Prospects for Scottish manufacturing: Finnish lessons

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By Ivan McKee  

The train north from Helsinki takes about five hours to get to Ylivieska. From there another 30 minutes by road and you are in Sievi. With a population of 5,000 Sievi is closer to the Arctic Circle than it is to the capital 500km to the south. In the winter it stays below minus 30 for weeks at a time.

The lakes freeze over with a foot of ice that doesn’t melt until April. In mid-summer sun still shines brightly at 2am. Getting a good night sleep can be hard for those unaccustomed to the midnight sun.  Road signs warn of moose, up to 2m tall, that can appear from the forest with no warning.

It’s true to say that Sievi is in the proverbial middle of nowhere. Sievi isn’t the headquarters of one global manufacturing group; it’s actually the headquarters of two, both of which have sizeable manufacturing operations in the town. The nearby town of Nivala, 20 minutes by road through the forest, houses the global headquarters of a third.

Ojala Group, Scanfil Oy and Mecanova Oy are all global players in the sheet metal and contract manufacturing industry. All three corporations have plants in eastern Europe and in Asia in addition to their Finnish manufacturing facilities. They are one small part of a Finnish manufacturing success story replicated in small towns throughout the country.

Finland has no oil; neither does it have much in the way of renewable energy sources: the northern Baltic freezes over in the winter and is largely non tidal. Finland has no access to the Arctic Ocean, a huge potential source of mineral and fishery wealth for its neighbours, Norway and Russia. In fact Finland doesn’t have much of a fishing industry at all unless you include dangling a rod over a hole in the ice for hours at a time, a popular pastime for the often insular Finns.

Finland isn’t known for tourism, it doesn’t benefit from a global ‘brand’ that delivers instant recognition in the way that whisky, tartan, the kilt or Burns does.

Finnish vodka has a market, but it doesn’t sit atop the list of globally desirable premium brands the way Scottish whisky does.

The weather is tougher than in Scotland, its further away from the main European and global markets than Scotland is, and even the language is incomprehensible, being one of the few languages European or South Asian languages that isn’t Indo-European in origin.

The Finnish economy has had to deal with some significant external shocks over the years. When its largest export market (the Soviet Union) went into terminal decline in the early 1990s the Finns set about establishing one of the world’s top technology and knowledge economies. A 100 year old industrial conglomerate called Nokia was transformed from rubber manufacture into the world leader in mobile telecommunications.

World Bank numbers show Finland has a GDP per head higher than that of the UK. Unlike the UK, Finland’s economy is scored AAA by the credit ratings agencies, and it has a manufacturing industry that comprises almost 20% of its robust economy – close to double that of the UK. It also has an education system held up as one of the most effective in the world, and benefits from one of the most equitable distributions of wealth anywhere in the world, some 35 places higher in the global rankings than the UK.

The Finns have used their ingenuity and determination to build a modern, thriving economy of five million people which has been able to deal with most things the world has thrown at it.

They have done it while sharing many of the disadvantages that Scots often complain about, yet with very few of the advantages that Scotland is blessed with.

When considering what Scotland could be, Finland is in many ways a more interesting comparison than Norway. Finland shows that economic self-determination is about a lot more than just oil. It shows what can be achieved by a small focussed north European country of five million people without significant natural resources.

Had Finland continued to have all the important decisions about its future made 400 miles away in St. Petersburg, or even in Stockholm, as they were in the 18th and 19th centuries would they be looking at the same success story they are today?

The Finns share certain characteristics with the Scots. Dour, outwardly emotionless, often un-communicative, (yet with a clear understanding of the advantages of the occasional drink to warm up the cold winter nights). My nine months in Sievi also taught me that they are also resilient and highly reliable. They don’t generally, however, suffer from that other Scottish characteristic, a deep seated inferiority complex about managing our own affairs that flies in the face of all the evidence.

Hopefully soon we will share another characteristic with the Finns: that we come from a self governing, confident, independent nation with an economic and manufacturing policy that is appropriate to the needs of a small northern European nation.

Further Reading:

Latest statistical releases on Finland’s manufacturing industry – Statistics Finland

What can Scotland learn from Finland? – Scotsman

This article appears courtesy of Business for Scotland.