, Rejlers, SITO, SWECO, WSP… 2

3. The Technology Industry in Finland
The Technology Industry in Finland
Electronics and Electrotechnical Industry
Data communications equipment, electrical machinery, medical technology products
Turnover (2014): 15.1 billion euros
Personnel (2014):
Metals Industry
Steel products, non-ferrous metals, castings
Turnover (2014): 9.2 billion euros
Personnel (2014):
Mechanical Engineering
Machinery, metal products, vehicles
Turnover (2014): 27.2 billion euros
Personnel (2014):
Information Technology
IT services, applications and programming
Turnover (2014): 10.0 billion euros
Personnel (2014):
Consulting Engineering
Expertise for construction
industry and infrastructure
Turnover (2014): 5.0 billion euros
Personnel (2014): 3

4. The Technology Industry – the Most Important Sector in Finland
50 % of total Finnish exports.
75 % of private-sector R&D investment.
Almost 280,000 employed directly in the sector, 700,000 employed in total, equalling about 30% of the entire Finnish labour force.
The Federation of Finnish Technology Industries has over 1,600 member companies.

5. Turnover of the Technology Industry in Finland

6. Export of Technology Industry Goods from Finland by Area in 2013
Total goods exports 24.8 billion euros*
Western Europe
11.4 billion €
46.1 %
Central and Eastern Europe
4.9 billion €
19.6 %
North America
2.2 billion €
8.8 %
Middle and Central East
0.7 billion €
2.8 %
Africa
0.5 billion €
2.1 %
Asia
4.1 billion €
16.5 %
South and Middle America
1.0 billion €
4.1 %
*) In addition to goods exports the sector exports services worth about 11 billion euros.
Source: National Board of Customs, Statistics Finland

7. Turnover of the Industry and Technology Industry in Finland
Seasonally adjusted turnover index.
Source: Macrobond, Statistics Finland

8. Turnover of the Technology Industry in Finland
Seasonally adjusted turnover index.
Source: Macrobond, Statistics Finland

9. Value of New Orders in the Technology Industry* in Finland
Million euros, at current prices
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Change:
IV,2014 / IV,2013
IV,2014 / III,2014
Export:
-1 %
-11 %
Domestic:
+16 %
-16 %
Combined:
+4 %
-12 %
*) Excluding metals industry and game industry companies.
Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies,
latest information October-December 2014

10. Million euros, at current prices
Value of Order Books in the Technology Industry* in Finland
Million euros, at current prices
Combined
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Change: / /
Export:
+10 %
+1 %
Domestic:
+34 %
+2 %
Combined:
+16 %
*) Excluding metals industry and game industry companies.
Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies,
latest information

11. Tender Requests* Received by Technology Industry Companies in Finland
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
“Have you experienced a notable increase or decrease in the number of requests for tenders in recent weeks in comparison to the situation three months ago?”. Balance figure = the number of companies receiving more requests - the number of companies receiving less requests.
Source: The Federation of Finnish Technology Industries’ order book survey,
latest information January 2015.

12. Value of New Orders in the Electronics and Electrotechnical Industry in Finland
Million euros, at current prices
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Change:
IV,2014 / IV,2013
IV,2014 / III,2014
Export:
-14 %
-10 %
Domestic:
+29 %
- 3 %
Combined:
-9 %
Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies,
latest information October-December 2014

13. Value of Order Books in the Electronics and Electrotechnical Industry in Finland
Million euros, at current prices
Combined
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Change: / /
Export:
-5 %
0 %
Domestic:
+40 %
-3 %
Combined:
-1 %
Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies,
latest information

14. Value of New Orders in the Mechanical Engineering in Finland
Million euros, at current prices
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Change:
IV,2014 / IV,2013
IV,2014 / III,2014
Export:
+23 %
-14 %
Domestic:
+27 %
-36 %
Combined:
+24 %
-20 %
Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies,
latest information October-December 2014

15. Million euros, at current prices
Value of Order Books in the Mechanical Engineering in Finland
Million euros, at current prices
Combined
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Change: / /
Export:
+21 %
+1 %
Domestic:
+54 %
+2 %
Combined:
+28 %
Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies,
latest information

16. Value of New Orders in the Consulting Engineering in Finland
Million euros, at current prices
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Change:
IV,2014 / IV,2013
IV,2014 / III,2014
Export:
+17 %
+39 %
Domestic:
+22 %
+66 %
Combined:
+21 %
+62 %
Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies,
latest information October-December 2014

17. Million euros, at current prices
Value of Order Books in the Consulting Engineering in Finland
Million euros, at current prices
Combined
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Change: / /
Export:
+6 %
+3 %
Domestic:
+21 %
+8 %
Combined:
+18 %
+7 %
Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies,
latest information

