Regional economic impacts of the Turku shipyard and its network 2019
Brahea Centre at the University of Turku Mikko Grönlund, Tuomas Ranti and Tapio Karvonen Basic information of the review • The purpose of this review was to examine the regional economic impacts of the Turku shipyard and its network in the same manner as in the previous review conducted in 2017. The review also includes comparisons with the previous review. • The review was commissioned by the City of Turku and Meyer Turku Oy. • The review was based primarily on financial statements and other statistical data, though information was also collected through surveys targeted at the shipyard’s supplier companies. The data received from Meyer Turku Oy was crucial for the successful execution of the review. The key financial figures were primarily from 2018, for which financial data was comprehensively available, though information from 2019 was also utilised in the examination of some of the impacts. Graphs are based on data from 2018, unless otherwise stated. • The review was conducted in autumn 2019 by experts Tapio Karvonen, Mikko Grönlund and Tuomas Ranti from Brahea Centre at the University of Turku. Meyer Turku Oy
Personnel development 20072019, forecast 20202023 3 000 • Key figures in 2018 (2016 in parentheses): • Own personnel 1 958 (1 567), 2 500 subsidiaries 247 (204) (Piikkio Works Oy, Shipbuilding Completion Oy and Technology Design and Engineering Eng’nD) 2 000 • Turnover: EUR 970 million (EUR 792 million) 1 500 • Value added: EUR 163 million (EUR 145 million) 1 000 • Preliminary data from 2019
500 • Own personnel: 2 124 • The fourth largest employer and second 0 largest industrial employer in Southwest 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Finland. Supplier network
• In 2018, the shipyard had a total of 1,246 direct supplier companies, of which 927 were Finnish and 319 were foreign. • The supplier network has remained roughly the same size as in 2016 in terms of the number of companies, though the total value of supply has nearly doubled. • Direct suppliers have their own networks of subcontractors, which cover almost all Finland and extend across the globe. Supplier network (2) • Based on surveys, for approximately one half of supplier companies the value of supply orders to the Turku shipyard accounts for no more than up to 10% of the companies’ total turnover, whereas for approximately 10% of companies supply orders to the shipyard account for at least 90% of the companies’ total turnover. • No significant changes are expected in this regard. • The employment impacts of the shipyard’s supply orders on companies followed a similar distribution. • In the surveys, 63% of Finnish supplier companies indicated that their labour force is exclusively Finnish and 22% indicated that foreign employees account for no more than up to 10% of their total labour force. Economic impacts The shipyard’s suppliers and value of supply orders – domestic vs. foreign in 2018
Foreign 26 % Foreign 32 %
Domestic 68 % Domestic 74 %
Distribution of companies, n = 1 246 Distribution of the value of supply orders, EUR 933 million The shipyard’s suppliers and value of supply orders – domestic vs. foreign
Value of supply orders in 2018 1 000 000 000 approximately EUR 933 million, EUR 933 million with the corresponding figure in 900 000 000 2016 being approximately EUR 508 million (+ 84%) 800 000 000 294 615 502
700 000 000 The value of domestic supply orders in 2018 was approximately 600 000 000 EUR 508 million EUR 638 million (+ 64%) € 500 000 000 118 063 021 The value of foreign supply orders 400 000 000 in 2018 was approximately EUR 295 million (+ 150%) 300 000 000 637 965 578
