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Project INNOREG

The capability and

competitiveness of the

mechatronics field in the

North-Estonia and South-Finland

region

INNOREG project

Client: Tallinn Enterprise Board

Prepared by: HeiVäl Consulting and project expert group

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The compilation of the questionnaire, questioning and the study analysis was carried out in the frame of Innoreg project (SFE23). Study questionnaire was compiled by the members of project` partner organisations and experts: Jüri Riives, Tauno Otto, Kaia Lõun, Ingrid Hindrikson, Jaanus Vahesalu, Jaak Lavin, Marko Kokla, Veli-Pekka Esala, Antti Lassila, Jussi Karlsson, Jukka Kallio. The study analysis was executed by a working group of HeiVäl Consulting consultants: Kaido Väljaots (consultant in the cluster field), Kaisa Kase (project manager for the study), Raili Paat (statistician-analyst), Tõnu Hein (technology consultant).

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Contents

Contents......................................................................................................................................................2 1. Short introduction of the study ..........................................................................................................6 2. General data about the companies ....................................................................................................7

2.1. Number of workers in the companies ........................................................................................7

2.2. Company turnover in 2010 .........................................................................................................9

2.3. Company profits in 2010...........................................................................................................10

2.4. Summary of the companies’ general data................................................................................12

3. Business environment and management of the companies ............................................................13 3.1. Business environment of the companies..................................................................................13

3.1.1. Products and services being offered ................................................................................13

3.1.2. Customer segments by industry .......................................................................................15

3.1.3. Distribution of customers by size .....................................................................................18

3.1.4. Customers’ purchasing motives........................................................................................20

3.1.5. Position compared to competitors ...................................................................................22

3.1.6. Market potential in various markets today (2010) and in the future (2015) ...................24

3.1.7. The reasons for searching for new markets .....................................................................26

3.1.8. The value chain today (2010) and in the future (2015) ....................................................27

3.1.9. Summary of the business environment............................................................................28

3.2. Management of the companies................................................................................................30

3.2.1. Use of management techniques today (2010) and in the future (2015)..........................30

3.2.2. Structural forms today (2010) and in the future (2015)...................................................32

3.2.3. Frequency of the changes made in the structure and operations ...................................34

3.2.4. Sources of new customers................................................................................................37

3.2.5. Products and services developed and implemented by the companies ..........................38

3.2.6. Summary of the management of the companies .............................................................39

4. Companies’ technological capabilities..............................................................................................41 4.1. Manufacturing methods in use.................................................................................................41

4.2. Manufacturing principles in use ...............................................................................................43

4.3. Equipment overview.................................................................................................................43

4.4. Monitoring principles in use .....................................................................................................44

4.5. Software in use .........................................................................................................................45

4.6. Summary of the companies’ technological capabilities ...........................................................46

5. Development of products and technology .......................................................................................47 5.1. Role and objectives of innovation ............................................................................................47

5.2. Objectives of product development .........................................................................................49

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5.3. Organization of product development in the companies.........................................................50

5.4. R&D investments ......................................................................................................................51

5.5. Summary of the development products and technology.........................................................52

6. Personnel ..........................................................................................................................................53 6.1. System for improving labour productivity................................................................................53

6.2. Use of an objective-based management system......................................................................55

6.3. Organization of the system for making suggestions for improvements ..................................56

6.4. Evaluation of the value chain competences.............................................................................57

6.5. Summary of personnel..............................................................................................................58

7. Issues related to information and communication technology (ICT) ...............................................59 7.1. Software solutions used in the management of business operations .....................................59

7.2. Number of computerized workplaces ......................................................................................60

7.3. Financial software in use ..........................................................................................................61

7.4. Computer-based functions used in production management .................................................63

7.5. Use of technology-oriented systems ........................................................................................65

7.6. Number of CAD, CAM, CAE, and CAPP software users.............................................................66

7.7. Summary of ICT questions ........................................................................................................67

8. Quality assurance and control ..........................................................................................................68 8.1. Quality management systems ..................................................................................................68

8.2. Types of control used for quality assurance.............................................................................70

8.3. Key indicators............................................................................................................................71

8.4. Internal process control............................................................................................................73

8.5. Use of measurement equipment..............................................................................................74

8.6. Indicators being measured .......................................................................................................76

8.7. Calibration of measurement equipment ..................................................................................77

8.8. Providers of calibration services...............................................................................................78

8.9. Importance of accreditation in the selection of calibration services providers .......................79

8.10. Sufficiency of calibration services providers.........................................................................80

8.11. Importance of the traceability of the measurement results when choosing a calibration

services provider...................................................................................................................................81

8.12. Use of Metrosert and MIKES services...................................................................................83

8.13. Summary of quality assurance and control ..........................................................................84

9. Cooperation ......................................................................................................................................85 9.1. Participation in various forms of cooperation..........................................................................85

9.2. Reasons for participating in cooperation .................................................................................87

9.3. Main cooperation partners.......................................................................................................88

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9.4. Objectives of cooperation.........................................................................................................89

9.5. Extent of the cooperation area.................................................................................................90

9.6. Summary of cooperation ..........................................................................................................92

10 . Summary and conclusions of the analysis of North-Estonia and South-Finland companies and the

study of Western European technological areas......................................................................................93

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1. Short introduction of the study

This study titled “The capability and competitiveness of the mechatronics field in the North-Estonia and

South-Finland region” was organized within the framework of the INNOREG project. In the course of the

study, a survey was conducted of 15 North-Estonia companies and 15 South-Finland companies in the

field of mechatronics and the information was analysed.

The organization of the report is based on the structure of the questionnaire that formed the basis for

the survey. The results are divided into general data about the companies and the following seven fields

of activity: business environment and management; technological capability; development of products

and technology; personnel; ICT solutions; quality assurance and control; and cooperation.

The main conclusion of the analysis is presented in the upper diagrams. At the end of section there is a

summary of the main conclusions. The 15 North-Estonia and 15 South-Finland mechatronics companies

included in the sample are hereinafter called the Estonian and Finnish companies.

The objective of the study was to map and analyse the following aspects of the companies:

• main competence, markets and products;

• market geography;

• technological capability;

• research and development capability;

• personnel competence;

• experience related to participation in cluster-based cooperation.

The study on the capability and competitiveness of mechatronics in the North-Estonia and South-

Finland region was commissioned by the Tallinn Enterprise Board and compiled by HeiVäl Consulting.

The basis for executing the study was the completed survey questionnaires provided by the client, as

well as the initial assignment established by the client and the information provided at meetings. The

companies were queried by recognised Estonian and Finnish experts in the mechatronics field in August

and September 2011 and the report was prepared in October 2011.

The study was executed by a working group of HeiVäl Consulting consultants, including the following:

Kaido Väljaots – consultant in the cluster field;

Kaisa Kase – project manager for the study;

Raili Paat – statistician-analyst;

Tõnu Hein – technology consultant.

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2. General data about the companies

2.1. Number of workers in the companies

The study succeeded in examining companies of similar size in both regions.

Figure 1. Distribution of the Estonian and Finnish companies by size

In order to assess the size of the companies, the representatives of the companies were asked to

answer the following question: “What is the number of total employees in the company?” The

respondents were not given a range but where asked for a specific number. All 30 companies included

in the sample answered the question.

To analyse the results, the companies were divided into three groups: companies with 1-26 employees;

companies with 27-99 employees; and companies with 100 or more employees. These ranges were

employed because this resulted in an equal number of companies in each group. The units on the

vertical axis of the chart indicate the number of companies in each group.

In the sample, there are an equal number of companies with 100 or more employees from both

countries. In the sample there are two more companies with 1 to 26 employees in Estonia. In the

sample there are two more companies with 27 to 99 employees in Finland.

Based on the above, it can be said that generally, the companies from both countries were similar in

size, although the sample companies from Estonia were somewhat smaller than the ones from Finland.

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A comparison of the total number of employees in the Estonian and Finnish companies shows

they are similar and the distribution between various jobs is also similar.

