26.3.2018 - Manufacturing of electronical and electrical equipment in Estonia
The sector of manufacturing electronic and electrical equipment is one of the fastest growing industries in Estonia. Behind this growth is the high added value of the products of the sector, production efficiency and rapid adaption of product development. Sales revenues have for the past six years increased nearly three times. In addition to the sales income, also production volumes and employment are increasing and the future growth potential can be assessed as high. The sector is heavily oriented to the external market, the majority (more than 90%) of net sales is accounted for by exports. Also, most of the larger companies in the sector are based on foreign capital.
The largest enterprises in the manufacturing of computers, electronic and optical equipment are Ericsson Eesti AS (mobile communication equipment), Enics Eesti AS (electronic components for industrial and medical devices), and Scanfil OÜ (telecommunications devices), and the largest computer manufacturer is Ordi AS. Unlike the general direction of the industry, computers are sold mainly on the domestic market. In the manufacturing of electrical equipment, the largest company is ABB AS, whose main activity is the production of electrical distribution equipment and power generators. Other major companies are Ensto Ensek AS (electricity distribution equipment and control apparatuses), Konesko AS (electric motors and equipment) and Draka Keila Cables AS (cables).
In 2016 the electronics and electrical equipment sector recovered from the weak demand of 2015 and restored growth. Enterprises were able to increase sales and export volume and the number of employees. The sector’s growth was supported by increased demand at home and in foreign markets.
The largest part of the production in the sector goes for export. In 2016, the share of exports in the sales revenue of businesses remained at the same level as in the previous year, amounting to 94%.
The biggest export markets for electronic and electrical equipment manufacturing industry are Sweden and Finland. Their share in total exports of the sector is 39% and 14% respectively.
The average number of staff employed increased by 3%. The average gross monthly wage in the sector increased by 6.7% in a year, being 1,184 euros.
The added value based productivity indicators continued to show a negative trend, but the decline was smaller than in 2015. Total productivity of the sector fell by 12%, labor cost productivity decreased by 14% compared to the previous year.
Due to increasing wage pressure the biggest challenge for the sector is increasing the productivity and automating the design and manufacturing process even more. Companies are increasing investments in new machinery and processes to improve productivity. These changes are creating opportunities also for Finnish companies in the area of industrial automation.
Source: Ministry of Economic Affairs of Estonia
Keywords: Estonia, electronical and electrical industry, exports
Fred Rohula, Senior Consultant, Estonia