Outsourcing production overseas often means a loss of provenance, craft and quality. Monocle visits the Finnish factories bringing it all back home.
As you step into the Iittala glass factory, in a small town of the same name 110km north of Helsinki, heat and noise assault the senses. Here, workers in grey overalls are blowing and moulding blobs of molten glass to make the company’s best-known product the Aalto Vase, designed by Alvar Aalto in 1936. Each one takes seven people 30 hours to make. “This requires so much skill. It always remains a challenge,” says master glassblower and employee of 40 years, Heikki Punkari.
This has always been a very Finnish operation. But while the majority of Iittala’s glass products are made here, in recent years the company farmed out some production to other parts of Europe and Asia.
The move didn’t last long. Last year, the company increased its capacity in Finland and production of the Aarne and Tapio ranges returned to Iittala HQ. The company says there is a tighter control on quality in-house, something key to the brand’s image. But there was also the issue of provenance. Outsourcing had depleted the brand’s unique identity and selling point – its “Finnishness”. “The pressure is coming from outside the Finnish market,” says Tapio Yli-Viikari, professor of ceramic and glass design at Aalto University School of Arts, Design and Architecture. “No Japanese customer wants to buy Iittala glass made in China. They want to see it is made in Nuutajarvi or Sorsakoski or Arabia factories in Finland.”
Yli-Viikari also believes that in the past Made in Finland has added more than just marketing value to Iittala. It has been key to innovation, with close dialogue between artists, engineers and craftsmen critical to the company’s technical success. “That type of collaboration is no longer possible if you are doing it on the other side of the globe,” he says.
Though some production still takes place in Thailand and elsewhere, Fiskars Corporation, which acquired Iittala in 2007, is investing more at home. In 2008, the company rebooted Iittala’s apprenticeship scheme; trainees are now given assignments from glassblowers and top Iittala designers, and taught IT and business skills. “I want to find a way to maintain production here,” says Ulla Lettijeff, the vice-president of operations at Fiskars Corporation’s Home department.
Tero Välimaa, 34, graduated in 2011 – along with 23 others – becoming the third generation of his family to have worked here. He has already achieved master glassblower status and can make all Iittala glass products, from delicate Toikka birds to Timo Sarpaneva-designed Claritas pieces. “No one else in the world has these skills so we realise how important it is to keep them,” says Välimaa.
Iittala is not the only company that has seen merit in investing in Finnish production, despite the challenges of higher labour costs of a highly unionised workforce. Another example can be found 390km north of Iittala in the town of Kajaani. Here, in the Renforsin Ranta business park, led lighting specialist Valtavalo was established in 2008, initially making the bulk of its products in China.
However, this arrangement changed in 2010 when a Finnish company, eid Tech, created an automated production line that allowed Valtavalo ceo Markku Laatikainen to fulfil his dream of moving production to his home town in 2012. “My father and grandfather worked on this site so having a little piece of that history is a big thing. It feels good,” he says.
The Research Institute of the Finnish Economy says advanced technology will play a major role in tempting more companies to return home and so will rising labour costs in China. “In China wages have been rising 15 to 20 per cent per year,” says research director Jyrki Ali-Yrkkö. “In 10 years China will no longer be the world’s factory.”
This shift can have a profound effect on Finnish society in towns such as Hanko – on the southwestern tip of Finland – home to the factory making the iconic Jopo bikes since 1965. Hanko is known as the Jopo Town and its iconic cycle’s popularity is clear to see in this picturesque seaside spot.
Despite this, production of the bike was moved from Hanko to Taiwan in 2007 to cut costs by using the country’s cheaper workforce. In a U-turn just three years later Jopo decided to return its manufacturing to Hanko, securing the existing 60 jobs at the Hanko factory and creating several more. Why the change of heart?
“Cost, quality and timing were the reasons,” says Jari Elamo, the managing director of Helkama Velox, the company behind Jopo, as he walks past rows of brightly coloured bike frames. “The bicycle season in Finland is short and you have to have the products available but the lead time in Taiwan was six months.”
There was also the issue of craft. In Taiwan, up to 40 people produced one bike. In Hanko, one person assembles the bike before stamping the frame. “There is the sense of craftsmanship with a real name and a real person behind the product,” says Elamo. Among bolts, screws and mudguards, Patrik Lindström – a worker on the production line – aligns the wheels on a turquoise bike. “The quality is better now,” he says. “The frame and everything is much stronger.”
It’s clear this is a thriving factory again. Bike frames hanging from an overhead conveyor belt move slowly through a painting station as a fine mist of vibrant red is sprayed over them. “In Taiwan there were quality costs and transportation costs that accounted for a lot. We can actually be a little bit cheaper than the Taiwanese version,” Elamo says.
Clearly for Elamo – and the company – provenance goes beyond cost. “That we have the Finnish flag on the frame matters to our customers. Keeping jobs in Hanko is important to us. Every one of us is prouder when it is made in Finland. Being Finnish is a positive thing.”
Finns have long been aware of their nation’s brand value. The Key Flag symbol (pictured below) was created by the Association for Finnish Work 49 years ago to promote the country’s goods. Issued when at least 50 per cent of production is of Finnish origin, around 1,300 companies now use the symbol on almost 3,000 products and services, with 90 per cent of Finns recognising it. Finland is seeking to build its international reputation beyond the design world and this year lowered corporation tax by 4.5 per cent to attract more cleantech, R&D and healthcare outfits.