Figure 2. Total number of employees in the Estonian and Finnish companies

In figure 2, the answers to the following question have been totalled by country: What is the total

number of employees?” The respondents were not given a range but where asked for a specific

number. All 30 companies included in the sample answered the question.

The chart shows that the total number of employees is almost equal in both countries and the number

of employees in various jobs is also quite similar.

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2.2. Company turnover in 2010

The sample includes companies with large and small turnovers from both countries. The

turnover per employee in the Estonian companies is lower than in the Finnish companies.

Figure 3. Distribution of Estonian and Finnish companies by turnover

In order to assess each company’s turnover, they were asked to indicate their 2010 turnover in euros

with one number. Thirteen Estonian companies and fourteen Finnish companies answered the question.

Fifteen companies from each country were included in the sample. In order to analyse the results, the

answers were divided into five groups. The unit indicated on the horizontal axis of the chart indicates the

number of companies in the given group.

The similarities between Estonia and Finland are the equal number of companies in the highest and

lowest range of turnovers.

The main differences between Estonia and Finland are the following:

• There are four Finnish companies in the group with turnovers totalling between 1 and 2.5 million

euros, while there is only one company in Estonia;

• There are five Estonian companies in the group with turnovers totalling between 2.5 and 10

million euros, while there were only two companies in Finland.

The Finnish companies were somewhat more uniformly distributed by turnover than were the Estonian

companies.

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Figure 4 show the average turnover per employee in the Estonian and Finnish companies in 2010. The

average is calculated based on the 13 Estonian companies and 14 Finnish companies that answered

the question. Based on this calculation, it can be said that the average turnover per employee in the

Estonian companies is somewhat lower than in the Finnish companies. .

Figure 4. Average turnover per employee in Estonian and Finnish companies

2.3. Company profits in 2010

In 2010 almost half the mechatronics companies that responded did not earn a profit or earned

relatively small profit. The average profit per employee in the Estonian companies is lower than

in the Finnish companies.

Figure 5. Distribution of Estonian and Finnish companies by profit earned

To calculate the companies’ profits, the respondents were asked to indicate their 2010 profits in euros

with one number. Thirteen companies answered from both Estonia and Finland. To analyse the results,

the answers were divided into five ranges. The unit indicated on the horizontal axis of the chart indicates

the number of companies in the given group.

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Almost half the companies that answered from both countries did not earn profit in 2010 or their profit

was less than € 100,000. Only Finnish companies were represented among the companies that earned

profits of more than € 1 million.

Figure 6 shows that the average profit per employee in the Estonian and Finnish companies in 2010.

The profit per employee is calculated as a quotient of the profit earned by the companies and the total

number of employees. Twelve companies have been left out of the calculation – four companies did not

provide information and eight companies had no profits or suffered losses.

Figure 6 shows that the average profit per employee in Estonian companies is significantly lower than

in Finnish companies. The results are affected by one Finnish company, which a profit per employee

ratio that is significantly higher than the other Finnish companies. If this company is not included, the

average profit per employee in the Finnish companies would be € 13,604. The same indicator for

Estonia is still almost 60% lower.

Figure 6. Average profit per employee in Estonian and Finnish companies

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2.4. Summary of the companies’ general data

The general data of the companies treated in the study include the number of employees, turnover and

profit. The companies provided information on the number of workers in total as well as by jobs.

The study sample includes companies of the same size from both countries.

Based on 2010 turnover, the sample includes companies with less than € 1 million and over € 50 million

of turnover. The turnover per employee is somewhat lower in Estonian companies than in Finnish

companies.

In 2010, about half the mechatronics companies did not earn any profit or earned a relatively small

profit. The average profit per employee in Estonian companies was lower than in Finnish companies.

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3. Business environment and management of the companies

3.1. Business environment of the companies

3.1.1. Products and services being offered

The Estonian companies are focused on final products and half-finished products, and the

Finnish companies on half-finished products and production equipment.

Figure 7. The products and services offered by the Estonian and Finnish companies

Figure 7 describes the products and services that the companies offer to the market. In order to

determine the products and services, the representatives of the companies were asked to answer the

following question: “Which products and services does the company offer and what is their relative

importance?” The respondents were presented with the categories shown in figure 7 (consumer goods,

final products, etc.). The respondents indicated the percentage of the products and services in each

category relative to their turnover.

The units indicated on the horizontal axis of the chart indicate the average percentage of the products

and services in the category relative to the turnover of the companies that answered in each

country. For instance, if there had been only two companies in the sample and the services comprised

6% of the company’s turnover, and the services comprised 20% of the other company’s turnover, the

average percentage of the service relative to the turnover of all the companies that answered would be

13%.

The largest difference between the Estonian and Finnish companies was the relative importance of

final products – on average; they comprise 40% of the turnover of Estonian companies but only a tenth

of the turnover of Finnish products. The main similarity between Estonian and Finnish companies is

the percentage of services relative to turnover – in Estonia the average is 13%, in Finland 11%.

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In Estonian companies, the largest percentage of the turnover is generated by final products (40.7%),

which are followed by half-finished products (32.2%). Finnish companies put more emphasis on half-

finished products and production equipment, with percentages of 51.8% and 26.4% respectively relative

to turnover.

In conclusion, Estonian companies are focused on the production of final products and half-finished

products, and Finnish companies on half-finished products and production equipment. The percentage

of consumer goods and services relative to turnover is quite low in both countries.

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3.1.2. Customer segments by industry

The Estonian companies have the most customers in the automotive industry, the Finnish

companies in the apparatus industry.

Figure 8. Customer segments of the Estonian and Finnish companies

Figure 8 shows the customer segments of the companies. To obtain this information, the

representatives of the companies were asked to answer the following question: “What are your

company’s customer segments by industry?” The respondents were presented with the industry

categories shown in figure 8 (automotive, aviation, etc.). The respondents indicated the percentage of

each category relative to the company’s turnover. Eight of the companies in Estonia chose “other”, of

which one mentioned agriculture and the other did not specify the industry. In Finland, four of the

companies chose “other”, of which one mentioned shipping, another construction and two did not

specify the industry.

The units on the horizontal axis of the chart show the average percentage of the turnover of the

customers in the given category relative to the turnover of the all the companies that responded.

The average percentage of each category is calculated based on the answers of all the companies. This

means that when calculating the average, the companies that indicated that the given customer

segment comprises 0% of their turnover have also been included.

The greatest differences between Finnish and Estonian companies are in the percentages of turnover

generated by the following industries: automotive industry, apparatus industry, health care industry,

electronics and “other”.

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In Estonia, it is worth noting that the large percentage of turnover is generated by customers in the

automotive industry (21.9%). Customers in the following industries generate more than 4% of the

average turnover: the apparatus industry, defence industry, energy and electronics.

In Finland, the largest percentage of average turnover is generated by customers from the apparatus

industry (37.8%). Customers in the following industries generate more than 4% of the average turnover:

health care industry, energy and mining.

In conclusion, it can be said that the largest percentage of the turnover of Estonian companies was

generated by customers from the automotive industry, while in Finland it was general by customers in

the apparatus industry.

In the automotive industry, where the Estonian companies have a large percentage, more of the

turnover is generated by companies with large numbers of employees. In the apparatus industry,

where more Finnish are active, both smaller and large companies are more evenly represented.

Figure 9. Customer segments of companies of various sizes

Figure 9 shows both the companies distributed by size and the customer segments of those companies.

The units on the horizontal axis of the chart show the average percentage of the turnover in this

customer segment relative to the total turnover of all the companies that responded. For

instance, customers from the automotive industry generate an average of 24.6% of the turnover of

companies with more than 100 employees.

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Of the turnover of companies with 1 to 26 employees, customers from the apparatus industry generate

the largest average percentage of the turnover (31.8%). Four companies chose “other” and none of

them specified the customers’ field of activity. The customers of companies with 100 or more

employees come primarily from the automotive and apparatus industries (the average percentages of

turnover are 24.6% and 22.8% respectively). The customers of the companies with 27 to 99 employees

are more evenly divided among the fields of activity.

