Interview with Mr. Anders Laubjerg (A.L.), Chairman, The Danish Metalworkers Union and Mr. Christian Eskelund-Hansen (C.E.H), Chief Consultant, Confederation of Danish Industry:
Read also the article The Metalworking Industry in Denmark
What major changes have you observed in the industry over the past 4 years?
Firstly, during the financial crisis the industry lost 140 000 jobs, and there has been only a moderate increase in wages. Secondly, during 2007-2008 [the peak growth time] the Danish metalworking industry had good job opportunities, some of which will never come back. On the other hand, the wage level has helped the Danish firms to continue to have good earnings, they are also investing in new technologies and constantly increasing productivity; all this put together has resulted in their being more competitive than 4 years ago.
C.E.H.: Most obviously, the returns from the metal and engineering sector decreased from around 200 bln DKK during the pre-crisis years to 150 bln DKK (25% less) in 2009. Those Danish companies that are oriented towards exports are seeing their returns growing once again, but those focused on domestic markets are still behind compared with 2009.
The metalworking industry is often called the “invisible sector” in Europe. How would you describe its “invisibility/visibility” in Denmark and the country’s economy?
C.E.H.: The sector generates quite a lot of jobs (e.g. in Denmark alone, it comprises 150 000 employees),
so it is significant to the country as well as to the whole of Europe, and especially Germany.
What do you think are the strengths/weaknesses that Denmark and/or its companies have regarding the metalworking industry?
A.L.: The Danish metalworking industry is very strong in the Medical and Green Product Markets. We have a very good trade relationship with Germany and Sweden, where Danish firms are the main subcontractors, mainly to big companies. On the other hand, production for the steel construction (welding) market will never be possible for Denmark.
Compared with Germany, which has very good sales and export numbers in the metalworking industry [Germany is the leading country in the EU market of the metalworking industry], Denmark has a much better standard of living, e.g. the fact that one has a job in Germany does not mean one will have a ‘normal’ standard of living, whereas in Denmark it does.
C.E.H.: Productivity is a very important issue at the moment in Denmark. Compared with their partners/competitors abroad, Danish firms are less productive; that must change.
How great do you think the actual influence that Denmark exercises on the sector in the EU-wide market is?
C.E.H.: Denmark’s export performance in the metal and engineering sector has decreased over the last couple of years. In general the country represents only 2-2.5% of the EU market share, so its influence is not very large; however, Danish companies are valued for their flexibility, effort and character.
Denmark and the Baltics: do you see them more as partners or as competitors in the metalworking industry in Europe? Or maybe they fall into a completely different category?
A.L.: With regard to workers, the Baltic countries are definitely a competitor, e.g. if the minimum wage of a Danish worker is 14 eur/h and a Lithuanian, Latvian or Estonian comes and agrees to work for 10 eur/h, that is not good for our people. As for the companies, I think they are both, as sometimes I have companies who call me and complain they can work no longer under such conditions, with Polish/Lithuanian/Latvian/Estonian companies constantly proposing lower-priced products, which is almost impossible for Danes as the Danish production costs are much higher. However, I know some companies who work as partners too.
C.E.H.: Partners. It is no secret that Denmark is a high-tax, high-salary country, so the costs of production are high, so Danish companies look for partners or move their production to countries like the Baltics. There are quite a number of companies who have done just that over the past 5-10 years.
What are the opportunities that you think the country is overlooking at the moment and should explore better (in Denmark itself and EU-wide)?
A.L.: Education and innovation – a lot of Danish SMEs get bought by foreigners after some years of operation, and skilled workers who can quickly alternate between different types of production are not explored (enough).
Before the economic crisis of 2008 the industry in Denmark, as in the whole of EU, was dominated by SMEs. Has anything changed since the crisis? Do you think there should be any changes?
A.L.: Yes, it is still the case, and it is simply like this: we cannot guess what would be if it were not as it is.
C.E.H.: It is still the case. Danish industrial structure has always been centred around the SMEs. It is one of its strengths as it gives flexibility of operation. On the other hand, there is a lack of cooperation between these small companies, which should change in order to get more sales. But again, there is an increasing trend to form partnerships with other companies, and it should become even more apparent during the next 3-5 years.
In your opinion, what are the threats that the industry is the most exposed to at the moment (in Denmark itself and EU-wide)?
A.L.: Let me put it this way: If you are not doing business in the New Markets, like Russia, like China, India or Brazil, you will die. Another threat is that products in this market do not live for many years. Everything is changing quickly, and if one does not invest in R&D, one risks losing profits and going out of business.
C.E.H.: High tax levels are the reason for the not so good export performance. All the other barriers to foreign trade can be regarded as threats too. In addition, some problems in the industry can be addressed at the companies and some at the government, so they need to be dealt with at these levels.
Do you find that the country’s major clients/partners are outside Denmark or do you consider there still to be room for growth in the home market?
C.E.H.: There is a tendency for Danish companies operating in the metal and engineering sector to do business outside Denmark, since the firms are aware that the main growth is abroad. Therefore, they direct their investment, production and sales towards the foreign markets.
There is some growth visible in the home market, but in general Denmark is doing badly in the sector and it has done so over the past couple of years, which is why the companies’ main focus is outside the home market.
Could you then say that because of this focus on foreign markets, the home market (concerning the metalworking industry) is suffering, as all the money and investment is going abroad?
C.E.H.: No. I would not put it like that. For instance, the level of investment in automatisation is growing and the number of industrial robots is now quite high.
What are the trends that you think will be the most obvious in this industry in Denmark during the next 4 years?
A.L.: I think Denmark will continue to lose market share in the industry every year. On the other hand, the country has very low levels of/no corruption, a welfare society and highly-educated and hardworking people, which I think will not change either; neither will the fact that the metalworking industry in Denmark is mostly export oriented, with 98% of our clients in foreign markets and only 2% at home.
C.E.H.: We will see more companies that are increasingly specialised, advanced, and companies that are more global and productive and enter new markets.
Author: Austėja Baškytė-Charlieu, GatewayBaltic
Picture: Office building, Estonia, Tallinn, GatewayBaltic
Read also the article The Metalworking Industry in Denmark
If you want to republish this interview please contact email@example.com