200 000 000 389 904 980 The proportion of domestic supply orders was 68%, with the 100 000 000 corresponding figure in 2016 being 0 77% Value of supply orders 2016 Value of supply orders 2018 Domestic Foreign The number of supplier companies has remained nearly unchanged (1,221/1,246) The shipyard’s foreign suppliers and value of supply orders in 2018 United Kingdom Others (16 1 % countries) Canada Denmark China Others (17 11 % 1 % Spain 1 % 1 % countries) France3 % Poland 4 % 3 % Lithuania 1 % 3 % Poland Norway 3 % 3 % USA Germany Italy 3 % 44 % 5 % United Kingdom 4 % Sweden Denmark 8 % 4 %
The Netherlands 5 %
Norway Germany 5 % 72 % Italy Sweden 7 % 8 % Distribution of companies, n = 320, 27 countries Distribution of the value of supply orders, EUR 295 million, 27 countries Distribution of the value of foreign supply orders in 2016 vs. 2018 United Kingdom 1 % Canada Denmark China Others (17 United Kingdom 1 % Others (19 countries) 1 % 1 % countries) 2 % 9 % Poland 4 % Spain Germany Lithuania 1 % Denmark 2 % 27 % 3 % 2 % Norway Poland 3 % 4 % Italy 5 % Norway 5 % Switzerland Sweden 6 % 8 %
Italy 9 % Germany Sweden 72 % 24 % Lithuania 10 % Distribution of the value of supply orders in 2016, Distribution of the value of supply orders in 2018, EUR 118 million, 29 countries EUR 295 million, 27 countries Distribution of foreign suppliers in 2016 vs. 2018 Others (16 Others (19 countries) countries) 11 % 18 % Spain France3 % Germany 3 % Lithuania 30 % 3 % Poland 3 % Poland USA Germany 4 % 3 % 44 % USA United Kingdom 4 % 4 %
Denmark Denmark 4 % 4 %
The Netherlands United Kingdom Sweden 5 % 6 % 10 % Norway Italy The 5 % 6 % Netherlands Norway Italy Sweden 6 % 9 % 7 % 8 %
Distribution of companies in 2016, n = 278, Distribution of companies in 2018, n = 320, 29 countries 27 countries Distribution of the shipyard’s domestic suppliers and value of supply orders by region in 2018
Tavastia Proper Others (10 Päijänne Central Finland 1 % regions) Tavastia Pirkanmaa Others (10 1 % 6 % Ostrobothnia 2 % 1 % regions) 2 % Päijänne Tavastia 1 % 2 % Satakunta 2 % Satakunta 4 % Tavastia Proper Pirkanmaa 5 % 5 % Uusimaa 41 %
Southwest Finland 48 %
Uusimaa 39 %
Southwest Finland 40 % Distribution of companies, n = 926, 17 regions Distribution of the value of supply orders, EUR 638 million, 17 regions Distribution of the value of domestic supply orders by region in 2016 vs. 2018 Päijänne Tavastia Pirkanmaa Others (10 Ostrobothnia 2 % 1 % regions) Tavastia Päijänne Tavastia 2 % Proper 2 % Others (11 1 % regions) Satakunta Satakunta 2 % 0 % 2 % 3 % Pirkanmaa 3 % Tavastia Proper 5 % Ostrobothnia 9 % Southwest Southwest Finland Finland 48 % 52 %
Uusimaa Uusimaa 29 % 39 %
Distribution of the value of supply orders in 2016, Distribution of the value of supply orders in 2018, EUR 390 million, 18 regions EUR 638 million, 17 regions Distribution of domestic suppliers by region in 2016 vs. 2018
Tavastia Proper Others (10 Central Finland regions) Northern 1 % Tavastia Proper Others (11 regions) 1 % 6 % 2 % Ostrobothnia 1 % 5 % Päijänne Tavastia Päijänne 2 % Tavastia Satakunta 3 % 4 % Pirkanmaa Southwest Pirkanmaa 4 % 5 % Uusimaa Finland 41 % 41 % Satakunta 6 %
Uusimaa Southwest Finland 38 % 40 % Distribution of companies in 2016, n = 943, Distribution of companies in 2018, n = 926, 17 regions 18 regions Distribution of the shipyard’s domestic suppliers and value of supply orders by sub-regional unit
Others (35 Vakka-Suomi Vakka-Suomi Forssa sub-regions) Loimaa 1% Tampere Jyväskylä 1% 1% 10% 1% 1% 1% Others (35 sub- Salo Lahti regions) 2% 2% Loimaa Rauma 3% 2% 2% Vaasa Pori 2% 2% Helsinki Lahti 38% Hämeenlinna 2% 4% Rauma Turku 2% 46% Tampere 4%