Among companies with 27 to 99 employees, three companies mentioned agriculture, construction and

shipping under “other” and two companies did not specify the “other” field of activity.

The customers of the companies earning the greatest profits come from the automotive and

health case industries.

Figure 10. Customer segments of companies in different profit ranges

Figure 10 shows the companies distributed by profit and the customer segments of those companies.

The units on the horizontal axis of the chart show the average percentage of the turnover in this

customer segment relative to the total turnover of the companies with profits in this range. For

instance, of the companies earning profits of more than € 400,000, an average of 39.6% of their

turnover is generated by customers from the automotive industry.

In 2010 the customers of companies that earned more than €400,001 in profits came mainly from

the automotive and health care industries. The average percentage of these customer segments relative

to the total turnover of the companies with profits in this range is 39.6% and 16.7% respectively.

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One of the companies that chose the option of “other” mentioned shipping and four of the companies did

not specify the field of activity.

In 2010, the customers of companies that earned €150,001 to € 400 000 in profits are primarily from

the apparatus industry (average percentage of turnover 38.1%) and the automotive industry (average

percentage of turnover 16%).

In 2010, the largest average percentage of the turnovers of companies that earned less than €

150 000 in profits was generated by companies classified as “other”. Two of the companies specified

agriculture and construction in this context and the remaining five companies did not specify the field of

activity.

3.1.3. Distribution of customers by size

Finnish mechatronics companies serve larger customers than Estonian companies

Figure 11. Distribution of Estonian and Finnish companies by the size of their customers

Figure 11 shows the Estonian and Finnish companies distributed by the size of their customers. To

make this determination, we asked the representatives of the companies to answer the following

question: “To which group do your main customers belong?” The respondents were presented with the

categories on the chart (large companies, mid-sized companies, etc.). The respondents indicated the

percentage of their turnover that is generated by the customers in each category. The value indicated by

each respondent had to total 100%.

The units indicated on the horizontal axis of the chart indicate the average percentage by the

customers of this size in the turnover of all the companies that responded. Separate results are

shown for Estonia and Finland.

Finnish companies stand out by serving more large companies and their average percentage of

turnover is 67.8%. The largest customer group for Estonian companies are also comprised of large

companies, but in comparison with Finland, there are more average- and small-sized companies

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among the customers of Estonian companies. In conclusion, it can be said that Finnish mechatronics

companies serve larger customers than Estonian companies.

Large companies serve more large customers; smaller companies serve more smaller

customers. Essentially, the mechatronics companies do not provide products to end users.

Figure 12. Distribution of various sized companies by the size of their customers

The vertical axis on figure 12 shows the sizes of the companies’ customers. Every respondent was

asked to indicate the percentage of their turnover is generated by the turnover from the customers in

each size range (large company, mid-sized company). The value indicated by each respondent had to

total 100%. The distribution of the companies based on size represented by the bars includes the

companies from both countries.

The customer base of companies with 1 to 26 employees is most evenly distributed among the size

categories. Generally, the larger companies serve more large companies and the smaller companies

serve more small customers.

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3.1.4. Customers’ purchasing motives

The main differences between Estonian and Finnish companies are the greater importance of

price and flexibility for the customers of the Estonian companies and the greater importance of

brand loyalty for the customers of the Finnish companies.

Figure 13. The assessment of the Estonian and Finnish companies regarding the purchasing motives

Figure 13 shows the purchasing motives of the sample companies’ customers. To make the

determination, the representatives of the companies were asked to answer the following question:

“What are the customers’ purchasing motives?” The respondents were provided with the factors shown

on figure 13 (brand loyalty, price, quality, etc.). The respondents marked the factors on a scale of 1 to 5,

regarding how important they thought they given factor was for their customers when making their

purchasing decision. When analysing the data, the answers given on a scale of 1 to 5 have been

transformed to a scale of 0 to 100. For instance, the average assessment given by Estonian companies

to the factor “Price” shows how important the Estonians think price is in the decision-making process of

its customers.

The largest differences between Finnish and Estonian companies are in the importance of brand

loyalty, price and flexibility to its customers – the representatives of the Estonian companies think that

price and flexibility are much more important to their customers. The Finnish companies believe it is

brand loyalty.

The greatest similarities between Estonian and Finnish companies that should be mentioned are that

both groups believe that the most important purchasing motives are quality and delivery accuracy.

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The customers of the larger companies place greater emphasis on brand loyalty and place less

emphasis on price

Figure 14. Distribution of various sized companies based on the customers’ purchasing motive

Figure 14 shows the importance of the customers’ purchasing motives, but this time the companies are

not divided into groups by country, but the size of the responding companies.

The greatest differences between different sized companies are that the customers of larger

companies consider brand loyalty to be more important and price less important than smaller

companies.

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3.1.5. Position compared to competitors

In figures 15 to 17 below, the positions of the sample companies is compared to their competitors. To

make the determination, the representatives of the companies were asked to answer the following

question: “How do you rate your company’s position today compared to the competitors?” The

respondents were provided with the five options shown on the charts (my company is a market leader,

etc.) and they were asked to indicate the most suitable answer. The respondent had to make the choice

regarding the company’s position based on technological and financial aspects. For instance, the

company could answer that it considers itself a market leader from the financial viewpoint, but its

competitiveness from the technological viewpoint is weak. The horizontal axis of the chart shows the

number of companies that chose the given answer.

The companies rate their technological and financial competitiveness

Figure 15. The assessments of the companies of their market position from the technological and

financial viewpoint.

All the sample companies are presented together in figure 15. Two of the companies indicated they

were market leaders from a technological viewpoint and only one from a financial viewpoint.

Approximately half of the respondents considered themselves to be at the same level of their

competitors. An interesting difference is that the more of the companies believed themselves to more

competitive from a technological viewpoint.

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In the comparison between Finnish and Estonian companies, the Finnish companies tend to rate

themselves as better than their competitors from a technological viewpoint and the Estonian

companies from a financial viewpoints.

Figure 16. The assessments of the Estonian and Finnish companies regarding their market positions

based on the technological aspect.

Figure 16 shows the assessments of the respondents regarding their market position based on the

technological aspect. Based on this, it can be said that the greatest difference between Estonia

and Finland is that over half of the Estonian companies consider themselves to be at the same level as

their competitors, but over half the Finnish companies consider themselves to be better than their

competitors. A positive similarity is that only one company in both samples believes its technological

competitiveness is poor.

In the comparison of the Finnish and Estonian companies based on the financial aspect the

Finnish companies tend to consider themselves to be better than their competitors, and the

Estonian companies tend to consider themselves to be at the same level. This opinion of the

companies is also supported by the higher profitability of the Finnish companies referred to

above.

Figure 17. The assessments of Estonian and Finnish companies regarding their market position based

on the financial aspect

Figure 17 shows the assessments of the respondents regarding their market position based on the

financial aspect. The comparison is presented by country. Based on this, it can be said that the

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greatest difference between Estonia and Finland is that more Estonian companies consider

themselves to be at the same level as their competitors. It is also interesting that none of the Estonian

companies consider their financial competitiveness to be poor. Two respondents in the sample of

Finnish companies made this assessment.

3.1.6. Market potential in various markets today (2010) and in the future (2015)

The following figures (18 and 19) show the assessment of the sample companies regarding their own

market potential today and in the future. To determine this, the representatives of the companies were

asked to answer the following question “How do you evaluate your company’s potential regarding

different markets today (2010) and in the future (2015)?” The respondents were presented with the

markets shown in the figure (home market, Baltic market, etc.), and asked to assess what percentage of

their turnover the market comprises in 2010 and what the forecast is for 2015. The amounts for each

respondent had to total 100%. The horizontal axes of the charts show the average percentage of the

market relative to the turnover of the companies that answers. The answers are presented by country.

2010 – The Finnish companies consider their home market to have the greatest potential and the

Estonian companies consider the Nordic countries to have the greatest potential.

Figure 18. The potential of the Estonian and Finnish companies in 2010.

