Manufacturing and construction industries are the most optimistic better in northern Finland. 65DN examines why.

According to the Business Tendency Survey recently issued by the Confederation of Finnish Industries (EK), 45 percent of building and manufacturing concerns in northern Finland expect their profits to improve in the coming year, compared to only nine percent who expect to see a slump.

This optimism is despite the fact that, according to Statistics Finland, industrial output in Finland has fallen by one percent over the last year, new manufacturing orders have fallen by almost 14 percent over the last year, and the cost of building has gone up by over 2 percent.

Under half feeling positive may not seem impressive, until it is compared to attitudes in the rest of the country. The Business Tendency Survey has found that, nationwide, only 14 percent of businesses forecast growth while 17 percent predicted a decline.

So why should economic prospects in the north – and especially Oulu, shaken by the decline of Nokia – be regarded as so comparatively rosy?

Penna Urrila, the Federation of Finnish Industries’ Chief Economic Policy Adviser, tells 65DN that there are even more complex regional differences in outlook that just ‘north’ and ‘south.’ Eastern Finland’s prospects are the gloomiest of all.

‘But generally speaking, northern Finland has many assets. There are many industries that are booming there. It is not in such a bad situation in the business cycle and it is structurally very sound.’ The economist insists that, in northern Finland, tourism, hotels and restaurants are ‘all doing quite well’ compared with much of the rest of the country.

In northern Finland, it is generally Lapland that is associated with tourism but, explains Mr Urrila, there is a great deal of internal tourism in the Oulu region. In addition, ‘there are also a lot of tourists in Kuusamo, both Europeans and Finns. And then, of course, there are a lot of Russians.’ Kuusamo is situated in Northern Ostrobothnia.

In the east, he emphasizes, there is some tourism, mainly by Russians in the border towns, but it is far less significant than in the north. Also, the main industries in the east, such as forestry, ‘have really suffered in recent years.’

But Oulu, according to Mr Urrila, is very likely to rise of from the ashes of the fall of Nokia. ‘There has, of course, been a big change in the Oulu region but other companies, that have been a bit less idle, are taking advantage of the situation.’

Mr Urrila explains that Oulu, with it many technology companies, its diverse economy (including tourism as well as technology), its young and highly educated population, and its university (strongly contributing to the technology industry), ‘can survive the decline of Nokia.’ By contrast, he notes, in other areas of the country, the outlook is far bleaker.

‘There are towns, especially in the south east of the country, that are completely reliant on the paper industry. In many of these places, and also Kajaani, the level of education is not so high.’

And, suggests Mr Urrila, there is a further factor working in Oulu’s favour. Other companies understand that the decline of Nokia has a left a pool of highly skilled but unemployed technology experts in the city. Accordingly, ‘new IT centres’ have been opening there to ‘take advantage of the unemployed talent.’

Reijo Heiskanen, the Chief Economist at OP Pohjola bank, confirmed that the bank has indeed been moving operations to the Oulu region precisely because, ‘there are now a lot of skilled, unemployed people there. Many other companies have also been interested in moving there because of the decline of Nokia.’

However, he was less sure than Mr Urrila about northern Finland having considerably better economic prospects than much of the south.

‘The per capita income in the south is much higher, and much of the Finnish population is concentrated into the south,’ he explained. ‘There are only really a few towns in the north but the south is very dynamic. Also, there are only a few southern towns reliant on paper mills and they have actually done very well. Google has actually invested heavily in a former paper mill town.’

But he agreed that, ‘Oulu will probably cope quite well’ economically in the future.