The decline of once-dominant telecommunications giant Nokia had grim repercussions for the Finnish city of Tampere, in which it employed 4000 people at its peak. However, with an educated, highly skilled workforce, and its innovative streak still fully intact, Tampere is filling the 'Nokia gap' with a number of exciting projects.
Tampere – Finland’s second largest city – is experiencing a revival in its mobile and network technology sectors, following the decline in the fortunes of Nokia, the Finnish telecommunications company whose device business is now owned by Microsoft, which had a heavy presence in the city.
In 2004, Nokia employed a total of 23,000 people in Finland, including 4000 in Tampere, in its mobile phone and networks businesses. Last year, Nokia – excluding NSN, which was a separate company – employed 6500 people in the country, including about 1100 in Tampere.
However, in April this year Nokia's mobile phone business was sold to Microsoft for $7.5bn and NSN assumed the Nokia brand again. In a sign of the company’s decline, today Nokia and Microsoft together employ about 2000 people in Tampere, including the research and development centre of the Lumia line of phones.
From the ashes
The fading of Nokia’s star has been one of the factors behind the rise in unemployment in Tampere to 17%. The city has 500,000 inhabitants and a €30bn economy, but has been hit by Nokia's decline, the problems in the eurozone, and the recent instability in Russia and Ukraine. However, Nokia’s fall also means that Tampere has a ready pool of highly skilled engineers and other professionals, as well as competitive labour costs.
Many new smaller companies have cropped up in the city in the past few years, which has gone some way towards helping Tampere become one of the key European centres for the development of mobile games technology.
“Tampere has a number of advantages,” says Pekka Salmi, the city’s deputy mayor for transportation. “It is located in the centre of Finland and first and foremost it is an education city. Almost one in five people in the city is a student. I think one of the city’s most important features is the close co-operation between the private and public sectors, which means that things get done.”
Some 34,000 people are employed in the technology sector in Tampere, and €750m is spent on average on technological research and development every year. The city has about 31,000 places of business, including 1000 technology companies.
Tampere is home to 38,000 students and three of Finland’s top universities – Tampere University of Technology, the University of Tampere, and Tampere University of Applied Sciences. Cutting-edge fields of research include signal processing, optics and photonics, intelligent machines, biomodelling, the built environment, human-technology interaction, information retrieval and game research.
This technical expertise saw world’s first commercial GSM call took place in the city in 1991, the first GSM card phone was produced there in 1997, and the first mobile camera phone was manufactured in the city in 2001 (the Nokia 7650).
In spite of its recent travails, Tampere is in an enviable position given that Finland is ranked as one of the world’s most competitive countries in which to invest in by the World Economic Forum, and the city itself has been awarded the prize of being the best place to live in Finland by Taloustutkimus, a Finnish market research company, for the past two years.
According to the WEF’s Global Competitiveness Report for 2013 to 2014, Finland is ranked number one globally for health, primary education, higher education, training and the availability of scientists and engineers, and number two globally for university-industry collaboration in R&D, the protection of minority shareholders’ interests, innovation, and the quality of mathematics and science education.
Such qualities have seen numerous companies set up production centres in Tampere, including Intel, Microsoft, John Deere, Sandvik, Cargotec, Metso, Avant, Glaston and Symbio.
New Factory settings
New Factory – set up in 2008 in a former cotton factory and now one of Finland’s leading start-up accelerator and business incubation centres – is an example of the kind of organisation that thrives in the rich innovative environment that Nokia helped to create in Tampere. It connects business and people providing the space, tools and facilities for collaboration. The centre has 170 partner businesses and has created 70 start-up companies, which have created more than 400 jobs.
New Factory is also the home to Demola, a programme whereby university students develop product and service demonstrations together with companies and create new solutions to real-life problems. Currently, Demola has 151 students working on 33 projects. In an indication of the programme’s success, 80% of its demonstrations end up being licensed by companies.
Jukka Matikanen, director of New Factory, says:
"We believe in the open-innovation, co-creation and lean start-up concepts. It means that start-ups can be successful by focusing on the essential and testing agilely the critical business assumptions. The Demola programme helps students to apply the theory that they learn to the real world."
Sensotrend is a small company based at New Factory which helps people to make sense of their diabetes trends. Its founder, Mikael Rinnetmäki, says:
“The buzz is right. We have received a lot of peer support from other start-ups. The most valuable help we have received from New Factory coaches has been advice regarding methodologies for developing our product and business model."
“We've also received expert services for financial and legal arrangements. Other start-ups, New Factory coaches and outside experts have advised us in developing our investor pitch but we still need to find the investors ourselves.”
Another thing Tampere has going for it is good transport links with the rest of Finland and Europe. Helsinki’s international airport – which has connections to 130 destinations globally – is only a 90-minute drive from Tampere, while Tampere’s own airport has connections with London Stansted, Budapest, and Stockholm Arlanda.
Olli-Poika Parviainen, Tampere’s deputy mayor for economic development, says:
"Tampere’s objective is to be a smart city in the broadest sense. We want the whole city to be an innovation platform. The city government itself acts as a facilitator, an enabler, bringing companies, universities and the public sector together and helping innovation to take place quickly.”
The local authority is spearheading a number of investment projects in the city. About €180m is being invested in a new 2.3-kilometre tunnel to ease congestion in Tampere by 2017. A further €250m is being spent on a 23-kilometre tram network that will help people to commute to the city's busier areas.
The city is also helping to develop the 110,000-square-metre Tampere Deck project in the city centre close to the main train station. This is a €400m investment – mostly funded privately – that will include shops, restaurants, offices, business premises, a hotel and apartments. It will also include an 11,000-seat sports stadium.
In a €40m investment, University Properties of Finland is also developing a campus arena next to the Tampere University of Technology. This will be a working environment for universities and enterprises that supports communality, learning and business. The 15,000-square-metre building – expected to be ready by mid-2015 – will be located at the centre of the campus site.
Tampere has suffered since the fall of Nokia, but its resilience and highly skilled labour force have kept the city firmly on the investment radar.
The costs of this report were underwritten by Tampere Region Economic Development Agency Tredea. Writing and editing were carried out independently by fDi Magazine.
This article is sourced from fDi Magazine
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