The greatest differences between the Estonian and Finnish companies is that fact that the greater

than average percentage of the Finnish companies’ turnover in 2010 is comprised of the home market,

while for the Estonian companies it is the Nordic countries. For the companies in both countries, the

Central and Western European market followed the home and Nordic markets. The average percentage

of the turnover generated from sales in other markets is quite low in both countries.

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2015 – The Finnish companies consider their home market to have the greatest potential and the

Estonian companies consider the Nordic countries to have the greatest potential. For Estonian

companies the importance of the Central and Western European market will increase, while for

the Finnish companies, in addition, growth will also occur in the Nordic and Russian markets.

Figure 19. The market potential of Estonian and Finnish companies in 2015

In Estonia, we do not see any great changes between 2010 and 2015. The percentage of average

turnover generated by the Nordic market is similar. The potential of the home market decreases

somewhat, while the importance of the Central and Western European market increases.

In the forecasts of the Finnish respondents, the importance of the home market has decreased by 10%

compared to 2010, and the turnover from the Nordic market, Central and Western European market, as

well as Russia has increased.

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3.1.7. The reasons for searching for new markets

Estonian companies assess all the reasons for exporting higher than the Finnish companies.

The most important reason for Estonian companies is an ambitious company strategy, while for

Finnish companies it is greater production capacities.

Figure 20. The importance of the reasons for exporting of the Estonian and Finnish companies

Figure 20 shows the reasons for exporting of the sample companies. In order to make a determination,

the representatives of the companies were asked to answer the following questions: “What is forcing

you your company to search for new markets?” The respondents were presented with the 20 factors

indicated on the chart (my company has greater production capacities, etc.). The respondents rated the

factors on a scale of 1 to 5 regarding how important each factor was as a reason for searching for new

markets. When analysing the data, the answers given on a scale of 1 to 4 have been transformed to a

scale off 0 to 100.

The largest difference between the Estonian and Finnish companies was that the Estonian

companies an ambitious company strategy to be a significantly more important reason for searching for

new markets. Another difference is that all the factors are more important for the Estonian companies

than for the Finnish ones, which may be explained by the fact that export generally is more important for

Estonian companies, and comprises a large percentage of their turnover.

Development along with infrastructure is considered to be the least important factor by the companies in

both countries.

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3.1.8. The value chain today (2010) and in the future (2015)

The following figures (21 and 22) show the assessment of the sample companies regarding their own

value chains today and in the future. To determine this, the representatives of the companies were

asked to answer the following questions “How do you place your company in the value chain today and

2015?” The respondents were asked to rank the stages of the value chain, with 1 being the most

important and 8 the least important stage. The horizontal axes of the charts indicate the importance of

the stages of the value chain on a scale of 0 to 100. In order to transform the answers, 1 or most

important in the given scale was equated with 100 and 8 or least important was equated with 0.

2010 – The companies of both countries give a high rating to production, while the Estonian

companies also do the same for technological development and the Finnish companies for

sales.

Figure 21. Importance of the stages of the value chain for Estonian and Finnish companies in 2010.

The greatest difference between Estonian and Finnish companies is the fact that the Estonian

companies give a much higher rating to technological development and a somewhat higher rating to the

role of production in the value chain. In addition, there is an approximately 10-point difference in the

importance of after-sales servicing, which the Finnish companies rate as most important. The Finnish

companies place themselves mostly in the sales and production stage, the Estonian companies in

the production and technological development stage.

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2015 – In Estonia, the importance of marketing and product development increases, in Finland

the importance of product development tends to decrease.

Figure 22. The importance of the various stages of the value for Estonian and Finnish companies in

2015

In the future, marketing, product development and after-sales servicing should increase for Estonian

companies. For Finnish companies, the importance of product development should decrease, and the

importance of after-sales servicing and marketing should increase further.

3.1.9. Summary of the business environment

The examination of the companies’ business environment included products and services, customer

segments, size of the customers and purchasing motives, as well as the market position of the

companies. The companies were asked to assess the geographical location of their customers in 2010

and the market potential for 2015; also the companies’ motives for exporting, as well as their value

chain and the forecast for its future.

In regard to the products and service offered by the companies, the Estonian companies are focus on

the production of final products and half-finished products, while Finnish companies are focused on

producing half-finished products and production equipment. Mechatronics companies essentially do not

provide any products to end users.

The Estonian companies have the most customers in the automotive industry, while the Finnish

companies have the most in the apparatus industry. In the automotive field, where the Estonian

companies have a large percentage, larger turnover is earned by the companies with the most

employees. In the apparatus industry, where the Finnish companies are more active, smaller and large

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companies are more evenly represented. The customers that earn more profits are in the automotive

and health care industries.

In regard to the size of the customers, it can be said that the Finnish companies serve large

customers than the Estonian companies. It is also apparent that larger companies generally serve larger

customers, while smaller companies serve larger numbers of small customers.

In regard to the purchasing motive, there were significant differences between the countries – price

and flexibility were more important to the customers of the Estonian companies and brand loyalty was

more important to the customers of the Finnish companies. It was also apparent that the customer of the

large companies place great importance on brand loyalty and consider price to be less important than

do the customers of smaller companies.

In the comparison with competitors, the sample companies consider their technological

competitiveness to be better than their financial competitiveness. The Finnish companies tend to

consider themselves to be better than their competitors from both technological and financial viewpoint,

while Estonian companies tend to consider themselves to be on the same level with their competitors.

In 2010 and in the future, the Finnish companies see their home market as their largest potential

market, while the Estonian companies see the Nordics as their largest potential market. In the

comparison for 2010, it can be said that the Estonian companies see the potential of the home market

declining somewhat, and the importance of the Central and Western European market increasing. In

Finland, the respondents forecast an increase in the percentage of their turnover coming from the

Nordic, Central and Western European as well as Russian markets.

The Estonian companies give higher ratings to all the reasons for exporting than do the Finnish

companies. For Estonian companies, the most important reason for exporting is an ambitious company

strategy, while for Finnish companies is the possession of larger production capacities.

In the value chain, the companies in both countries are positioned mostly in the production and

sales stages. For the Estonian companies, the technological development stage is important. In the

forecasts for 2015, increases are projected in the importance of marketing, product development and

after-sales servicing for the Estonian companies. For the Finnish companies, the importance of product

development will decrease somewhat and the importance of after-sales servicing and market will

increase even further.

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3.2. Management of the companies

3.2.1. Use of management techniques today (2010) and in the future (2015)

The main techniques used in the Estonian and Finnish companies are house rules and the ISO

9001 standard. In 2015, there are plans to increase the use of Lean Principles, Balanced

Scorecard and 6-sigma.

Figure 23. The management techniques used in the companies in 2010 and 2015

Figure 23 shows the management techniques used in the companies in 2010 and in the future, in 2015.

In order to make the determination, the representatives of the companies were asked to answer the

following question: “Which management techniques does your company use and is planning to use?”

The respondents were presented with the categories (house rules, Theory of Constraints, etc.) shown in

figure 23. Several options could be chosen. The option “other” was chosen for both periods by one

Finnish company and four Estonian companies, of these one Estonian company named authoritarian

management and the other SMED, while the remainder did not specify a management technique.

As of 2010, the most popular management technique used by the companies is house rules and ISO

9001 quality management. Approximately half the companies already use Lean Principles. By 2015, the

companies plan to expand the use of Lean Principles, Balanced Scorecards and 6-sigma. There will be

a decrease in the number of companies that use house rules and ISO 9001. The companies believe that

the most popular management technique along with ISO 9001 will become adherence to Lean

Principles.

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In the future the use of Balanced Scorecards and 6-sigma will increase in various sized

companies. The percentage of those using Lean Principles will increase in companies with 26 or

fewer employees.

Figure 24. Percentages for the management techniques in use in various sized companies in 2010 and

2015

Figure 24 shows the percentages for the management techniques used in different years and in various

sized companies. The percentages in each size range of companies total 100% for that size range. The

vertical axis indicates the percentage of companies using the particular management technique in that

size range.

From the division by company size, we see that the use of house rules and ISO 9001 will decrease in all

groups. The percentage of companies using Lean Principles will increase most in smaller companies.

