A recent study on major corporations offers some surprising bright spots. Representatives of major businesses believe that subcontracting and purchases within Finland will increase. Finland is also more and more attractive for companies to set up their production and other operations. Finnish major companies under domestic ownership are particularly committed to Finnish production and subcontracting.
The positive results of the survey do not, however, hide the fact that the most alarming result is the lack of capacity for investment. Investments by major companies sank in 2014, and future investment plans are modest. Digitisation is the only aspect that companies are comfortable investing in.
"The investment outlook of major companies is alarmingly bleak. Companies cannot see the current economic situation and their operating environment as favourable to investments. This will only make it difficult to achieve growth later on," says Hannu Jaatinen, who is in charge of banking services to corporate customers.
"We need to get Finland back on a growth track and we must act swiftly to encourage investments. If a project is good, I'm sure the funding can be made available," he continues.
Corporate management is losing faith in Finland's political leadership, and this is seen as an even higher risk than recent developments in Russia. Big companies with Finnish roots and owner base in particular are still very much dependent on the domestic political environment.
The best companies have secured their future capacity
Finland's 250 largest companies account for over 80% of the country's private-sector net sales, employing over 60% of the private-sector personnel. Companies have reacted to a decrease in overall net sales by, for example, reducing their staff numbers. and as a result achieving a clearly better level of profitability.
According to the survey, company representatives experienced much higher competition in the market than previously. One of the survey's positive results is that as competition is becoming tighter, more and more heads of companies with Finnish roots rely heavily on their business's strengths and competitive edge.
It is a sign of higher confidence that companies with Finnish roots are resorting less to outsourcing, with threats of going out of business being lower. This could be a sign that we have seen the greatest spate of outsourcing and layoffs.
The survey supports the trend that has been detected earlier. The winners and losers are set even more clearly apart.
"Operating in a certain sector no longer guarantees a good position and success, but competition is making companies go in different directions. We are also seeing that companies are choosing one of these two strategies brought about by the competitive situation: some are restoring their competitive edge by cutting costs and optimising productivity, while others seek new markets and operating models. In the long run, the future only holds promise for the latter," says Professor Pekka Mattila, who is in charge of the research project.
The survey of large Finnish corporations and their prospects was carried out for the third time by OP and the Nordic Institute of Business and Society (NIBS), a think tank set up by professors of the Aalto University School of Business. The survey involved the largest 250 Finnish companies as in the previous survey. The first survey was carried out in the autumn of 2012. The survey was this year again led by Professors Pekka Mattila and Henrikki Tikkanen.
The basic statistics were collected from the top 250 Finnish companies in the autumn of 2014. In addition, the survey covered an extensive electronic questionnaire sent to key executives and their interviews. The questionnaire was answered by 147 key executives from 107 major companies. The created research data collected during these three years is unequalled in Finland in terms of its extent and nature.
For more information, please contact:
Hannu Jaatinen, Executive Vice President, Banking at OP tel. +358 (0)10 252 2874
Pekka Mattila, Professor, Aalto University School of Business, and Group Managing Director of Aalto University Executive Education, tel. +358 (0)40 738 7221
Professor Pekka Mattila and Mr Hannu Jaatinen will talk about the survey's results on OP Nyt on 10 February at about 8.30 am at op.fi/uutishuone
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Pohjola Pankki Oyj via Globenewswire