18. Value of New Orders in the Information Technology in Finland
Million euros, at current prices
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Change:
IV,2014 / IV,2013
IV,2014 / III,2014
Combined:
-2 %
+9 %
*) Excluding game industry companies.
Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies,
latest information October-December 2014

19. Value of Order Books in the Information Technology in Finland
Million euros, at current prices
2007
2008
2009
2010
2011
2012
2013
2014
Change: / /
Combined:
+13 %
+3 %
*) Excluding game industry companies.
Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies,
latest information

20. Personnel in the Technology Industry
Some of employees
affected by temporary or part-
time lay-offs
Source: Statistics Finland, The Federation of Finnish Technology Industries’ labour force survey

21. Technology Industry Personnel in Finland by Branch
Source: Statistics Finland, The Federation of Finnish Technology Industries’ labour force survey

22. Technology Industry Personnel in Subsidiaries Abroad
Source: The Federation of Finnish Technology Industries’
labour force survey

23. Retirement of Technology Industry Personnel
Individuals per year
Salaried employees
Blue collar employees
Source: Wage inquiry of the Federation of Finnish Technology Industries, Finnish Centre for Pensions, Statistics Finland

24. Retirement of Technology Industry Blue Collar Employees
Individuals per year
Source: Wage inquiry of the Federation of Finnish Technology Industries, Finnish Centre for Pensions, Statistics Finland

25. Situational Overview and Outlook
Situational Overview and Outlook
- Finland is in the grip of structural change. Development remains uneven between companies.
- Turnover in Finland in 2014 increased slightly compared to Turnover totalled EUR 66.5 billion. In the pre-crisis year 2008 it was EUR 86 billion.
- The monetary value of new orders reported between October-December 2014 was 4 % higher than in the corresponding period in 2013, but 12 % lower than in the preceding quarter.
- At the end of December, the value of order books was 16 % higher year-on-year, and slightly above the value reported at the end of September.
- The turnover of technology industry companies in the beginning of 2015 is expected to be slightly higher than in the corresponding period year earlier.
- Since 2008, personnel numbers in Finland have shrunk by 50,000 employees, totalling 276,000 on average in 2014.

26. Weak Demand Continues in Main Export Markits in 2015

27. Industrial Production Volume
Source: Macrobond

28. Industrial Production Volume in EU Countries
Source: Macrobond

29. Weak Growth in Manufacturing Industry in Eurozone in Early 2015
Purchase Managers’ Index (PMI)
50 = no change from previous month
Latest information February 2015.
Source: Markit

30. Russian Economy is in Negative Circle
Purchase Managers’ Index in manufacturing and services sectors in Russia
50 = no change from previous month
Latest information February 2015.
Source: Markit

31. Global Economy is Expected to Grow by 3.5% in 2015
GDP growth in 2015, %
China
India
Rest of Latin Am.
Middle East and Africa
Mexico
Average growth: +3.5%
Rest of
Asia
Rest of Eastern Europe
North America
Russia
Western Europe
Brazil
Japan
The width of the bar indicates the share of global GDP in 2014 (adjusted for purchasing power parity), %.
Source: IMF (January 2014) 31

32. Export Demand for Technology Industry in Finland Will Grow by 2
Export Demand for Technology Industry in Finland Will Grow by 2.0 % in 2015
GDP growth in 2015, %
Rest of Latin Am.
China
India
Rest of Eastern Europe
Middle East and Africa
Mexico
Rest of
Asia
North
America
Average growth: +2.0%
Brazil
Russia
Western Europe
Japan
The width of the bar indicates the export share of technology industry from Finland in 2013, %
Source: IMF (January 2015), Board of Customs 32

33. Exports from EU Countries to Russia is Falling
Source: Macrobond

34. Russia’s Share of Technology Industry Exports Will Decline Again to the Level of Approximately Five Per Cent %
*) Soviet Union up to 1991.
Source: Finnish Customs

35. Breakdown of World Industrial Production%
Purchasing power parity adjusted shares.
Source: Maddison (Historical Statistics), IMF and ETLA

36. Industrial Production Development by Year
Source: Macrobond

37. The Big Challenge for Finland after 2008

38. Finnish Exports up to EUR 30 Billion Short of Annual Target Level
Export of goods and services by quarter, billion euros, at current prices
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Working day and seasonally adjusted index.
Latest information October-December 2014.
Source: Statistics Finland / National Accounts