The use of Balanced Scorecards and 6-sigma will increase in all size ranges.

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3.2.2. Structural forms today (2010) and in the future (2015)

In the following figures (25 to 27) show the structural forms of the companies today (2010) and in the

future (2015). The given results were obtained when the representatives of the companies were asked

to answer the following questions “Which type of organization structure does your company have today

and will have in the future?” Each respondent was given the opportunity several appropriate answers

from the presented options (hierarchical structure, structure based on product families, etc.). The

horizontal axis of the chart indicated the number of companies that chose the given structural form.

The majority of the companies have hierarchical structures, but in the future the number of such

companies will decrease.

Figure 25. The structural forms of the companies in 2010 and 2015

Figure 25 shows the structural forms of the Estonian and Finnish companies in 2010 and 2015.

Currently, companies with hierarchical structures are predominant among the companies, but by 2015,

they should decline about almost half. The other structural forms are represented among the companies

relatively evenly. In the future, the hierarchical structural form should decrease (only 9 companies in

2015) and the number of other structural forms should increase somewhat. In addition, two companies

hope to implement a self-learning organizational structure.

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In 2010, a structure based on product families is also used in Finnish companies along with a

hierarchical structure.

Figure 26. Structural form in Estonian and Finnish companies in 2010.

Figure 26 shows the structural forms in the Estonian and Finnish companies in 2010. The biggest

difference is that structures based on product families are only implemented in Finland. Hierarchical

structures are the most popular in the companies in both countries and the remaining structural forms

are distributed quite evenly by country.

By 2015, the use of structures based on product families will increase in the Finnish companies

and the use of project-based structures will increase in the Estonian companies.

Figure 27. Structural forms in Estonian and Finnish companies in 2015.

Figure 27 shows the structural forms in the Estonian and Finnish companies in 2015. The biggest

difference between Estonia and Finland is that structures based on product families are still planned

only for implementation in Finland, while project-based structures predominate in Estonia. In the time

comparison, it is worth noting that there are plans to reduce the use of hierarchical structures in both

countries. Compared to 2010, the greatest increase in Estonia is in the use of project-based structures,

while in Finland, the use of structures based on product families will increase somewhat.

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3.2.3. Frequency of the changes made in the structure and operations

The following figures (28 to 30) show the frequency of the changes made in the companies’ structures

and operations. To make the determination, the representatives of the companies were asked to answer

the following question. “How often do you make changes in your company’s structure and operations?”

The respondents were asked to choose one of the presented options (after less than six months, after

six months to a year, etc.). The horizontal axis of the chart indicates the frequency which option the

company chose.

Changes in the companies’ operations are made more often than in the structure.

Figure 28. Frequency of the changes made in the companies’ operations and structure.

Figure 28 shows the frequency of the changes made in all the companies. The changes made in

operations and management structures have been differentiated. The figure shows that changes in

operations are made more often – about two-thirds of the sample companies made these changes more

frequently than every two years. Changes in processes are made somewhat less frequently.

Estonian companies change their operations more often than Finnish companies.

Figure 29. Frequency of the changes in operations made in Estonian and Finnish companies

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About two-thirds of the Finnish companies change their operations every three years or even less

frequently. All the Estonian companies change their operations every two years or even more

frequently.

The Estonian companies change their structure more often the Finnish companies.

Figure 30. Frequency of the changes made in the structure in Estonian and Finnish companies.

The same trend is apparent in regard to structure – almost two-thirds of the Finnish companies change

their structures every three years or even less frequently. All the Estonian companies change their

structures every two years or even more frequently.

In figures 31 and 32, the bars provide a comparison based on the various sized companies in the

sample (1-26 employees, etc.). In addition, the adjacent bars provide a comparison of the Estonian and

Finnish companies in the corresponding size group. The answers from all the companies in the

corresponding size group and the companies each country total 100%.

Frequency of changes in operations – larger companies in Finland make changes in operations

less frequently than smaller companies.

Figure 31. Frequency of making changes in operations in various size Estonian and Finnish companies

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In the comparison between the various size groups, the chart shows that in Estonia companies with

99 or less employees change their operations more frequently. As anticipated, in Finland smaller

companies also make changes more frequently. Surprisingly, Finnish companies with 1-26 employees

also make changes in operation less frequently than every three years.

Frequency of changes in structure – larger companies in Finland also make changes in structure

less frequently than smaller companies.

Figure 32. Frequency of making changes in structure in various size Estonian and Finnish companies

In the comparison between the various size groups, the same trend is apparent for structural

changes. In the Finnish sample, a certain connection between the size of the company and the

frequency of changes can be discerned. This is not as clearly apparent in Estonian companies.

However, it can still be stated the larger Estonian companies (100 or more employees) make changes

more often than companies that are smaller.

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3.2.4. Sources of new customers

Estonian companies deal more actively with sales, while Finnish companies rely on the

reputations of their companies to find new customers.

Figure 33. Sources of new customers for Estonian and Finnish companies.

Figure 33 shows the sources of new customers for the companies. To determine the percentages, the

representatives of the companies were asked to answer the following question: “How do you find new

customers?” Various sources were presented as options and the respondents indicated the percentage

of their turnover generated by the customers that came from the corresponding source.

The units on the horizontal axis of the chart indicate the average percentage of the turnover of all the

responding companies that was generated by customers that came from the corresponding source.

The Estonian companies assigned the highest percentages to active sales, while Finnish companies

assigned the highest percentages to reputation of the company, which caused the customers to find the

company themselves.

Another difference between the countries is that, Estonian companies also rate participation in fairs,

and finding customers on the Internet higher than Finnish companies as a way to generate turnover.

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3.2.5. Products and services developed and implemented by the companies

The Estonian companies deal more with the development of new products and services, while

the Finnish companies deal with the modification and improvement of existing products.

Figure 34.The importance of the opportunities for the development of products and services in Estonian

and Finnish companies

The Estonian companies consider the development of existing products to be most important, but they

consider the addition of new products into the product range, the creation of totally new products and

introducing new products to new markets to be more important than Finnish companies do. However,

Finnish companies consider the development of existing products and constant improvement of

existing products to be more important than Estonian companies do.

Smaller companies deal more with the improvement of existing products, while larger

companies deal more with the development of new products.

Figure 35. The importance of the opportunities for the development of products and services in various

sized companies.

Figure 35 shows the results of the examination of new products and serviced based on the following

question: “Which products or services are developed and implemented by your company?” The

respondents were provided with the possibilities shown in figure 35 (new products and services for new

markets, totally new products, etc.) and asked to assess how they feel each option is on a scale of 1 to

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5. When the data was analysed, the answers given on a scale of 1 to 5 were transformed to a scale of

0 to 100.

The companies with 1 to 26 employees considered the addition to, modification and improvement of

existing products to be the most important. Companies with 27 to 99 employees placed great

importance on the development, modification and improvement of existing products and services.

Companies with over 100 employees also considered the addition to, modification and improvement of

existing products to be most important, but compared to the others, they gave a significantly higher

rating to introducing new products and services to new markets.

3.2.6. Summary of the management of the companies

In regard to changes and developments at the companies, the following were examined: the use of

management techniques and possible changes therein, the structural forms of the companies today

and in the future, frequency of making changes, finding sources for new customers, and the

development of goods and services.

House rules and the ISO 9001 standard are the main management techniques used by the Estonian

and Finnish companies. By 2015, the companies plan to increase the use of Lean Principles, Balanced

Scorecards and 6-sigma. All the various sizes of companies plan to increase the use of Balanced

Scorecards and 6-sigma in the future. Companies with less than 26 employees plan to increase the use

of Lean Principles.

Today, the companies’ structural forms are predominantly hierarchical. However, in the future, fewer

companies plan to keep using hierarchical structural forms. By 2015, the use of structures based on

product families will increase among Finnish companies and the number Estonian companies using

project-based structures will increase.

In regard to the frequency of making changes, these are made more often in the companies’

operations and less often in their structures. Estonian companies change their operations and

structures more often than Finnish companies. The reason for the higher frequency in the Estonian

countries may be related to the fact that they are more involved with the development of new products

and services, which may in turn, be related to project-based structures.

