Finland - Metal Industries

Metal industries

The metal industries led Finland's postwar economic development, and they were crucial to the country's economic health. Until World War II, Finland generally produced relatively unsophisticated goods for domestic consumption. The country's shortages of energy, basic metals, and capital accounted for the sector's slow development. Although Finland had produced ships and other capital goods for the Russian market since the late nineteenth century, the real breakthrough came after 1944. Then the metalworking industry, goaded by Soviet reparations demands, overcame its handicaps, sharply increasing both the the quantity and quality of output. Reparations deliveries ended in 1952, but the Soviet Union continued to absorb Finnish metal goods. By the late 1950s, Finland had built an efficient and innovative metalworking sector.

In the 1960s, the metalworking sector, stimulated by the effects of trade liberalization, embarked on an export drive in Western markets. Domestic demand rose as a result of both the expansion of the forest and the chemical industries and major infrastructure projects. Throughout the 1960s and the 1970s, the sector prospered, growing at an average annual rate of over 6 percent, higher than the rates of other industrial sectors. The strategy of specializing in a small number of products in which the country already possessed a comparative advantage paid off in export markets. Finnish design, which integrated ergonomics, durability, and attractive appearance, also helped maintain sales. Thus, the sector was relatively well prepared to respond in the 1970s, when rapid increases in energy prices, competition from newly industrialized countries, and worldwide improvements in capital-goods technologies threatened profitability.

Beginning in the mid-1970s, metalworking, like the forest industries, underwent a period of intense rationalization and restructuring--with only limited state help. By the late 1980s, it appeared that the sector was well on the way to transforming itself to meet the conditions of high energy costs. Indeed, metalworking grew faster in Finland than it did in most industrialized countries, and it remained Finland's leading industrial sector.

Finnish analysts divided the sector into four branches: basic metals, machine building, transport equipment, and electrical equipment. Although many companies were active in more than one branch, the categories provide a useful framework for reviewing industrial developments.

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