|
The machinery and metalworking sector comprises nearly 24% of all the enterprises operating in the manufacturing industry in Estonia. The predominant sub-sector is manufacturing of fabricated metal products, which involves 16% of all the companies operating in the manufacturing industry. This is followed by machinery and equipment, with 5%, other transportation equipment, with 2%, motor vehicles, trailers and semi-trailers, with 1%, and manufacturing of basic metals, with 0.2%.
Breakdown of the Estonian manufacturing sector in 2007 by number of companies
Source: Statistics Estonia
Although the machinery and metalworking sector makes up only 24% of manufacturing companies, it contributes 42% in total exports and 43% in total imports (2008). The most export-oriented sub-sector is machinery and mechanical appliances, which contributes 22% of total exports. Estonia's main export partners were Finland, which contributed nearly 20% of all the sector exports, Sweden, with approximately 19%, the Russian Federation, with 11%, and Latvia and Lithuania, with 9% and 6% respectively.
Main export destinations 2008, % of total
Source: Statistics Estonia
The sector has local small-scale companies, as well as a number of subsidiaries of international corporations, which are mostly focused on subcontracting for exports. The sector is actively represented by the Federation of Estonian Engineering Industry, both on the local and global levels.
Examples of companies in the sector include: AS Hekotek (woodworking machinery), AS Fors MW (forest machinery), AS Finmec (components of machinery), Ruukki Products AS (metal constructions), AS Viljandi Metall (metal constructions), AS Saku Metall (metal constructions),Favor AS (metalworking), AS Bestnet (trailers), Cargotec Estonia AS (cargo handling solution components), AS BLRT (shipbuilding), AS Norma (vehicle components), Loksa Laevatehase AS (components for shipbuilding), and AS Respo Haagised (trailers).
Net turnover of machinery and metalworking sector
Source: Statistics Estonia
There are more than 25,100 people working in the sector, of which approximately 13,800 are engaged in the manufacturing of metals and fabricated metal products, nearly 6,000 in the manufacturing of machinery and equipment and approximately 5,300 in the manufacturing of transportation equipment (2007).
Average number of employees in 2007
Source: Statistics Estonia
Main advantages and strengths of Estonia in the metalworking and machinery sector
Good logistics and transportation infrastructure for export-import activities
-
Highly developed infrastructure. Estonia has highly developed transportation and logistics infrastructures for the metal and machinery sector, with a favourable location due to its close integration with Scandinavian countries, proximity to Russia and rapid, direct ferry connections to Germany.
-
Excellent ferry connectivity. Estonia has several highly developed ports, which makes possible the warehousing and carrying of heavy and overweight metal production to neighbouring countries or to world-wide logistical hubs. This has enabled the sector to grow rapidly in terms of export and has created a situation where 42% (based on 2008 figures) of all the products exported are metal and machinery products.
-
Low transportation costs. The Estonian metal and machinery sector is further favoured with relatively low transportation costs, due to its proximity to Scandinavia, Russia and Western Europe.
-
High digital infrastructure level. According to the Estonian Federation of Engineering Industry, the sector is also highly developed in terms of digital infrastructure consistent with the overall high standards of ICT solutions on the Estonian market, and that has increased work efficiency.
Skilled and cost-efficient labour with a long history in the metalworking and machinery industry
- Educated labour force. The metal and machinery industry is one of the oldest industries in Estonia and, hence, educational programs have been set up to provide a highly qualified labour force. The Tallinn Technical University provides high-class engineering studies and there are a number of institutions providing high-level vocational education around Estonia for engineering. Additionally, a special course has been established for companies to educate a suitable labour force.
- Skilled and cost-efficient labour. The labour is skilled and labour costs are lower than in Western Europe; the average monthly gross salary in the manufacturing sector was 765 EUR in 2008 and varied between 770 EUR and 850 EUR in the machinery and metalworking sector in 2007, depending on the sub-sector.
Increasing productivity with government subsidized R&D services
-
Constant productivity increase. There has been a notable productivity increase in the sector through the usage of new technological solutions and increased labour skills. Enterprises are encouraged to invest in new technological solutions as the Estonian taxation system allows zero per cent corporate taxation on reinvested profits. The total labour productivity increased 140 percent from 2000 to 2008 in Estonia.
-
Competency centers and government support. There is a high-class competency center for Innovative Machine Manufacturing Systems, which was recently subsidized with 5.6 million EUR for R&D development and potential productivity increase.
Stable environment and clear sector regulations
-
Clear regulations in the sector. Regulations in the Estonian machinery and metal industry have been clearly developed as a result of strong integration with Scandinavian countries and Western Europe.
-
Transparency in government leadership. Estonia has high freedom of media, as well as transparency in government policies, which maintains the stability of the business environment.