39. Finnish Exports Lagging Behind Competitors
Source: Macrobond

40. The Share of Industry in GDP in Finland 1900-2013
*) During industry covers also mines, energy, water and refuse collection sectors.
Source: Statistics Finland / National Accounts

41. Finland’s Industrial Production and Exports Will not Regain the Level of 2008 with the Present Production Capacity Finland’s production capasity has decreased over 20 %
-21%
2008
2009
2010
2011
2012
2013
2014
Working hours and seasonally adjusted time series.
Source: Statistics Finland / National Accounts, Industrial volume index

42. Growth of Public Debt and Tax Rate Out of Control
Increased cost burden requires cuts to public sector
Source: Macrobond

43. Industrial Investments Should be Increased
Industrial fixed and R&D Investments in Finland
Million euros, at current prices
Source: Statistics Finland, Confederation of Finnish Industries’
Investment Survey (June 2014)

44. Upswing of Investments Required in Finland
Companies’ fixed investments
Index, 2005=100
Source: OECD, Economic Outlook 2014

45. Turning Point of Productivity Development in Finland in 2008 After 2008 Finland has lost considerable volume production in electronics, forest and machinery industries**
**) The structure of current industry does not enable the similar productivity development as during the years
*) Productivity is measured as real value added per hours worked. When productivity grows (the curve rises) value added grows more than hours worked.
Value added = turnover – purchasing of materials and services
Value added = labour costs + rents + depreciations + profits
Source: Statistics Finland / National Accounts

46. Unit Labour Costs at the National Economy Level
Labour costs / productivity, including the effective exchange rates
2005,I =100
Finland’s cost
competitiveness
declines
Finland’s cost
competitiveness
improves
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
*) 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 III/2014. Source: European Central Bank

47. Compact of Growth and Jobs Has at the Most Slight Effect on Finland’s Cost Competitiveness Finland’s relative unit labour costs compared to Germany
Source: Confederation of Finnish Industries

48. 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

49. 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

50. The Federation of Finnish Technology Industries

51. The Federation Of Finnish Technology Industries Strategy 2014 –2015
A Pioneer
Advancing Technology Finland!
Competitiveness and renewal
Competitive business environment
Innovation to drive international operations
Expertise and competences to drive growth and employment
Efficiency and new business through digitalisation
Reform of labour markets
Export-sector to drive revival of cost competitiveness
Increase in company-specific solutions
Strike-free environment
Engine of growth and success

52. Competitiveness – Renewal – Reform of labour markets
Operational model 2014
Advancing Technology Finland
Competitiveness – Renewal – Reform of labour markets
Industrial Policy
Innovation Environment
Digitalisation and growth
Labour Markets
CEO Jorma Turunen
Eeva-Liisa
Inkeroinen
Sanna Rauhansalo
Mervi Karikorpi
Jukka Viitasaari
Coordination of public affairs
Energy politics
Sustainability
Logistics
Business law
Innovation, research and education policy
Innovation networks and business development
Foresight
Collaboration between industry and educational institutions
ICT 2015
Internet of things
Cyber security activities
Real Time Economy
Labour market policy
Collective agreements
Economic forecasts
Guidance and training on employment issues
Mechanical Engineering
Ilkka Niemelä
Electronics and Electrotechnical Industry
Jukka Viitasaari
Metals Industry
Kimmo Järvinen ( >)
Information Technology
Consulting Engineering
Matti Mannonen
Branch Networks
Ilkka Niemelä
Branch groups
Branch associations
Security of supply
SMEs and Regional Activity
Eeva-Liisa Inkeroinen
Regional Activity and Services
Eeva-Liisa Inkeroinen
SME Committee
Aluetoimistot
Regional Offices
Yrittäjävaliokunta
Piiriyhdistysyhteistyö
Cooperation with district associations
Communications
Nora Elers
Communications
Nora Elers PR
Image and brand
Website and publications
Finance and Administration
Esko Keskinen
Teknologiainfo
Teknova Oy HR
Finance
Information management
Technology Industries of Finland Centennial Foundation
Laura Juvonen

53. The Federation’s Member Companies 2013
Number of enterprises 1,612
Number of personnel 186,723
1–249 employees
500–999 employees
250–499 employees
1000– employees
Source: The Federation of Finnish Technology Industries

54. The Federation’s SME Member Companies 2013
Number of enterprises 1,463
Number of personnel /
1–19 employees
50–99 employees
20–49 employees
100–249 employees
Source: The Federation of Finnish Technology Industries

