Business tendency survey for manufacturing, mining and quarrying, Q3 2000

A part of the basis for the evaluations of the short-term outlooks is the production performance through the 3. quarter showing poor results for some sectors and high activity for others. While new domestic orders improved, the growth in export orders and prices slowed down. Although some industries operate at high capacity, the manufacturing situation in total is influenced by the setback in engineering industries during 1998-1999.

Engineering production is still low - for the offshore-related sectors substantially lower than the 1998-level. For some of the sectors the current situation has improved. Although facing problems, a majority of the engineering enterprises evaluate the outlooks as positive. The new orders and production expectations seem to be important, and new development projects in the North Sea in the months to come constitute an important part of the basis for this optimism. Long time lags between signing agreements and start of building activity will delay production.

Production and new orders

Large differences are found in growth rates in production across industries, and the traditional export industries seem to be the winners. For the manufacturing industry on aggregate the capacity utilisation rate has been fairly stable around 80 per cent.

For sectors producing intermediate goods (include traditional export industries) the 3. quarter performance turned out very good comprising growth in production and new orders. On aggregate the capacity utilisation rate increased to slightly above 82 per cent higher than in the 3. quarter last year. The high activity level is also confirmed by the leader evaluations of employment. The trend has been pointing upwards since the turning point in the beginning of 1999. New orders are growing due to a noticeable upswing in export prices.

For sectors producing capital goods the production activity is still low, but the overall performance of this group is highly influenced by the engineering industry situation. For sectors producing consumer goods, production showed no changes. The level of activity has been fairly stable for these sectors through the last year or so.

Bottlenecks in production

Lack of demand and/or increased competition - especially in the domestic markets - remain the main bottleneck limiting production in manufacturing industry. Seven out of ten enterprises focus on such problems in the 3. quarter, while only five out of ten had the same problems in 1997. This type of bottleneck has primarily been an engineering industry problem.

Industries like e.g. pulp and paper, basic chemicals and wood and wooden products do not have demand problems. For these sectors the capacity is the major obstacle. For manufacturing industry as a whole 7 per cent of the enterprises focus on the capacity. Other parts of the industry are facing problems in recruiting staff. 9 per cent of the enterprises report about such obstacles. Last year the share was 5 per cent while 10 per cent in 1998. The manufacturing leaders seem to expect that such problems will escalate in the 4. quarter.