Most important location criteria for industrial sectors and activities internationally
Source: Ernst & Young European Investment monitors 2009
Most attractive sub-sectors/business functions and examples of foreign investors
International investment trends in the CEE region indicate that the most prominent investment sectors are still manufacturing processes, accounting for 78% of all the investments made in the region in 2008. Additionally, market prospection operations, local sales subsidiaries, and investments have accounted for 14% of all the investments made in the region. Due to the fact that Estonia has a favourable geographical location and proximate markets with great infrastructure for Scandinavia, Russia and Western Europe, near shoring activities are considered to be first-rate business opportunities. Today, Estonia is considered to be a great country for manufacturing processes, which is attributable to its proximity to the main markets of Europe and Estonia's relatively cost-efficient labour, with highly qualified engineering skills. Proximity, labour skills, labour costs, infrastructure and international business ethics are notable across the sector.
Most attractive business functions and sub-sectors include the following:
|
Sub-sector / business function
|
Description
|
Example of foreign investors
|
Activity description
|
|
Toolmaking
|
Toolmaking is a business area that is considered highly developed in Estonia at present, number of them sub-contract and/or develop tools for international partners. The technological development (CNC and CAD/CAM technology) and productivity increase is considered highest in the machinery and metal sector. Clear steps have been taken towards a cluster of manufacturing in the business area that has been developed in close cooperation with the Federation of Estonian Engineering Industry, which supports the growth of the business area.
|
Zircon Technologies AS (UK)
|
Manufacturing of injection melds and high precision tungsten carbide dies. Zircon has produced dies for such brands as AEG, AMI Doduco, Brandauer, Ekranas, Electrolux, Osram and Tyco Electronics.
|
|
Manufacturing of transport equipment
|
There are a number of successful businesses on the market that produce either ferry components or other parts/products of transportation vehicles, e.g. for the automotive industry. The total number of employees in the sector is close to 5,300 (2007). Shipyards are considered a particularly good business area due to the access to the Baltic Sea and proximity to Western Europe.
Time has shown that Estonia has been used as a near shoring country for subcontracting. Consequently, exports make up 70% (2007) of all the sales in the sub-sector. This sub-sector accounts for 5% (2008) of the entire manufacturing sector.
In total, the sector turnover reached 405 million EUR. Today, Estonia can be used as a country for high-end welding (e.g. diffusion) components production and other high-end manufacturing opportunities. Estonia's seaside location offers immense opportunities to import-export large metal components, vehicles and machinery for nearby countries, as well as for the world's logistical hubs. The main export markets in 2008 were the Russian Federation (23%), Latvia (21%), Lithuania (16%), Sweden (11%), Finland (7%) and Germany (3%).
|
Norcar BSB Eesti AS (FI)
|
Norcar BSB was established in 1979 in Sweden. In 1994 a subsidiary in Estonia was established. Today they have opened new production facilities with automated welding and employ a total of 54 people. Norcar BSB is focused on the manufacturing of miniloaders, farming products, and industry automation.
|
|
Loksa Laevatehase AS (DK)
|
Manufacturing of hatch covers and non-curved steel blocks. If required, Loksa Shipyard delivers products fully painted and outfitted. The company is more than 100 years old. In 1994 the company became part of the A.P. Moller-Maersk Group, after which comprehensive renovation and advanced production installment took place.
|
|
Norma AS (SE+ public)
|
Norma is mostly focused on the automotive industry. Connections with the international automotive industry were established in 1973, the year in which Norma started producing safety belts for cars. In addition to manufacturing and distributing safety systems for cars, today Norma is gradually becoming a major manufacturer of safety equipment components for the international automotive industry. Manufacturing of seatbelts and assemblies, progressive stamping, fine blanking, injection moulding, etc. Today Norma is part of the Autoliv Group and employs nearly a thousand people.
|
|
Metec Valduse OÜ (EE+DE)
|
Manufacturing of vehicle accessories and OEM parts, accessories for ships and yachts, machining of metals and making of plastics, tools and appliances. The Metec Group mostly specializes in metal working technologies and products, with a number of subsidiaries situated in Estonia.
|
|
Fors MW AS (SE)
|
Manufacturing of hook lift systems, lumber trailers, tractor processors. Fors MW is the oldest Swedish company in Estonia and was founded in 1992. The headquarters is situated in Saue, Estonia. There are two subsidiaries, one in Norrköping, Sweden and one in Shanghai, China.
|
|
Manufacturing of machinery
|
There were about 6,000 people working in machine manufacturing in 2007. The sector can be described mainly as a subcontracting business for foreign companies. Of the total turnover of machinery, exports comprised 57%. The main export destinations are Finland, Sweden, Russia, Italy and Germany. The sub-sector contributed 4% to the manufacturing industry. Manufacturing of machinery in Estonia is beneficial, mainly due to its geographical location, labour skills and costs.
|
Finmec AS (SE)
|
Heavy duty welding and machining of steel structures. Finmec AS was founded in 1994 and is a subsidiary of a Swedish company whose production facilities are located in Estonia, including modern CNC controlled cutting.