55. Technology Is Everywhere 55

56. The Technology Industry is also about Services 56

57. Segmentation of Member Companies The ‘segmentation model’ is used for developing member services
Multinational enterprises in Finland
Finnish
blue chip enterprises
Finnish internationalis ing enterprises
Small local enterprises
Units in Finland are part of a multinational enterprise with headquarters situated outside Finland, foreign ownership > 50%
The enterprise’s headquarters and/or roots are in Finland, but its operation is very international and its area of expertise broad
A Finnish enterprise that has international operations and/or the ability and resources to grow internationally
The enterprise operates in Finland and often at a local level. Its activities are usually focused on a certain area of expertise
Share of total membership
14% (200 companies), 17% of employees
Typical size of enterprise
160 employees
Examples: ABB, AGCO, Fujitsu, IBM, Logica, Microsoft, Norilsk Nickel
Share of total membership
1% (11 companies),
30% of employees
Typical size of enterprise
5,200 employees (in Finland)
Examples: Cargotec, KONE, Konecranes, Metso, Nokia,Outokumpu, Tieto,
Wärtsilä
Share of total membership
1 % (11 companies),
30 % of employees
Typical size of enterprise
5 200 employees (in Finland)
Examples: Cargotec, KONE, Konecranes, Metso, Nokia,Outokumpu, Rautaruukki, Tieto,
Wärtsilä
Share of total membership
24 % (345 companies), 35 % of employees
Typical size of enterprise employees
Examples:
Basware, Ensto, F-Secure, Hollming, Polar, Ponsse, Suunto
Share of total membership
24% (345 companies), 35% of employees
Typical size of enterprise employees
Examples:
Basware, Ensto, F-Secure, Hollming, Polar, Ponsse, Suunto
Share of total membership
60% (860 companies), 17% of employees
Typical size of enterprise
35 employees
Examples:
Hakaniemen Metalli, Hellmanin Konepaja

58. The Federation Promotes Entrepreneurship
The Federation - creating a competitive business environment
Promotes the interests of SMEs
Supports expansion abroad
Influences legislation
Influences trade and industrial policy
Promotes a competitive tax system
Sub-sector and specialist groups
Manage sub-sector specific questions

59. Working to Improve the Attractiveness of the Sector
The Federation
Provides information on jobs and training within the sector for teachers, parents and young people
Promotes collaboration between companies and schools and universities
Works to enhance the image of the sector.

60. The Federation Is Here to Serve
Provides labour market services and strives
to reshape working life:
Guidance on employment issues
Training and coaching
Collective bargaining
Improving productivity
Influencing EU decision-making
Publishes professional literature,
economic forecasts and statistics and
arranges seminars
Provides legal services

61. Sub-sectors

62. Mechanical Engineering
55 per cent of personnel employed in Finland
70-80 per cent of sales from the EU and neighbouring areas
Urbanisation, and expansion in the rapidly developing economies the motor for growth
Company presence in these areas to continue to increase
Increased R&D investment and higher automation in production required to improve competitiveness
High skilled and educated personnel needed to replace retiring employees
fixed-investment products: machinery, metal products,
vehicles

63. Electronics and the Electro-technical Industry
Strong commitment to R&D
in many fields over 10 per cent of turnover
Exports account for over 80 per cent of sales
Industry plays a vital role in the development of the internet of things (sensors collecting data)
Competitiveness of enterprises in Finland dependent upon:
availability of university-level experts
effective commercial exploitation of research
finding the right niche
data and communications equipment, electrical devices,
and instruments

64. The Metals Industry
Rapidly growing economies maintaining high demand for metals and metal-based solutions.
Exports account for 80 per cent of sales
Competitiveness of enterprises in Finland dependent upon:
the availability of a sufficiently skilled workforce
keeping up research of a high standard
reasonably-priced energy
a competitive business environment in the EU, especially regarding climate and environmental policy
reliable and reasonably-priced logistics
Steel products, non-ferrous metals, metal based solutions, castings

65. Information Technology
Thanks to digitalisation, demand for IT solutions is growing in all sectors of society
IT solutions are needed for example in gaming industry, clean tech and health technology
Finnish IT sector’s clients predominantly Finnish
Growth of the sector in Finland requires
a new customer-oriented approach from the sector’s enterprises
education of the existing customer base
new customers
growth in the size of enterprises
strong internationalisation
skilled workforce
IT solutions and services

66. Consulting Engineering
Companies are experts and designers in investment and development for industry, society and construction
Competitiveness in Europe is good, global markets require new approaches
Consulting engineering services are an important part of industrial company networks
Over 60 percent of the employees have university degree education
Competitiveness of the sector require
education and expert knowledge
international expertise and networking
investments and innovative solutions
procurement emphasis on expertise and quality
Knowledge intensive services for industry, society and construction