N ORDIC C OUNTRIES September 2008 Nordic Countries Office Stockholm Västmannagatan 4 11124 Stockholm Tel. 004684546592 Fax: 004684546595 email: [email protected] 4 - 2008 Caravan capitalism in the North? – The Case of Stora Enso Dismissals in Finland by Antti Alaja The decision of Nokia to shut down its factory in the city of Bochum caused a wide- reaching political uproar in Germany last year. The concept of caravan capitalism, which was firstly used by the German minister of finance Peer Steinbrück, was consequently also used in the Finnish discussions. The German political protests encouraged thinking in Finland that maybe there are other possibilities than just adjusting to unfair decisions by the companies. In October 2007 the Finnish forest industry giant Stora Enso published its plans to shut down offices and factories in Finland and Sweden. This “case of Stora Enso” has ever since become a controversial and a symbolic theme in the political debates in Finland. A significant reason for this lies behind the fact that the Finnish state is the largest single owner of the company. In many European discourses the Nordic countries are often being portrayed as the winners of globalization, because of their ability to produce economic growth and do well in comparisons that measure economic and social development. The case of Stora Enso proves that globalization, understood here as opening international competition and accelerating industrial restructuring, should be considered to be a contradictory process even in a Nordic country like Finland. Stora Enso dismissals will have negative consequences to a balanced regional development. The limits of employees’ flexibility also limit the possibilities of active labour market policies. The discussion around Stora Enso has also raised the question of democracy. It has revealed a situation, where politicians avoid taking responsibility over economic matters that shape peoples lives. In October 2007 the Finnish-Swedish redundancy notices were made public, they forest industry multinational Stora Enso have become a more and more published its plans to close down factories controversial theme in the Finnish political and offices in Finland and Sweden that debate. One significant underlying reason would mean the loss of a total of 1400 is that the Finnish state has the largest jobs 1. Ever since the Stora Enso single stake in the company. To be more 1 The Finnish Act on Coparticipation obliges companies to negotiate with the representatives of Summa, 214 in Kemijärvi and 170 in Anjala. The the personnel on redundancy notices. At Stora Enso paper mill in Summa was already closed in the these negotiations concluded in January 2008. beginning of February and it is planned to close Altogether 985 jobs will be lost in Finland. 450 in Kemijärvi mill in May. 1 N ORDIC C OUNTRIES September 2008 exact, its shares give it 35.1% of the votes 2 characteristic to stress that the welfare state in the company. Secondly, the Finnish must be seen as a precondition for success centre-right government has consistently in a global economy. In this context the refused to take action to prevent the welfare state’s ability to invest in people’s production cutbacks. One outcome of this capabilities and to produce human capital “Stora Enso case” has been the emergence is often mentioned. The Nordic model of of a visible social movement named collective risk sharing is seen as a key Kemijärven Massa, which is working to factor in maintaining a favorable public prevent the planned pulp mill closure in the opinion to free-trade and globalization- small eastern Lappish city of Kemijärvi. At friendly policies that are important for a more general level the dismissals have export-oriented industries 4. In this article I politicized the discussion of the possibility wishto use the example of the Stora Enso of political influence on multinational dismissals to point out that globalization, companies. The Nokia dismissals in the understood here as opening international German city of Bochum offer an competition and accelerating industrial interesting international parallel to the restructuring, should be regarded as a Stora Enso case, because the German contradictory process even in a Nordic reactions against Nokia have been country like Finland. As my analysis in simultaneously noticed in the Finnish this article will show, the Stora Enso discussions. According to Risto Uimonen, dismissals, in particular, will have a chief editor of the newspaper Kaleva the negative impact on balanced regional reactions in Bochum have prompted ideas development. Secondly long distances and that there may be other possibilities in natural limits to employees’ flexibility Finland than mere adjustment to global limit the possibilities of active labor market forces. Interestingly enough, the market policies. It is issues like these that concept of caravan capitalism 3 was should be taken into consideration when recently incorporated into Finnish political discussing “the Nordic model” as a vocabulary through the influence of successful model of globalization. The Bochum and Stora Enso dismissals. In the Stora Enso dismissals also call into Finnish context this is a notable change, question the legitimacy of democratic because it has not been common to use the institutions in Finland, because it has conflictual concept of capitalism, when revealed a situation in which politicians debating globalization in Finland. avoid taking responsibility over economic matters that shape people’s lives. The Nordic countries as a reference The forest industry as ann aspect of In many European discourses the Nordic Finnish industrial identity countries have been portrayed as the winners from globalization, because they The forest industry has traditionally been have been able to produce economic one of the core elements in the Finnish growth and do well in international economy. It had a central, even decisive, comparisons that measure economic and role in the Finnish industrialization process social development. On the other hand, in and many industrial towns were in practice the Nordic debates it has been built around paper factories. In a historical perspective, the forest industry has also 2 The votes linked to the shareholdings of the Finnish Social Security Institute are included in this 4 Implemented through its universal welfare state figure. model. See for instance the Research Institute of the 3 The concept of Karawanen-Kapitalismus was used Finnish Economy study: by German finance minister Peer Steinbrück, when http://www.etla.fi/files/1892_the_nordic_model_co he referred to Nokia dismissals in Bochum. mplete.pdf 2 N ORDIC C OUNTRIES September 2008 linked Finland more closely to Western seen as a part of this strategy. In particular Europe as most of the paper industry the Kemijärvi pulp mill closure has been products were exported to the “west”. widely criticized, because the mill has been Considering this background, it is obvious undoubtedly profitable. This was shown by that deep symbolic meanings, in addition the purchase offers received by Stora Enso to the economic and social considerations, for the mill, which have been refused are attached to the recent crisis of the offers to avoid further competition. Finnish forest industry. In the past years the discussion around the Finnish forest Exaggerated profitability expectations have industry has centered on the question of also been criticized in parliament. In whether the Finnish forest industry November 2007 several Social Democrat factories have a long-term competitive and Left Alliance politicians demanded future. the availability and price of timber, that as an owner the Finnish government digital predominance in offices and media, should define more moderate (7%-8%) a weak dollar, the shifting balance in the rates of return for Stora Enso. More world market and Russian plans to moderate rates of return would make it implement high timber tariffs have been possible for the closing paper and pulp some of the factors taken into account. mills to carry on, and this would mean taking regional and employment aspects A shift in state ownership policies into consideration in the state’s ownership policies. In his answer to opposition When the Stora Enso board announced the parliamentarians the minister in charge of mill closures in Kemijärvi and Summa, and government’s ownership policies, Jyri production cutbacks in Anjala, it cited Häkämies, referred to Stora Enso’s board rising costs and long-term profitability and experts, who according to Häkämies plans. Later on Stora Enso has also are capable of evaluating the long-term mentioned the uncertain availability of competitiveness and profitability of the cheap timber and impending Russian company. Political intervention in timber tariffs in 2009 as reasons for the company decisions would only scare off production cuts. In any case the claim that investors. According to Häkämies’s there is a shortage of cheap Finnish timber technocratic view, state ownership policies has been widely contested in the Finnish should not even be considered to be public debate. A forestry professor, Matti political. Kärkkäinen, has stated that Stora Enso has not declared its true reasons for the pulp In response to opposition criticism, the mill closure in Kemijärvi and that the government has claimed that it is only company’s argumentation has not been implementing the ownership policies that consistent. Therefore Kärkkäinen has were shaped by the previous