ULLA VÄISTÖ – Finland Ambassador to Mexico

Editor’s Interview

WHAT IS THE ROLE THAT MEXICO PLAYS FOR FINNISH INVESTMENT IN LATIN AMERICA?

Mexico is the second largest investment destination after Brazil for Finnish companies. There are a large number of Finnish production plants in the U.S. and during recent years some of them have moved operations to Mexico.

A comparison of the number of Finnish subsidiaries in Latin American countries would identify 37 in Mexico and 115 in South America including the ones in Argentina, Bolivia, Brazil, Chile, Ecuador, Guyana, Colombia, Peru, Uruguay, and Venezuela. Also, there are 12 in Central America including Belize. Only in Brazil (with 47) are there more Finnish subsidiaries than in Mexico.

Many companies consider Mexico to be an interesting location due to the country’s proximity to the North American market and its large internal market of almost 110 million consumers.

Many of the Finnish production sites are located in the northern part of the country where they are close to the U.S. border.

WHAT IS THE LEVEL OF SATISFACTION OF FINNISH COMPANIES WITH THEIR OPERATIONS IN MEXICO?

In general the Finnish companies are satisfied with their operations in Mexico. The Finnish Trade Center – Finpro and the Embassy of Finland did a study a few years ago among the Finnish firms established in Mexico. Most of the operations considered that their business volumes and number of employees will be growing in Mexico.

Naturally, the worldwide recession may change this vision at the moment, but we think that over the medium and long term the situation will be positive.

What the companies often tell us is that they really appreciate Mexican employees at all levels and positions and as a result there are not many expats working at the Finnish production sites.

Rather, the companies are directed by Mexican managers. Currently the Finnish companies employ around 10,000 people in Mexico. The engineers are considered to be very capable and Mexico is an excellent platform for R&D and designing products for the entire North American market.

WHAT IS YOUR OUTLOOK FOR FINNISH TRADE AND INVESTMENT IN MEXICO?

Trade and investments have been growing year after year. If there are large scale investments, naturally there are going to be peaks during some years; the overall trend, however, is positive.

Trade between Finland and Mexico is still quite small; there is definitely room for much more. Mexican exports to Finland consist mainly of machinery and transport equipment which is almost 70% of the total; cars play an important role in this category. Crude material accounts for almost 18% of the total Mexican exports to Finland. There are also some exports of agricultural products and other food items.

The largest export category from Finland to Mexico is machinery and transport equipment. Finland has a strong machinery industry and it is particularly so for heavy vehicles. Paper is also an important export item to Mexico and all the most important paper manufacturers sell high quality Finnish paper to Mexico.

There are very few Mexican investments in Finland, even though interest has been increasing, especially in the information/telecom and chemical sectors. It is important to remember that Finland also has a very strategic location in terms of the Russian, and in general, the Eastern European markets. It’s just like Mexico and the North American market.

ARE THERE SPECIFIC SECTORS TARGETED BY FINNISH COMPANIES?

The metal mechanical sector is one of the most traditional in Finland and many companies established in Mexico are from this sector. Also, the chemical companies play an important role, as well as the electronics’ companies. There are many healthcare equipment companies from Finland present in the Mexican market, but they are not yet producing in Mexico.

IN WHICH INDUSTRIAL SECTORS WILL THE FINNISH GOVERNMENT MAINTAIN OR INCREASE ITS INTEREST?

The Finnish government is focusing on the following at the moment: Environmental technology, water, energy and climate change. According to the Program Director of the Finnish Cleantech Cluster, Mari Pantsar-Kallio, Ph.D., Finland has around 1,300 clean technology enterprises, many of which operate internationally. The Finnish Cleantech Cluster has been founded to help small and medium-sized enterprises that are still aspiring toward internationalization. The cluster is currently made up of around 200 companies. According to Pantsar-Kallio, the demand for new companies and new innovation is high.

The cluster, for example, gives small and medium-sized enterprises advice and services that help them to network and internationalize their businesses.

The cluster works together with the Finnish Trade Centers (Finpro) in more than 40 countries. For foreign companies the cluster represents a gateway for finding partners in Finland.

Another sector includes electronics and wireless IT solutions. This industrial effort in Finland employs 51,500 people and has a combined annual turnover of EUR 7 billion.

Information technology is an industry of tremendous strategic importance. The products and services this sector provides can help improve productivity and performance, as well as the quality of products and services. Many of the significant social changes currently underway, such as an aging population, can be addressed successfully with the appropriate use of information technology.

Also, the metal refinement, machinery and metal industry, which is an industry in Finland employing 14,000 people and has a yearly turnaround of EUR 6 billion. The Finnish metal processing industry is famed for its highly efficient use of energy and raw materials. In some processes we are indeed proud to be the global leaders.

More than half of the copper and a third of the nickel used globally is made using a flash smelting method developed in Finland. This approach self-generates the energy required in the process. Metal processing companies manufacture and process steel and copper products, refined steel, zinc and nickel. The business is shifting towards even more highly processed specialty products and related services. In this sector expertise, automation and the efficient use of the newest technologies are taking center stage. Recycling is an integral part of the industry. In Finland, more than 90 per cent of discarded steel products are re-processed.

Nanotechnology is an industry in which Finland will be investing a total of EUR 120 million by 2010. Finland funds nanotechnology through four programs. Finland is rapidly growing in the area of nanotechnology applications in various fields including chemical, information, communication and health. During the last four years many new nanotechnology companies have been established in Finland and these companies are either engaging in research areas or applications. Another is Biotechnology which is an industry where our Country has investment interest in Mexico.

WHICH CONDITIONS ARE NEEDED IN MEXICO TO INCREASE FINNISH INVESTMENTS?

Mexico has an excellent geographical location from a logistics perspective. Nevertheless, at times, customs procedures as well as other registrations can be complex.

In addition, the cost of energy is an important issue for companies having energy intensive production processes. From the perspective of the companies more free trade agreements, such as the one with Brazil, would not only increase Mexico’s attractiveness but most likely also direct more foreign investment there.

ANY LAST COMMENT FOR THE MEXICONOW SUBSCRIBERS?

Mexico has many advantages for companies of all nationalities, such as an educated labor force, a high market potential especially in consumer goods and industry, and it also features free trade agreements with many different countries.