The Federation of Finnish Technology Industries February 2014

The Technology Industry Is Comprised of Five Sub-sectors Electronics and Electrotechnical Industry ABB, Ensto, Murata Electronics, Nokia, Nokia Siemens Networks, 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… 6.11.2018 2

The Technology Industry in Finland 6.11.2018 The Technology Industry in Finland Electronics and Electrotechnical Industry Data communications equipment, instruments, electrical machinery Turnover (2013): 14.2 billion euros Personnel (2013): 46 600 Metals Industry Steel products, non-ferrous metals, castings Turnover (2013): 9.4 billion euros Personnel (2013): 15 900 Information Technology IT services, applications and programming Turnover (2013): 8.3 billion euros Personnel (2013): 55 200 Mechanical Engineering Machinery, metal products, vehicles Turnover (2013): 26.3 billion euros Personnel (2013): 132 600 Consulting Engineering Expertise for construction industry and infrastructure Turnover (2013): 5.5 billion euros Personnel (2013): 45 700 6.11.2018 3

The Technology Industry – the Most Important Sector in Finland 55% of total Finnish exports. 80% of private-sector R&D investment. Almost 300,000 employed directly in the sector, 740,000 employed in total, equalling about 30% of the entire Finnish labour force. The Federation of Finnish Technology Industries has over 1,600 member companies. 6.11.2018

Turnover of the Technology Industry in Finland Billion euros,at current prices Source: Statistics Finland, The Federation of Finnish Technology Industries 6.11.2018 6.11.2018 5

Export of Technology Industry Goods from Finland by Area in 2012 Total goods exports 26.5 billion euros* Central and Eastern Europe 5.3 billion € 20.2 % Western Europe 12.0 billion € 45.2 % North America 2.2 billion € 8.2 % the Middle East 0.6 billion € 2.3 % Asia 4.1 billion € 15.6 % Africa 0.8 billion € 3.0 % South and Central America 1.5 billion € 5.5 % *) In addition to goods exports the sector exports services worth about 12 billion euros. Source: National Board of Customs, Statistics Finland 6.11.2018

Turnover of the Industry and Technology Industry in Finland Change: 1-10, 2013 / 1-10, 2012, % -4 % -6 % 2005 2006 2007 2008 2009 2010 2011 2012 2013 Seasonally adjusted turnover index, latest information 10/2013. Source: Statistics Finland 6.11.2018

Turnover of the Technology Industry in Finland Change: 1-10,2013 / 1-10,2012, % +11 % +3 % -6 % -8 % -13 % 2005 2006 2007 2008 2009 2010 2011 2012 2013 Seasonally adjusted turnover index, latest information 10/2013. 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 6.11.2018

Value of New Orders in the Technology Industry* in Finland Million euros, at current prices 2005 2006 2007 2008 2009 2010 2011 2012 2013 Change: IV,2013 / IV,2012 IV,2013 / III,2013 Export: -15 % +15 % Domestic: -3 % +13 % Combined: -12 % *) Excluding metals industry. Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest information October-December 2013 6.11.2018

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 Change: 31.12.2013 / 31.12.2012 31.12.2013 / 30.9.2013 Export: -12 % -2 % Domestic: -7 % -5 % Combined: -11 % *) Excluding metals industry. Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest information 31.12.2013 6.11.2018

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 Change: IV,2013 / IV,2012 IV,2013 / III,2013 Export: -13 % +25 % Domestic: -34 % -3 % Combined: -15 % +23 % Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest information October-December 2013 6.11.2018

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 Change: 31.12.2013 / 31.12.2012 31.12.2013 / 30.9.2013 Export: -15 % +18 % Domestic: -33 % -4 % Combined: -16 % +16 % Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest information 31.12.2013 6.11.2018

Value of New Orders in the Mechanical Engineering in Finland Million euros, at current prices 2005 2006 2007 2008 2009 2010 2011 2012 2013 Change: IV,2013 / IV,2012 IV,2013 / III,2013 Export: -19 % +2 % Domestic: -4 % +13 % Combined: -16 % +4 % Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest information October-December 2013 6.11.2018

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 Change: 31.12.2013 / 31.12.2012 31.12.2013 / 30.9.2013 Export: -11 % Domestic: -17 % -12 % Combined: Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest information 31.12.2013 6.11.2018

Value of New Orders in the Consulting Engineering in Finland Million euros, at current prices 2005 2006 2007 2008 2009 2010 2011 2012 2013 Change: IV,2013 / IV,2012 IV,2013 / III,2013 Export: +31 % +30 % Domestic: +17 % +26 % Combined: +19 % +27 % Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest information October-December 2013 6.11.2018