To find new clients, Estonian companies devote more time to active sales, while Finnish companies

rely on their reputations.

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Estonian companies deal more with the development of new products and services, while the

Finnish companies spend more time on the modification and improvement of existing products.

Considering the size of the companies, it is apparent that the smaller companies deal more with the

improvement of existing products, and the large companies devote more time to the development of

new products.

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4. Companies’ technological capabilities

4.1. Manufacturing methods in use

The greatest use is made of mechanical machining on CNC equipment and welding and

assembly with conventional equipment.

Figure 36. Conventional and CNC-type manufacturing methods used in the companies

When examining manufacturing methods, the representatives of the companies were asked to indicate

the manufacturing methods used by their companies, and whether CNC or conventional equipment was

used for the given method. The horizontal axis of the chart shows the number of answers for each

manufacturing method provided by the companies. The respondents were asked to indicate all the

methods in use and their type.

The most popular was mechanical machining on CNC equipment and welding and assembly on

conventional equipment. In the comparison of CNC and conventional equipment, in the most often

mentioned fields of activity, CNC methods are used more often in mechanical machining and sheet

metal machining, and conventional methods are used in assembly, surface coating technologies,

welding and finishing technologies.

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Of the manufacturing methods in electronics, the most popular were manually executed

manufacturing methods

Figure 37. The automatically and manually executed manufacturing methods used by the companies

When examining the manufacturing methods, the representatives of the companies were asked to

indicate the manufacturing methods used by their companies and what are the technological capabilities

of the equipment (manual or automatic). The horizontal axis of the chart shows the number of answer

for each manufacturing method and type provided by the companies. Several options could be

indicated.

The most popular were manual manufacturing methods for assembly, testing and final inspection, the

composition of printed circuits and adjusting.

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4.2. Manufacturing principles in use

The companies in both countries predominantly employ the single workplace principle. The

Finnish companies also use group technology.

Figure 38. The manufacturing principles used in Estonian and Finnish companies

In regard to manufacturing principles, the representatives were asked to indicate all the manufacturing

principles in use. The horizontal axis of the chart indicated the number of companies making the

corresponding choice. The most popular was the use of single workplaces in both Estonian and Finnish

companies. The main difference is that group technology is more popular in Finland than in Estonia.

However, compared to Finland, flow manufacturing and multi-flow manufacturing is more popular in

Estonia than in Finland.

4.3. Equipment overview

Estonian companies have more conventional equipment, while Finnish companies have more

CNC machine tools.

Figure 39. Equipment used in Estonian and Finnish companies

When examining the equipment in use, the representatives of the companies were asked to indicate the

amount of the corresponding type of equipment. Conventional equipment was most popular in both

Estonian and Finnish companies, although in the sample there were 44 more pieces of equipment in

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Finnish companies than in Estonian companies. There was a significant difference in the number of

CNC machine tools – there were 140 more in Finland.

4.4. Monitoring principles in use

There are more monitoring methods used simultaneously in Finnish companies.

Figure 40. Monitoring principles used in Estonian and Finnish companies.

In order to get the results shown in figure 40, the representatives of the companies were asked to

indicate all the monitoring principles used by their companies. In both Estonian and Finnish companies,

the most popular principle in the Estonian and Finnish companies was inspection at the workplace after

the operation and the final inspection of products. The main difference between the Finnish companies

and the Estonian ones was the more frequent use of active monitoring during machine-tooling and

monitoring in the coordinate measuring machine (CMM).

Larger companies use a large variety of monitoring methods.

Figure 41. The monitoring principles used by various sized companies.

Figure 41 shows the monitoring principles used in various sized companies. As one might expect the

number of monitoring methods used increases along with the number of employees in the companies.

The only principle, which is used equally in different sized companies, is inspection at the workplace

after the operation.

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4.5. Software in use

In Finnish and Estonian companies CAD and CAD/CAM software is most popular.

Figure 42. Software used in Estonian and Finnish companies.

Figure 42 shows the software used in the companies to present and deliver product data. The horizontal

axis of the chart shows the amount of the corresponding software used the companies. The companies

in both countries primarily use CAD and CAD/CAM. Of the Estonian companies, only one uses DNC

software, which is used by six companies in Finland. In addition, four Finnish companies use virtual

manufacturing.

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4.6. Summary of the companies’ technological capabilities

In regard to the technological capabilities, the following aspects of the companies were examined: the

manufacturing methods, manufacturing principles, equipment, monitoring principles and the

presentation and delivery of product data.

The most popular is mechanical machining on CNC equipment and welding and assembly with

conventional equipment. Of the manufacturing methods in electronics, the most popular were

manually executed manufacturing methods.

In regard to manufacturing principles, in the companies of both countries the most popular in the

single workplace principle, while group technology is also used in Finland. As far as equipment, in

Estonian companies, mostly conventional equipment is used, while in Finnish companies there are

significantly more CNC machine tools.

In regard to monitoring principles, more monitoring methods are used simultaneously by Finnish

companies. The most popular in both countries is monitoring at the workplace after the operation and

the final inspection of products. Larger companies use a large variety of monitoring methods.

In Finnish and Estonian companies, CAD and CAD/CAM is most popular. In Finnish companies, the use

of DNC and virtual manufacturing is more popular.

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5. Development of products and technology

5.1. Role and objectives of innovation

Estonian and Finnish mechatronics companies deal most with product improvements and

gradual modifications.

Figure 43. Ways of dealing with innovation in Estonian and Finnish companies

Figure 43 provides the assessment of the companies’ representatives regarding the role and objectives

of innovation in their company’s strategy. To make this determination, they were asked to choose the

appropriate answers from the following options:

• Do not deal with targeted innovation.

• Innovation focuses on the improvement of products and/or gradual modification of operations.

• Focused on the development of new-generation products

• Development and implementation of new high-tech technologies

• Deal with the development of new products, operations, and technologies based on the

development of environmentally friendly technologies and the recycling of resources

Slightly less than half of the companies in both countries are focused on the improvement of products

and gradual modification.

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The companies that earn higher profits invest the most in the development of new-generation

products and the development of high-tech technologies.

Figure 44. How Estonian and Finnish companies in different profit ranges deal with innovation.

The bars on figure 44 show a comparison of companies in different profit ranges (1 to 26 employees,

etc.). In addition, on adjacent bars a comparison is provided of the Estonian and Finnish companies in

the same profit range. The answers of all the companies in each profit range and each country total

100%. In the comparison between Estonia and Finland, the most similar group of companies is the one

with profits between € 150,000 and € 400,000.

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5.2. Objectives of product development

The Estonian companies place greater importance on new product development based on

customer needs, while the improvement of existing products and expansion of the product mix

are more important for the Finnish companies.

Figure 45. The importance of the product development objectives in Estonian and Finnish companies

To make the determination regarding the product development objects, the companies were asked to

indicate the importance of each objective for their company on a scale of 1 to 5. When the data was

analyzed, the answers provided on a scale of 1 to 5 were transformed into a scale of 0 to 100.

Estonian companies consider new product development based on customer needs to be the most

important, while, Finnish companies consider the improvement or modernization of existing products

to be most important.

The greatest difference between the countries is the fact that the improvement and modernization of

existing products and the expansion of the product mix as product development objects are twice as

important in Finnish companies. Estonian companies placed much more importance on increasing the

technological nature of existing products.

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5.3. Organization of product development in the companies

Estonian companies deal with product development primarily in their own development

departments, while most Finnish companies do not have development teams or create them

temporary based on the corresponding needs.

Figure 46. Organization of product development in Estonian and Finnish companies

To make the determination about the organization of product development, the representatives of the

companies were asked to answer the following question: “How does product development occur in your

company?” The respondents were asked to indicate their answer as a percentage of relative importance

so that the answers total 100%. The average of all the percentages is shown on the horizontal axis of

the chart.

