THE FUTURE OF INDUSTRY

The Finnish industrial sector is changing into a service-intensive industry in a global market. Specialisation and innovation play an important role in this transition, and the nature of jobs is changing.

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Sustainable well-being for Finland

Over the coming years, Finland will need to create at least 200,000 new jobs in the private sector. This is the greatest challenge facing the Finnish economy. In addition to social and ecological balance, sustainable well-being requires financial balance. Naturally, good jobs are important for individual well-being as well. New growth areas could emerge from research at universities and cooperation between major companies as well as industrial family businesses that are profitable but avoid taking risks.

Many businesses in Finland are facing the same situation as KONE Corporation in the mid-1960s: eat or be eaten. At the time, KONE was a medium-sized company mainly focusing on the domestic market. With poor profitability, the company had two strategic options: to be acquired by a large international company or to go global through corporate acquisitions.

KONE managed to acquire a larger competing company in Sweden, which marked the beginning of an international success story. At some point in nearly all sectors, centralisation begins to take place through acquisitions, and KONE started to participate in this development early enough. Restructuring enhances competence development, but acquistions also involve considerable risks.

Growth potential

Compared to many other countries, Finland is lacking in large medium-sized businesses – that is, companies with sales between EUR 100 million and 1,000 million. On the other hand, Finland has a reasonable number of healthy businesses within the range of EUR 10 million to 100 million in sales, and these companies offer considerable growth potential. Active corporate restructuring would present relevant growth opportunities for many Finnish businesses. However, acquisitions involve risks and challenges that call for risk financing. Banks, pension funds and governmental financial institutions should work together to ensure that financing is available for corporate acquisitions.

Sitra’s Growth Programme for the Mechanical Engineering Industry has produced four books that discuss the development of the Finnish industrial sector as well as the related challenges, opportunities and solutions, including competitive abilities based on expertise.

The future of industry theme was part of Sitra’s Growth Programme for the Mechanical Engineering Industry (2008-2011). More information on the theme is available from Sitra’s Communications on-call service, tel. +358 40 548 0794.

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