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 Change: 31.12.2013 / 31.12.2012 31.12.2013 / 30.9.2013 Export: +12 % +6 % Domestic: +25 % +2 % Combined: +22 % +3 % Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest information 31.12.2013 6.11.2018

Value of New Orders in the Information Technology in Finland Million euros, at current prices 2005 2006 2007 2008 2009 2010 2011 2012 2013 Change: IV,2013 / IV,2012 IV,2013 / III,2013 Combined: +23 % +21 % Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest information October-December 2013 6.11.2018

Value of Order Books in the Information Technology in Finland Million euros, at current prices 2007 2008 2009 2010 2011 2012 2013 Change: 31.12.2013 / 31.12.2012 31.12.2013 / 30.9.2013 Combined: +3 % +1 % Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest information 31.12.2013 6.11.2018

Change in Value of Order Books in the Technology Industry in Finland Compared with a Year Earlier Change by companies: 31.12.2013 / 31.12.2012, % Median: 0 % Average: -11 % Companies in random order Source: The Federation of Finnish Technology Industries’ order book survey’s respondent companies, latest information 31.12.2013 6.11.2018

Personnel in the Technology Industry Some 18 000 of employees affected by temporary or part-time lay-offs 31.12.2013 Source: Statistics Finland, The Federation of Finnish Technology Industries’ labour force survey 6.11.2018

Change in the Number on Personnel in the Technology Industry in Finland Compared with a Year Earlier Change by companies: 31.12.2013 / 31.12.2012 Median: -1,3 % Average: -2,1 % Companies in random order Source: The Federation of Finnish Technology Industries’ labour force survey 6.11.2018

Technology Industry Personnel in Finland Source: Statistics Finland, The Federation of Finnish Technology Industries’ labour force survey 6.11.2018

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 6.11.2018

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 6.11.2018

Situational overview and outlook 6.11.2018 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 64 billion. Turnover in the pre-crisis year 2008 was EUR 82 billion. - The monetary value of new orders in October-December 2013 was 12 % lower than in the corresponding period of 2012, but 15 % higher than at the level of the preceding quarter. - At the end of December, the value of order books was 11 % lower year on year, and 2 % lower the value reported at the end of September - The turnover of technology industry companies in early 2014 is expected to be roughly equal in comparison with the corresponding period last year. - Since 2008, personnel numbers in Finland have shrunk by 31,000 employees, totalling 296,000 in 2013. - Small and medium-sized enterprises in particular have reported weak development in profitability. 6.11.2018

Optimism with regard to an upturn in the growth of the global economy has increased 6.11.2018

Industrial Production Volume Industrial production volume in EU countries 10 %, but in Finland 18 % lower since early 2008 2008=100 2008 2009 2010 2011 2012 2013 Seasonally adjusted volume index, latest information 11/2013 or 12/2013. Source: Eurostat, Federal Reserve (USA), Statistics Bereau and Statistics Center (Japan) 6.11.2018

Industrial Production Volume in EU Countries 2008=100 2008 2009 2010 2011 2012 2013 Seasonally adjusted volume index, latest information 10/2013 or 11/2013. Source: Eurostat 6.11.2018

Euro Countries Are Developing Unevenly Manufacturing and Services Sector Purchasing Magers’ Index 50 = no change on previous month Latest information January 2014. Source: Markit 6.11.2018

Growth Continues in Developing Countries, but Slower than During Last Years Manufacturing and services sector purchasing magers’ index 50 = no change on previous month GDP, % v/v, y/y Latest information December 2013. Source: Markit, HSBC 6.11.2018

Breakdown of World Industrial Production % Purchasing power parity adjusted shares. Source: Maddison (Historical Statistics), IMF and ETLA 6.11.2018

Industrial Production Development by Year 2005=100 Source: Consensus Economics 6.11.2018

Almost all Western Countries have Excessive Public Debt Public debt / GDP, % Source: OECD, Economic Outlook, November 2013 6.11.2018

The Big Challenge for Finland after 2008 6.11.2018

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 Working day and seasonally adjusted index. Latest information July-September 2013. Source: Statistics Finland / National Accounts 6.11.2018

Finnish Exports lagging Behind Competitors Export of goods and services by quarter, billion euros, at current prices, index 2005,I = 100 2005 2006 2007 2008 2009 2010 2011 2012 2013 Working day and seasonally adjusted index. Latest information July-September 2013. Source: Eurostat 6.11.2018

The Share of Industry in GDP in Finland 1900-2012 Source: Statistics Finland 6.11.2018

Finland not attracting Companies’ Investment Companies’ Fixed Investments in Different Countries Indeksi, 2005=100 Source: OECD, Economic Outlook, November 2013 6.11.2018

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 *) 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/2013. Source: European Central Bank 6.11.2018

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 6.11.2018

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 6.11.2018