On the Estonian companies, product development occurred mostly in their own resources, for instance,

a development engineer, or product development and/or development department. A larger percentage

of Finnish companies also had their own product development department, but the answer with the next

largest percentage was the answer that the company does not have a product development department.

The main differences between the two countries were that Finnish participate in more cooperation

networks and clusters and make significantly more use of temporary development teams based on

need.

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5.4. R&D investments

Estonian companies make more investments in technological development, while Finnish

companies invest similar amounts in the development of products, technology and the

company.

Figure 47. R&D investments in Estonian and Finnish companies.

The data shown in figure 47 is compiled from the following question asked of the company

representatives: “How large are the annual R&D investments on average?” Separately, the

respondents were asked to provide an assessment of the investments for the development of products,

technology and the company. The respondents were also asked to indicate the amount of the

investment in euros and its percentage of turnover. Seven companies answered the question – four in

Estonia and three in Finland. On average, the Estonian companies invest the most in technology

development, while the Finnish companies invest evenly in technology and company development.

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5.5. Summary of the development products and technology

In the chapter on the development of products and technology, the following were examined: the role

of innovation in the company’s strategy, the objectives and organization of product development, and

R&D investments.

In regard to innovation, the Estonian and Finnish mechatronics companies place the greatest emphasis

of the improvement of products and gradual modifications. When analysing different sized companies, it

turns out that the companies earning the highest profits invest most in new-generation products and

high-tech technologies.

In regard to the objectives of product development, the Estonian companies place greater

importance on new product development based on customer needs, while the improvement of existing

products and expansion of the product mix are more important for the Finnish companies.

Estonian companies deal with product development primarily in their own development departments,

while most Finnish companies do not have development teams or create them temporary based on the

corresponding needs.

Estonian companies make more investments in technological development, while Finnish companies

invest similar amounts in the development of products, technology and the company.

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6. Personnel

6.1. System for improving labour productivity

In order to improve labour productivity, approximately two-thirds of the Estonian

mechatronics companies systematically compare the competence of their employees with the

actual needs in their organization. In Finnish companies the opportunities for increasing

labour productivity are ascertained mostly in discussion at the department level. A

programme for increasing labour productivity has been implemented at the company level in

only three Estonian and four Finnish companies.

Figure 48. Systems for improving labour productivity in Estonian and Finnish companies.

In order to determine the companies’ measures for improving labour productivity, the respondents

were asked to answer the following question: “Does your company have a system for improving

labour productivity?” Five possible answers were supplied and the respondents were asked to

indicate the appropriate answer. The units indicated on the horizontal axis of the chart show how

many companies chose the corresponding answers. In the interests of clarity, abbreviated versions of

the possible answers have been included in figure 48. The original answers included in the

questionnaire are presented in table 1.

The greatest difference between the Estonian and Finnish companies is that more Estonian

companies than Finnish companies use a systematic approach for improving labour productivity. In

Estonian companies more solutions are used simultaneously – the representatives of Estonian

companies provided a total of 21 answers regarding the existence of different systems; the

representatives of Finnish companies provided only 15 answers.

The most popular method in Estonian companies is the systematic comparison of employees’

competences with the necessary skills. Six of the Estonian companies stated that there is no direct

system for improving labour productivity in the company, but the opportunities for increasing labour

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productivity are discussed in the departments. The most frequent answer provided by Finnish

companies was that the only method is having discussions at the departmental level, and four

Finnish companies have implemented a programme for increasing productivity at the company level.

In addition, one Finnish company has indicated that it has not thought about improving labour

productivity.

Abbreviated answers on the chart:

Complete versions of the answers presented in the questionnaire:

None Have not thought about improving labour productivity

None, discussions held in departments

There is no direct system, although the departmental managers discuss the company’s/department’s strengths and weaknesses with the employees and discuss possibilities for improving productivity

Systematic comparison of employees’ competences with necessary skills.

The knowledge and skills of employees are systematically ascertained and these are compared to the necessary skills, in order to get a clear picture of the strengths and weaknesses

Systematic analysis of employees’ competences for increasing productivity

Systematic analyses are carried out on how the employees’ knowledge and skills help to increase productivity, and what are the strengths and weaknesses of the department.

Programme for increasing productivity at the company level

A system for measuring and analyzing productivity has been implemented at the department level. The results are analysed at the department level as well as comprehensively at the company level. A productivity improvement programme exists.

Table 1. Correlation between the abbreviated questions in figure 48 and the complete questions in the

questionnaire.

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6.2. Use of an objective-based management system

In Estonian companies, responsibility has mostly been delegated to departmental heads, while

Finnish companies use various management principles relatively evenly.

Figure 49. Use of objective-based management systems in Estonian and Finnish companies

In order to determine the companies’ management systems, the respondents were asked to answer

the following question: “Does your company use a system of objective-based management?” Four

possible answers were included in the questionnaire and the respondents indicated the answer that

described the situation in their company. The units indicated on the horizontal axis of the hart how

that how many companies chose the corresponding answer. In the interest of clarity, abbreviated

versions of the possible answers have been included in figure 49. The original answers included in

the questionnaire are presented in table 2.

The greatest difference between the Estonian and Finnish companies is that in more Estonian

companies than Finnish companies, a system of objective-based management is unsystematically

implemented by managers at the departmental level.

One-third of the Estonian companies employ a system of objective-based at the top management

level and three companies have developed a system implemented at the company level. In the

Finnish companies the use of the various systems is distributed more evenly. Systems

encompassing the entire company are most popular in Finland. Objective-based management

systems that encompass the entire company are implemented in almost one-third of the companies.

Not in use Objective-based management is not implemented

In use at the top management level

Objective-based management is implemented only at the top management level

Unsystematically used by managers at the departmental level

Department managers determine the main objectives and the means for achieving them in their departments, but not systematically, but based on need

System in use encompasses the entire company

A system of objective-based management has been developed along with a mechanism for analyzing the documented objectives, key indicators and achievements, which covers the entire company and has been made known

Table 2. Correlation between the abbreviated questions in figure 49 and the complete questions in the

questionnaire.

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6.3. Organization of the system for making suggestions for improvements

The mechatronics companies of both countries relatively equally use an approach wherein the

employees discuss their ideas with their direct superiors. The systems for collecting

suggestions for improvements vary somewhat more in Estonian companies.

Figure 50. Use of systems for making suggestions for improvements in Estonian and Finnish

companies.

In order to determine the systems used in companies for making suggestions for improvements, the

companies’ representatives were asked to answer the following question: “How is the system for

making suggestions for improvements organized in your company?” Five possible answers were

included in the questionnaire and the respondents were asked to choose the appropriate answer. In

the interest of clarity, abbreviated versions of the possible answers have been included in figure 50.

The original answers included in the questionnaire are presented in table 3.

An equal number of Estonian and Finnish companies lack a definite procedure for dealing with

ideas – if employees get good ideas, they tell their direct superiors. However, compared Finnish

companies, Estonian companies have more different ways of dealing with suggestions for

improvements – in four companies, a person has been assigned that deals with the suggestions, and

in two companies, an annual competition takes place to choose the best suggestion. Three Estonian

companies and four Finnish companies use a documented system for improvement suggests that is

connected to the motivation system, that is only a quarter of all the companies in the sample. Of

Finnish companies, two stated that they lacked any systematic approach.

No systematic approach exists No systematic approach exists

Employee tells his/her direct superior.

If an employee has a good idea, he/she discusses it with his/her direct superior. No procedure/system exists for handling the ideas

A person for collecting suggestions and procedure for dealing with them

A person has been assigned to coordinate the handling of improvement suggestions and a procedure has been established for dealing with the improvement suggestions

Competition to determine the best suggestion

Improvement proposals are clearly appreciated and every year a competition is organized to choose the best idea

Documented system, which is connected to a motivation system.

A documented system exists for promoting innovation by the employees and this is connected to the motivation system

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Table 3. Correlation between the abbreviated questions in figure 50 and the complete questions in the

questionnaire.

6.4. Evaluation of the value chain competences

The companies in both countries give the highest evaluation to their production competences.

In Estonian companies this was followed by R&D competences, while in Finnish companies

this was followed by selling competences.

