According to a study made by the Research Institute of the Finnish Economy (Etla), UPM is the company producing the most added value in Finland when taking into account the added value produced by companies themselves and the indirect added value resulting from purchases.
The study carried out by Etla analyses the role of the largest companies in Finland and their value chains in the economy. The results show that the top ten Finnish companies produced 7.6% of the Finnish gross domestic product (GDP) in 2015.
“In terms of the GDP, UPM is Finland’s fourth-largest company if we only look at the added value produced by the company itself. UPM’s share of the GDP was 0.8% in 2015,” says Jyrki Ali-Yrkkö, Deputy CEO at Etlatieto Oy. Considering the added value generated by the multiplier effects resulting from purchases, UPM’s share of the GDP rises to 2.0% making it the most significant company.
“Added value is the difference between the product’s final selling price and the purchase price paid for raw materials, energy, services and other intermediate products to manufacture the product.
In 2015, the added value produced by UPM in Finland totalled EUR 1.5 billion and the added value generated by the multiplier effects resulting from purchases as much as EUR 2.6 billion. UPM’s supply chain in Finland includes 10,000 companies and service providers, and, for example, the company’s annual wood sourcing spend is approximately EUR 850 million.
“Forest industry companies mainly purchase their wood raw material from Finland, which means that the added value from wood trade, felling and transport is created in Finland,” Ali-Yrkkö says. Sourced materials and services from abroad have been deducted from the research.
All Finnish units of each company were included in the study. UPM has 27 production plants and 120 forest service offices in Finland.
High productivity and added value per person
Ali-Yrkkö points out that the productivity and growth rate of the top companies are clearly above average. In 2015, the top companies generated almost EUR 221,000 of added value per employee, while the average value in smaller companies was less than half of this.
“If the added value per person employed is high, a company can achieve good profitability and pay employees with relatively high salaries. Large companies often have access to resources that provide them with the opportunity to make major investments and benefit from economies of scale.”
UPM employs around 7,500 people in Finland. Paid salaries total over EUR 400 million per year. During years 2013-2017, UPM’s investments in Finland totals approximately EUR 440 million.
Cost level enhances competitiveness
A competitive cost level helps Finnish businesses in becoming a part of international value chains.
“Having a low cost level is an important competitive factor in the short term, but in the long term, the produced products and services must be such that they increase the added value of production. The goal must be to create as much added value per working hour as possible,” Ali-Yrkkö emphasises.
He points out that all export income does not increase economic growth to the same extent.
” The share of domestic added value is the largest in timber and paper industry as well as in the food industry because they use more domestic raw materials and intermediate products than other industries.”