|
|
Vertex Estonia AS (US)
|
Vertex Estonia AS has notable experience in two main business activities: production of antennas for ground stations for satellite communications and production of steel construction and industrial equipment. Products are used worldwide in more than 30 countries. The company was founded in 1981 and has steadily grown ever since. Vertex Estonia AS combines experience in related skills and technologies to produce equipment not only from carbon steel but also from stainless steel and aluminum.
|
|
Cargotec Eesti AS (FI)
|
Manufacturing of steel structure and components, and cargo handling solution components. Subsidiary of Cargotec Group. The company was previously owned by A.P. Moller-Mærsk Group. Cargotec acquired the company as they perceived it to be the best alternative when developing competitive component sourcing. Important roles are played by the close proximity to other EU countries and low-cost manufacturing.
|
|
Hekotek AS (SE)
|
AS Hekotek is a mechanical engineering company founded in 1992 by Finnish specialists; its main operations include designing and producing woodworking technology installations. In 2007, Hekotek's ownership changed and it now belongs to Sorb Wood, which belongs to the Lifco concern in Sweden. Hekotek Estonia employs approximately 100 people.
|
|
Manufacture of metal and fabricated metal products
|
Metal processing is mostly an export-oriented business area. The turnover reached about 1.1 billion EUR in 2007 and there were about 14 thousand people engaged in the labour force. In 2008, export comprised 62% of all the sales.
The main export destinations in 2008 were Finland, Turkey, Sweden, Norway and Poland. The sub-sector contributed 11% to the manufacturing industry. The total labour force in the manufacturing of basic metals and fabricated metal products was nearly 14,000 people. The sector has growth potential, mostly due to a highly skilled labour force that is well aware of the usage of high-end technological solutions, which has led to increased productivity in recent years.
|
Hanza Tarkon AS (SE)
|
Hanza Tarkon's work varies from cold stamping, milling, turning, plating etc to assembly of mechanical and electromechanical electronic units. The company was first established in 1907 and privatized in 1996. In 2006 Hanza Tarkon also set up a factory in China.
|
|
Evmet-Mehaanik AS (EE+CN)
|
The company is specialized on casting under pressure and onМеханической обработкой (токарная, фрезерная, шлифовальная) machining (turning, milling, grinding).
|
|
Metalliset Eesti AS (FI)
|
Metalliset is a Finnish Group that focuses on comprehensive contract services for industrial companies. In Estonia they have two production plants (Narva and Tallinn) and are focused on production (sheet, machining, plastics and melds) and surface treatment services. Furthermore, they offer product development and design. The group has subsidiaries in Estonia, Finland and the Czech Republic.
|
|
Ruukki Production OÜ (FI)
|
Ruukki started their core business in Estonia in 1992. Today they have two production plants in Pärnu. They mainly focus on construction and metal products. The construction unit produces metal-based construction solutions for retail, industrial and logistics buildings. The metal unit produces aluminium and steel-based standardized, as well as special, products. Ruukki employs approximately 250 people in Estonia.
|
Sources of additional information
Tallinn Technical University - Faculty of Mechanical Engineering
The opportunity to gain information about R&D projects developed in the university. Further information about engineering education, services offered and contact details of the faculty.
http://deepthought.ttu.ee/mehaanika/index.php?k=1&id=&ids=0&html=
Tallinn Technical University - Research and Development Center
Information on different research facilities, development centers and contact details.
http://technology.ttu.ee/
Federation of Estonian Engineering Industry
The federation represents Estonian metal and machine manufacturing companies. It focuses on their role in society and is actively engaged in development of the sector.
http://emliit.ee/
Estonian Innovation Relay Center (ESTRIC)
IRC is a project co-ordinated by the Foundation of Tartu Science Park. The project aim is to promote and facilitate technology inflow, support the exploitation of research results, increase productivity etc.
The project partner is the Archimedes Foundation.
http://www.irc.ee/Eng/Projects/estirc_en.htm
Tartu Science Park
The Tartu Science Park is the oldest science park in the Baltic states. The Science Park has supported business innovation activities in the region by networking with universities, and the public and private sectors for 15 years. For foreign companies, they offer help in extending business to Estonia.
http://www.teaduspark.ee
Tigerprises - Technology and Innovation Blog in the Baltic States
Tigerprises is a blog oriented to technology and innovation in the Baltic states. Tigerprises is edited by Toivo Tänavsuu, a long time journalist for the Eesti Ekspress Group. Tigerprises offers an overview of recent trends in the market, updates on news and much more.
http://www.tigerprises.com/
Doing Business in Estonia 2010
Overview of The World Bank's report on the Estonian business environment, compared to 181 world economies.
http://www.doingbusiness.org/ExploreEconomies/?economyid=65 |
Business environment 
