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Severe cost cuts to continue in Finnish companies in coming months
Hundreds of possible job losses announced this week
The summer holidays are winding down, and the harsh reality of the recession is becoming apparent to many Finnish companies.
On Thursday a number of large listed companies announced grim quarterly financial results to June, and outlined plans to continue tough cost-cutting measures in the coming months.
The figures were accompanied by a barometer reading from the Confederation of Finnish Industries (EK) that indicated a pensive mood among businesses, as output and employment continue to decline despite some tentative signs of improvement in the outlook (see attached graph).
The poor interim figures come right on the heels of announced job cuts by companies including the bakery company Vaasa & Vaasa, and the energy company Neste Oil.
This week alone, large Finnish companies have declared plans to start co-determination talks with personnel aimed at temporary layoffs of nearly 800 employees, and the permanent cutting of nearly 600 jobs.
On Thursday it became apparent that the job erosion would continue.
The sharpest decline in earnings came from sports equipment manufacturer Amer Sports, the tyre company Nokian Tyres, and the industrial textile manufacturer Tamfelt.
Amer’s result went into the red. The company is being hit by poor demand for expensive sporting goods, such as golf clubs and gym equipment, especially on the US market.
Amer has shed 300 jobs during the year - about a fifth of its entire personnel. More cuts are likely, says CEO Roger Talermo. The situation will be examined when the holiday period is over in other countries where the company has operations.
Tamfelt, whose result fell by nearly 80 per cent compared with the same period in the previous year, announced on Thursday that it would revamp its entire operations.
The company plans to move some of its production to China, and possibly to Poland and Portugal as well.
Tamfelt, which employs 1,400 people, plans to cut a total of 200 jobs by 2013, in addition to the 100 that were axed in the early part of this year.
Tamfelt CEO Reima Kerttula notes that a decline mining activities and the closure of paper mills in Finland have reduced demand for industrial textiles. He also notes that new factories are being opened in China.
“It is natural that we need to be close to the customer.”
Sharp cuts were also announced on Thursday by plant hire company Cramo. Its result declined by more than 20 per cent, reflecting the poor situation in the construction business.
A cost-cutting programme enacted in the early part of the year by Cramo has not yet had the desired effect. The target of saving about EUR 35 million this year means that the number of employees will decline by a third compared with the situation in August last year.
It seems likely, therefore, that the unemployment figures will get worse in the autumn and the coming winter. The Ministry of Employment and the Economy predicts that joblessness will rise to 10.5 per cent next year, from the present level of slightly over nine per cent.
Corporations now expect that the cost-cutting measures will have some impact, and that this will lead to improvement in the bottom line already at the end of this year.
Both Tamfelt and Nokian Tyres predicted that the worst might be over.
“Demand appears to have bottomed out and stabilised, and some signs of recovery can be seen. However, our measures are based more on a gradual recovery than a rapid one”, said Kim Gran, CEO of Nokian Tyres.
The tone was somewhat darker at Amer.
“The autumn will be very difficult”, Talermo says.