1. Technology Industry / Finnish Economic Situation and Outlook August 2014

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, Rautaruukki, Sacotec…
Mechanical Engineering
Abloy, Cargotec, Fiskars, Glaston, Kone, Konecranes, Metso, Normet, Oras, Patria, Pemamek, Ponsse, Prima Power, Stala, STX Finland, Valtra, Wärtsilä...
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… 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 (2013): 15.8 billion euros
Personnel (2013):
Metals Industry
Steel products, non-ferrous metals, castings
Turnover (2013): 8.8 billion euros
Personnel (2013):
Mechanical Engineering
Machinery, metal products, vehicles
Turnover (2013): 27.2 billion euros
Personnel (2013):
Information Technology
IT services, applications and programming
Turnover (2013): 8.3 billion euros
Personnel (2013):
Consulting Engineering
Expertise for construction
industry and infrastructure
Turnover (2013): 5.0 billion euros
Personnel (2013): 3

4. The Technology Industry – the Most Important Sector in Finland
50 % of total Finnish exports.
75 % of private-sector R&D investment.
Some 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
Billion euros, at current prices
Source: Statistics Finland

6. Export of Technology Industry Goods from Finland by Area in 2013
Total goods exports 24.8 billion euros*
Central and Eastern Europe
4.9 billion €
19.6 %
Western Europe
11.4 billion €
46.1 %
North America
2.2 billion €
8.8 %
Middle and Central East
0.7 billion €
2.8 %
Asia
4.1 billion €
16.5 %
Africa
0.5 billion €
2.1 %
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 Technology Industry in Finland
Change: 1-4,2014 / 1-4,2013, %
-1 %
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Seasonally adjusted turnover index, latest information 4/2014.
Source: Statistics Finland

8. Turnover of the Technology Industry in Finland
Change: 1-4,2014 / 1-4,2013, %
+13 %
0 %
-1 %
-7 %
-6 %
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Seasonally adjusted turnover index, latest information 4/2014. Share of total turnover in 2012: mechanical engineering 41 %,
electronics and electrotechnical industry 26 %, metals industry 14 %, information technology 11 %, consulting engineering 8 %
Source: 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:
II,2014 / II,2013
II,2014 / I,2014
Export:
-1 %
+1 %
Domestic:
+3 %
-9 %
Combined:
0 %
*) Excluding metals industry and game industry companies.
Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies,
latest information April-June 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 %
-4 %
Domestic:
+2 %
0 %
Combined:
-7 %
-3 %
*) 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: July 2014.

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
Muutos / Change:
II,2014 / II,2013
II,2014 / I,2014
Vientiin / Export:
-23 %
-10 %
Kotimaahan / Domestic:
+7 %
+3 %
Yhteensä / Combined:
-19 %
-8 %
Lähde/Source: Teknologiateollisuus ry:n tilauskantatiedustelun vastaajayritykset, viimeisin tieto huhti-kesäkuu 2014 / The Federation of Finnish Technology Industries’ order book survey’s respondent companies,
latest information April-June 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:
-23 %
-9 %
Domestic:
+8 %
Combined:
-20 %
-7 %
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:
II,2014 / II,2013
II,2014 / I,2014
Export:
+29 %
+14 %
Domestic:
+16 %
-3 %
Combined:
+26 %
+10 %
Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies,
latest information April-June 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:
-3 %
-2 %
Domestic:
-1 %
Combined:
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:
II,2014 / II,2013
II,2014 / I,2014
Export:
-12 %
-10 %
Domestic:
+20 %
-4 %
Combined:
+16 %
-5 %
Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies,
latest information April-June 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:
-3 %
+5 %
Domestic:
+14 %
+6 %
Combined:
+11 %
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:
II,2014 / II,2013
II,2014 / I,2014
Combined:
-15 %
-25 %
*) Excl. game industry companies.
Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies,
latest information April-June 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:
0 %
-1 %
*) Excl. game industry companies.
Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies,
latest information

20. Change in Value of Order Books in the Technology Industry in Finland Compared with a Year Earlier
Change by companies: / , %
Median: 0 %
Average: -7 %
Companies in random order
Source: The Federation of Finnish Technology Industries’ order book survey’s
respondent companies, latest information

21. 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

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

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

24. 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

25. 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

26. 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 2013 was some EUR 65 billion. Between January and April of this year, turnover was slightly lower than twelve months earlier. Turnover in the pre-crisis year 2008 was EUR 86 billion.
- The monetary value of new orders in April-June 2014 was remained unchanged from the corresponding period in 2013, but slightly lower than in the precending quarter.
- At the end of June, the value of order books was 7 % lower year-on- year, and 3 % below the value reported at the end of March.
- The turnover of technology industry companies in the autumn of 2014 is expected to be roughly equal in comparison with the corresponding period last year.
- Since 2008, personnel numbers in Finland have shrunk by 48,000 employees, totalling 278,000 at the end of June 2014.

27. Situation in Russia and Ukraine hindering Europe’s revival

28. Industrial Production Volume

29. Industrial Production Volume in EU Countries

30. Euro Countries Are Developing Unevenly
Manufacturing and Services Sector Purchasing Managers’ Index
Purchasing Magers’ Index
50 = ei muutosta edelliskuukaudesta / 50 = no change on previous month
Latest information July 2014.
Source: Markit

31. World Economic Growth in 2014e
GDP growth in 2014, %
China
Rest of Latin America
India
Rest of Eastern Europe
Middle East, Africa
Average growth: +3,4 %
Rest of
Asia
Mexico
North America
Russia
Brazil
Western Europe
Japan
The width of the bar indicates the share (purchasing power parity adjusted) of world GDP in 2013, %
Source: IMF (July 2014)

32. World Economic Growth in 2014e with the Export Shares
GDP growth in 2014, %
China
Rest of Latin America
India
Middle East, Africa
Rest of
Asia
Rest of Eastern Europe
Mexico
Brazil
Average growth: +2,3 %
North America
Russia
Western Europe
Japan
The width of the bar indicates the export share of technology industry from Finland in 2013, %
Source: IMF (July 2014), Board of Customs

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

34. Industrial Production Development by Year
2005=100
Source: Consensus Economics

35. The Big Challenge for Finland after 2008

36. Finnish Exports up to EUR 20 – 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 January-March 2014.
Source: Statistics Finland / National Accounts

37. Finnish Exports lagging Behind Competitors

38. The Share of Industry in GDP in Finland 1900-2013
Source: Statistics Finland

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

40. Growth of Public Debt and Tax Rate Out of Control
Increased cost burden requires cuts to public sector

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

42. Finland not Attracting Companies’ Investment
Companies’ Fixed Investments in Different Countries
Index, 2005=100
Source: OECD, Economic Outlook, May 2014

43. Unit Labour Costs at the National Economy Level
(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 I/2014.
Source: European Central Bank

44. 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

45. 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