Finnish high-tech giveth, high-tech taketh away

  • 2003-07-03
  • Paal Aarsaether
AFP HELSINKI

High-tech has propelled Finland onto the world stage, boosting wealth and welfare, but Finns are now learning that cutting-edge industries are the first to feel the pain when the economy goes wrong.
"The Finnish economy and companies are more dependent on the U.S. and other European countries due to the IT sector, so you will see the effect of a downturn here first," Tarmo Korpela, head of the Confederation of Trade and Industry, said.
The technology sector, encompassing the engineering, metals, electronic and technology industries, employs half of Finland's work force.
"When we consider that about 70 percent of our sector's sales is export, then it's quite clear that we have problems if there is no growth in the world economy," said Martti Maeenpaeae, head of the Federation of Finnish Electrical and Electronics Industry.
This year the value of the sector's production is expected to be 20 billion euros, or 3 percent lower than in 2002, Maeenpaeae said, adding that he does not expect it to reach the same level again before 2006, or even later.
"But we have invested a lot in research and technology development, and when the world economy starts to grow again, I think we have good opportunities to be a success," he said, with a smile.
In the meantime, Finnish technology groups have tried to hold on to their staff, but as a global economic upswing fails to appear on the horizon, they are now forced to pink-slip employees for the first time in a decade.
"All those companies have been waiting and waiting for a global recovery and postponed the layoffs, but now they are feeling the pinch and have to cut costs," Juha Ahtola, chief economist with Nordea Bank, said.
Since last fall up to 10,000 lay-offs have occurred in the Finnish engineering and technology sector, and it is likely that the figure will be twice as high by the end of this year, analysts said.
"But the problem is also that when companies let skilled people go, it's very difficult to get them back," Maeenpaeae pointed out.
Even rock-solid mobile telephone maker Nokia is feeling the pinch, recently announcing it would let go 1,100 of its Finnish employees in the ailing network division.
Two of its main sub-contractors, Perlos and Elcoteq, have also been forced to fire some of its personnel here, even though most of their production is abroad.
The situation is even worse at IT services provider Novo group, which plans to temporarily send home on a rolling basis 1,950 of its 2,300 employees.
Other Finnish economic stalwarts forced to lay off hundreds of workers are the metals and mining firm Outokumpu, the engineering group Metso, medical research firm Orion, mobile phone maker Benefon, and telecom operators Radiolinja, Telia-Sonera and DNA.
Even the state-owned Finnish Technical Research Center, due to a slump in research contracts from the IT sector, has been forced to pink-slip 15 percent of its workforce, some 500 people.
Other firms, such as Masa-Yards, a part of the Anglo-Norwegian engineering group Kvaerner, which dominates the luxury cruise ship segment, see their strategy to go up-market backfiring, as demand for these ships has all but dried up.
"It's been going on for a while and will be ongoing for a while more," Bo-Erik Blomqvist, Kvaerner's senior vice president for marketing and sales, admitted.
"We have already laid off some hundreds of our 4,500 employees, and the worst case scenario is 4,500 lay-offs," he noted.
It is the same story at Waertsilae, a world leader in advanced ship engines, which announced it would lay off 800 of its 12,500-strong workforce.
Valmet Automotive, part of engineering group Metso, and a contract maker of premium cars for Porsche and Saab, plans to temporarily lay off half of its workforce, or 750 employees for a year, as Saab cancelled the contract with it.
Recently there have been signs that the layoffs are spreading to other sectors too, with the travel industry being the first to feel the fallout from the high-tech firms.
The state-controlled airline Finnair said it would fire 10 percent of its employees, or some 1,200 people, due to a lack in demand for its services.