Helsinki 38% Turku 36%
Distribution of companies, n=926, Distribution of the value of supply orders, EUR 638 million, 45 sub-regional units 45 sub-regional units Distribution of the shipyard’s domestic suppliers and value of supply orders by municipality Others (99 Lahti municipalities) Others (99 Turku Rauma 1% 9% municipalities) 22% 2% 29% Vaasa Helsinki 2% 28% Espoo 4% Hämeenlinna 4%
Rauma Vantaa 2% Helsinki 5% Naantali 14% 2% Lahti Raisio 2% 8% Kaarina 2% Tampere Vantaa 3% Raisio 10% Turku Espoo Kaarina 6% 10% 8% 27%
Distribution of companies, n = 926, Distribution of the value of supply orders, EUR 638 million, 109 municipalities 109 municipalities Distribution of the shipyard’s suppliers based in Southwest Finland and value of supply orders by sub-regional unit Åboland- Vakka-Suomi Turunmaa Åboland- 2,7 % 0,3 % Salo Turunmaa Vakka-Suomi Salo 3,8 % 0,8 % 2,3 % 0,1 % Loimaa Loimaa 4,0 % 2,4 %
Turku 88,7 % Turku 94,9 %
Distribution of companies, n = 372 Distribution of the value of supply orders, EUR 307 million Distribution of Meyer Turku Oy’s personnel
Other regions Åboland- (6 regions) Turunmaa Uusimaa Helsinki 1 % Foreign Vakka-Suomi 1 % 1 % Salo 1 % 0 % 2 % Satakunta 2 % Others (10 sub- 2 % Rauma regions) 2 % 1 % Loimaa 3 %
Southwest Finland Turku 96 % 88 % By region, n = 2,164, 9 regions By sub-regional unit, n = 2,164, 17 sub-regional units
Data from 2019 Distribution of Meyer Turku Oy’s personnel by municipality
Pöytyä 1 % Others (44 Paimio Parainen Aura 1 % municipalities 1 % 1 % 6 % Salo Rauma 1 % 1 % Rusko Nousiainen 2 % 2 % Mynämäki 2 %
Masku 3 % Turku Lieto 49 % 4 %
Naantali 5 %
Kaarina 8 %
Raisio 12 %
Based on the data of 2,164 persons, 59 municipalities (in 2019) Distribution of Meyer Turku Oy’s personnel in Turku by Turku ward
Hirvensalo-Kakskerta 5 % Varissuo-Lauste 6 % City centre 21 % Maaria-Paattinen 7 %
Nummi-Halinen 8 %
Runosmäki-Raunistula Skanssi-Uittamo 9 % 17 %
Länsikeskus 12 % Pansio-Jyrkkälä 15 %
The number of personnel living in Turku was 1,065 (in 2019) Distribution of Meyer Turku Oy’s and its subsidiaries’ personnel Other regions (6 regions) Åboland-Turunmaa HelsinkiPori Uusimaa 1 % 1 % 1 % 1 % 1 % Vakka-Suomi Satakunta Foreign 2 % Others (10 sub- 5 % 0 % Salo 2 % regions) Loimaa 1 % 2 % Rauma 4 %
Southwest Finland Turku 93 % 86 % By region, n = 2,440, 9 regions By sub-regional unit, n = 2,440, 18 sub-regional units
Data from 2019 Distribution of Meyer Turku Oy’s and its subsidiaries’ personnel by municipality Pöytyä Aura Rusko 1 % 1 % Others Parainen 7 % 2 % 1 % Nousiainen Salo 2 % 2 % Mynämäki Paimio 2 % 2 % Kaarina 3 % Masku 3 % Rauma 3 % Turku 53 % Lieto 4 %
Naantali 5 %
Raisio 11 %
Based on the data of 2,440 persons, 61 municipalities (in 2019) Direct and indirect employment impacts of the Turku shipyard on other companies in Finland in 2018
9 000 8 054 Meyer Turku Oy 8 000 Please note! The review 1 958 does not cover foreign 7 000 suppliers and the Indirect 5 677 employment 6 000 3 961 employment impacts impacts thereon. The subcontractor 3 961 5 000 2 548 networks of direct suppliers 4 000 have not been examined 3 000 2 135 separately. 1 345 2 000 Foreign suppliers impact 1 000 1 784 1 958 employment in both Supplier 0 Finland and other companies 2016 2018 2 135 countries. Meyer Turku Oy Supplier companies Indirect employment impacts Employment impacts of the Turku Shipyard by municipality, ordered by direct employment
Employment impacts of the 4 000 shipyard and supplier companies + indirect impacts on other 3 500 companies.
