Make it your homepage |   E-mail: Subscribe Unsubscribe

IBM to Manage IT Infrastructure Globally for Fiat S.p.A., Chrysler Group and CNH Industrial

Friday, April 25, 2014
News Making Money

High Costs and Shifting Global Demand Could Cost 200,000 Production Jobs

24/08/2013 09:31 (243 Day 12:17 minutes ago)

The FINANCIAL -- Weakening cost competitiveness and shifts in global demand from developed markets to emerging markets are expected to force manufacturers in the Nordic nations of Denmark, Finland, Norway, and Sweden to cut around 200,000 production jobs over the next five to seven years unless the region acts decisively, according to a new report by The Boston Consulting Group (BCG).


The report, titled Revitalizing Nordic Manufacturing: Why Decisive Action Is Needed Now, warns that such continued erosion of manufacturing—a foundation of Nordic economies since World War II—would have significant economic consequences. The region has already lost nearly 1 million production jobs, a decline of 40 percent, since 1980.

Further job losses could exacerbate already high unemployment among Nordic youth and weaken the future competitiveness of key Nordic manufacturing industries—such as electronics, machinery, wood products, and transportation equipment—the report says. Nordic service industries would suffer, too, because many services jobs are connected to manufacturing.

“Manufacturing has historically been a critical driver of economic growth, employment, and healthy trade balances in the Nordic economies,” said BCG partner Andreas Alsén, a coauthor of the report. “Urgent policy action is required on a number of fronts to keep the region’s competitiveness from eroding further,” he added.

The biggest challenges for Nordic manufacturing are relatively high labor costs, explains the report, which elaborates on research previously released in Denmark and Sweden. Despite rapid wage increases in emerging markets, average manufacturing labor costs remain 80 to 90 percent lower in China and Eastern Europe. Average manufacturing labor costs in Germany are around 20 percent lower than in the Nordic region, while in the U.S. they are around 40 percent lower, according to the report.

“Because Nordic wages are also projected to keep rising for the rest of this decade, the cost gap with emerging markets is unlikely to shrink enough to improve the region’s competitiveness in the near term. And the cost gap with Germany and the U.S. is likely to widen,” explained coauthor Ian Colotla, who leads BCG’s Operations practice in Denmark.

An aging workforce that will likely lead to a future talent shortage and rigid labor rules in three out of four Nordic countries also undermine Nordic competitiveness. Sweden, Norway, and Finland rank in the bottom twentieth percentile of 144 countries in terms of flexibility in setting wages, according to the Global Competitiveness Report2012–2013 by the World Economic Forum. Sweden and Norway also rank in the bottom twentieth percentile in hiring and firing practices. Denmark is the exception because of its flexible labor rules.

The combination of factory downsizings with labor rules that encourage older employees to hold onto their jobs as long as possible effectively excludes young Nordic workers from the manufacturing workforce.

“Many companies, particularly small and midsize enterprises, avoid new permanent hiring unless absolutely necessary,” said Børge Kristoffersen, a BCG partner based in Oslo. “Instead, they are hiring offshore.” Partly as a consequence, the average age of Nordic workers is rising steadily. “If today’s youth can’t get entry-level jobs now, Nordic industries could face shortages of trained labor in the future as veteran workers retire,” Kristoffersen explained.

“By taking decisive action now, the region can also ensure that manufacturing will remain a powerful contributor to future economic growth and job creation,” says Pekka Vanne, a partner based in Helsinki who leads BCG’s Industrial Goods practice in the Nordic region.



Make Your Comment

Add NewSearchRSS
Only registered users and facebook social network members can write comments!

This text is replaced by the Flash movie.
This text is replaced by the Flash movie.
“The former Yugoslav Republic of Macedonia”: presidential election and early parliamentary elections

23/04/2014 16:38 (1 Day 05:10 minutes ago)

The FINANCIAL -- A 14-member delegation of the Parliamentary Assembly of the Council of Europe (PACE), led by Stefan Schennach (Austria, SOC), will travel to “the former Yugoslav Republic of Macedonia” from 25 to 28 April to observe the conduct of the presidential election (2nd round) and the early parliamentary elections, alongside observers from the OSCE’s Parliamentary Assembly and Office for Democratic Institutions and Human Rights (ODIHR), according to PACE.



Major Cloud Service Providers Slash Prices; Threaten Smaller Players’ Existence: IDC Warns

19/04/2014 13:40 (5 Day 08:08 minutes ago)

The FINANCIAL -- In the last week of March, major Cloud Service Providers (CSPs) in Asia dropped their prices for core services dramatically and IDC believes that this will make it very difficult for smaller CSPs to remain in business if they continue to rely on provision of basic, undifferentiated services, according to International Data Corporation (IDC).

Zurich identifies seven cyber risks that threaten systemic shock

23/04/2014 17:00 (1 Day 04:48 minutes ago)

The FINANCIAL -- The recently published Zurich Cyber Risk Report, created in collaboration with the international think tank Atlantic Council, argues that cyber-risk management professionals need to look beyond their internal information technology safeguards to interconnected risks which can build up relating to counterparties, outsourced suppliers, supply chains, disruptive technologies, upstream infrastructure and external shocks, according to Zurich Insurance Company.


Developed by Aleksandre Chiabrishvili

Design built by Creo Group