Direct impacts include only the 3 000 figures of the shipyard’s own personnel and domestic suppliers. 2 500 Suppliers also have their own subcontractor companies, the 2 000 personnel numbers of which are not included in these figures in their entirety.
1 500 Number of employees of Number The indirect impacts of the 1 000 shipyard’s own personnel via retail trade and service purchases, for 500 example, are not covered. Total impacts are 0 somewhat higher than indicated here.
Meyer Turku Oy Supplier companies Indirect employment impacts Total Employment impacts of the Turku Shipyard by municipality, ordered by total employment
1 800 Employment impacts of the shipyard and supplier companies 1 600 + indirect impacts on other companies.
1 400 Direct impacts include only the figures of the shipyard’s own 1 200 personnel and domestic suppliers. Suppliers also have their own 1 000 subcontractor companies, the personnel numbers of which are 800 not included in these figures in their entirety.
Number of employees of Number 600 The indirect impacts of the shipyard’s own personnel via retail 400 trade and service purchases, for example, are not covered. 200 Total impacts are 0 somewhat higher than indicated here.
Meyer Turku Oy Supplier companies Indirect employment impacts Total Employment impacts of supplier companies by municipality
1000
900
800
700
600
500
400 Number of employees of Number
300
200
100
0 Helsinki Kaarina Turku Raisio Aura Rauma Espoo Vantaa Hämeenlinna Lahti Others
Direct (2018) Indirect (2018) Direct (2016) Indirect (2016) Employment impacts of supplier companies by sub-regional unit
1800
1600
1400
1200
1000
800 Numebr of employees of Numebr 600
400
200
0 Turku Helsinki Pori Loimaa Rauma Hämeenlinna Lahti Vakka-Suomi Vaasa Tampere Others
Direct (2018) Indirect (2018) Direct (2016) Indirect (2016) Employment impacts of supplier companies by region
2500
2000
1500
1000 Number of employees of Number
500
0 Southwest Uusimaa Satakunta Tavastia Proper Päijänne Ostrobothnia Pirkanmaa Others Finland Tavastia
Direct (2018) Indirect(2018) Paid corporation taxes by municipality
4000
3500
3000
2500
2000 1000 EUR 1000
1500
1000
500
0
2018 (1000 EUR) 2016 (1000 EUR) Paid corporation taxes by sub-regional unit
4000
3500
3000
2500 1000 EUR 1000 2000
1500
1000
500
0 Helsinki Turku Lahti Hämeenlinna Loimaa Rauma Riihimäki Tampere Forssa Vakka-Suomi Others Paid corporation taxes, sub-regional units of Southwest Finland
2500
2000
1500 1 000 EUR 000 1
1000
500
0 Turku Loimaa Vakka-Suomi Åboland-Turunmaa Salo Paid corporation taxes by region
4500
4000
3500
3000
2500
1000 EUR 1000 2000
1500
1000
500
0 Uusimaa Southwest Finland Tavastia Proper Päijänne Tavastia Satakunta Pirkanmaa Others Skill and labour needs in network companies Skill needs in the supplier network • Responses to the survey question on skill needs were received from 57 companies of different sizes and sectors, indicating that there is a wide range of skill needs. • Areas in which skill needs were highest were HVAC technology, welding skills and project management skills; additionally there were individual mentions of numerous different specialised skills and more generally of skills related to digitalisation, among others. • The language and cultural skills related to operating in a multicultural operating environment were also mentioned in a few responses. • Nearly a third of the respondents did not have or had not identified any skill needs related to the shipyard’s supply orders. Training needs in the supplier network • What kind of training would best serve to fulfil skill needs?
Short-term continuing education and training alongside 30% work
Secondary vocational education and training 10%
University education and training 15%
Other, please state 7%
Our company has no need for any education or training in relation to the Turku shipyard’s supply 50% orders
0% 10% 20% 30% 40% 50% 60% • Other training options mentioned included apprenticeship training and training sessions and courses organised by the shipyard and manufacturers. Employment needs in the supplier network • Based on the responses, the following professionals are in the shortest supply: • Plate-welders • Project managers • HVAC and electrical designers • Plumbers, machinery mechanics and CNC machine operators • Salespersons familiar with the shipyard’s needs • Planners and foremen • The responses also included individual mentions of many other specialised professionals. • Of the companies that responded to the question on labour shortage (52), a quarter said that they have no shortage of professionals of any field in relation to the Turku shipyard’s supply orders. Other regional impacts Traffic • Average traffic on Telakkatie: 2,800 vehicles/day (2016) • Shipyard end of Ankkurikylänkatu: 4,200 vehicles/day (2017) • Pernontie north of the Ankkurikylänkatu junction: 8,850 vehicles/day (2018) • Growth of 14% compared to 2016, when the traffic volume was 7,750 vehicles/day • Not all of this traffic is shipyard traffic, but the growth is primarily based on increased shipyard traffic. Summary and conclusions Summary and conclusions (1) • The shipyard is an extremely important local operator in the economic area of Turku and in Southwest Finland, but its impacts are felt throughout Finland as well as around the world due to the global nature of the business. • The total combined turnover of the shipyard and its direct supplier companies’ production related to the shipyard is approx. EUR 1.9 billion (+ 46%). • The value of supply orders to the shipyard has grown significantly, nearly doubling in two years (+ 84%). • The shipyard employs approximately 4,300 persons directly (+ 35%) and another 4,000 indirectly (+ 54%) as measured in person-workyears. • The shipyard also has an impact on the employment of foreign companies and so- called second level suppliers, in addition to which the consumption habits of the shipyard’s personnel have indirect impacts on e.g. retail trade and services, which could not be determined in this review. Summary and conclusions (2) • Local and domestic impacts still clearly the highest. • Three quarters of suppliers are Finnish companies and 68% of the total value of supply orders comes from domestic suppliers. • The impacts are highest in Southwest Finland, but in Uusimaa they, apart from employment impacts, are nearly as high and have grown in proportion. • Domestic supply: • Southwest Finland: 40% of companies, 48% of the value of supply • Uusimaa: 40% of companies, 39% of the value of supply • Personnel Southwest Finland: 96% • Tax revenue: Tax revenue impact greatest in the municipalities of Southwest Finland, but corporation tax impact highest in Uusimaa. Summary and conclusions (3) • The business is global and has become more international in recent years. • The value of foreign supply has increased by a factor of 2.5. • The volume and share of German supply orders in particular have increased significantly. Germany’s share of the value of foreign supply used to be less than a third, now nearly three quarters. Increased synergy between Meyer’s different shipyards. • Due to increased production, the demand for experts in different fields has also increased at the shipyard and among supplier companies. • The majority of the companies that responded to the training needs survey indicated a need to develop their employees’ skills, and the survey highlighted training needs at all levels. • A large proportion of companies have difficulties finding specialists in different fields in relation to the shipyard’s supply orders. Further information: Senior Researcher Tapio Karvonen [email protected], tel. +358 (0)40 779 9482