Figure 51. Level of value chain competences in Estonian and Finnish companies

In order to evaluate the competences, the respondents were asked to answer the following question:

“How do you evaluate the situation in your company in different parts of value chain, compared to the

maximum level?” The representatives of the companies evaluated the competences in five areas of

activity on a scale of 1 to 5, in which 1 was the worse level and 5 the best level. When making the

analysis, the values assigned by the respondents were transformed into a scale of 0 – 100. The units

indicated on the horizontal axis of figure 51 show the transformed average evaluation by the

companies of each competence.

The competences of the Estonian companies that were given the highest evaluations were the

production and R&D competences. The Finnish companies give the highest evaluations to

production and selling competences.

Both Estonian and Finnish companies gave the highest evaluations to production competences. The

main difference was that Estonian companies gave the highest evaluations to R&D competences.

The Finnish companies consider themselves to be stronger than Estonian companies in regard to

selling and marketing competences. Finnish companies also gave somewhat higher assessments to

their production competences.

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6.5. Summary of personnel

In the personnel area, the systems in the companies for the improvement of labour productivity,

objective-management and making suggestions for improvements were under examination. In

addition, it was ascertained what the level of the competences are in the companies at various stages

of the value chain.

In regard to the systems for improving labour productivity, the most popular method is the

systematic comparison of employees’ competences with the necessary skills. In Finnish companies,

the most popular method for ascertaining the possibilities for increasing labour productivity is having

discussions at the departmental level. Systematic approaches are used, but only a quarter of the

companies in the sample have productivity programmes encompassing the entire company.

In regard to objective-based management, responsibility has mostly been delegated to

departmental heads. Finnish companies use various management principles relatively evenly.

Objective-based management systems that encompass the entire company are implemented in

almost one-third of the companies.

In regard to the system for making suggestions for improvements, in Estonian companies more

systems for making suggestions are employed. In most Finnish companies there is no systematic

approach. A quarter of the companies in the sample have a documented system that is connected to

the motivation system.

The evaluation of the value chain competences showed that the companies of both countries give

the highest evaluation to their production competences. In Estonian companies this was followed by

R&D competences, while in Finnish companies this was followed by selling competences.

In conclusion, it can be said that in both countries, there is room for development in the

implementation of productivity programmes at the company level, as well as documented systems for

making suggestions that are connected to motivations systems. Each of these was used by only a

quarter of the sample companies.

An interesting result is that Estonian companies give their selling competences a lower assessment

than Finnish companies. At the same time, we see from chapter 3.2.4 that sales activities are a

greater source for Estonian companies to find clients than it is for Finnish companies. In this

connection, the competences of Estonian companies apparently need further development.

The fact that Estonian companies give higher marks to their R&D competences was to be expected,

because, as it turns out from chapter 5.3, more R&D is done in-house in Estonia.

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7. Issues related to information and communication technology (ICT)

7.1. Software solutions used in the management of business operations

ERP systems are the ones used most often by companies in both countries. Finnish

companies use significantly more software solutions than Estonian companies.

Figure 52. The software solutions used for the management of business operations in Estonian and

Finnish companies.

In order to make the determination about the software solutions used in the companies to manage

their business operations, the respondents were asked to answer the following question: “Which

software solutions do you use for the management of business operations?” Four different systems

were provided as possible answers in the questionnaire. The respondents were also provided the

opportunity to add their own system and they could choose more than one answer. The units on the

horizontal axis of figure 52 indicate how many companies chose the given option.

ERP systems are the ones used most often and relatively equally, in both Estonian and Finnish

companies. Finnish companies use over twice as many software solutions as Estonian companies –

the number of answers provided by Estonian companies was 11, Finnish companies provided 23

answers.

Two Estonian companies use MRP II systems, and one company used another system, which was

not specified on the questionnaire. In addition to ERP systems, Finnish companies also use MRP I

and MRP II systems. One Finnish company also uses a PLM system, and three companies have

indicated they use other software solutions, with one company specifying the use of c900 Logica.

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7.2. Number of computerized workplaces

The number of computerized workplaces ranges from 11 to 50 in approximately half of the

sample companies.

Figure 53. The number of computerized workplaces in Estonian and Finnish companies.

In order to determine the number of computerized workplaces, the representatives of the companies

were asked to indicate the correct size range from the six that were provided on the questionnaire.

The units on the horizontal axis of the chart show how many companies have the same number of

computerized workplaces as in the given range.

In most Estonian and Finnish companies the number of computerized workplaces is between 6 and

50. Two of the Finnish companies have fewer than 6 workplaces and none of the Estonian companies

do. Two Estonian companies and three Finnish companies have more than 60 computerized

workplaces.

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7.3. Financial software in use

As of 2010, almost all the Finnish companies use data table systems. In Finland generally,

more types of financial software are used and other software is used simultaneously with data

tables systems.

Figure 54. The financial software used in Estonian and Finnish companies in 2010.

In order to determine the financial software used by the companies, the respondents were asked to

answer the following question: “Which financial software do you use today and plan to use in the

future?” Five possible answers were provided and the respondents had to indicate which software

was being used in 2010 and which they planned to be using in 2015. The respondents could choose

as many answers as they wished. The units indicated on the horizontal axis of the chart show ho

many companies chose the corresponding answer.

Figure 54 shows the financial software used by the companies as of 2010. We can see that the

Finnish companies can be differentiated most by the abundance of data tables systems they use.

The Estonian companies gave 17 positive answers, and the Finnish companies gave 25 positive

answers. Based thereon, it can be concluded that more financial software is generally used in

Finland, and in addition to data tables systems, Finnish companies simultaneously also use other

software.

In addition to data tables systems, Finnish companies also use many mid-sized ERP packages and

packages for small companies. The Estonian companies are characterized by the more even

distributed use of various financial software solutions. The use of mid-sized ERP packages, software

packages for small companies and data tables systems is relatively evenly distributed.

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In 2015, the Finnish companies plan to continue using data tables systems, while among

Estonian companies the number of users for packages for small companies and mid-sized

ERP systems should increase.

Figure 55. The financial software to be used in Estonian and Finnish companies in 2015.

Figure 55 describes the use of financial software planned in the companies for 2015. Several

appropriate answers have been indicated, if necessary, and two Estonian companies did not answer

the question.

Generally, the situation regarding the use of financial software does change much between 2010 and

2015. Finnish companies continue to be differentiated by the abundance of data tables systems and

the same number of companies will be using mid-sized ERP systems as were in 2010. Among

Estonian companies, the number of users of data tables systems should decrease and the number

of uses of packages for small companies and mid-sized ERP packages should increase.

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7.4. Computer-based functions used in production management

Finnish companies use computer-based functions in the management of more areas of

activity.

Figure 56. Use of computer-based functions in production management in Estonian and Finnish

companies

In order to make a determination about the use of computer-based functions in the companies, the

representatives of the companies were asked to answer the following question: “Which computer-

based production management functions are used in your company?” A choice of ten areas of

activity was provided. When answering, it was possible to choose more than one and, if necessary,

unnamed areas of activity could be added to the questionnaire. The units indicated on the horizontal

axis of the chart indicate how many companies chose the given option.

The greatest similarity in figure 56 is that almost all the Estonian and Finnish companies use

financial management and accounting computer-based functions. However the difference between

the companies of the two countries becomes apparent in almost all other field of activity. Estonian

companies outpace Finnish companies in the use of computer-based functions to a small extent in

only production planning and management. However, two-thirds or more of the Finnish companies

use computer-based functions in cash flow management, material flow management, supply chain

management, personnel management and product data management. Computer-based functions are

used the least in both countries for customer service and project management.

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The percentage of the use of computer-based functions for material flow management and

production data management increases in larger companies.

Figure 57. Percentages of the use of computer-based functions for production manage in various

sized companies.

Figure 57 describes the percentage of fields of activity managed by computer-based functions in

various sized companies. The number of answers in each range of companies totals 100% for that

range. The vertical axis describes the percentage in the corresponding range of companies.

The figure shows that all the fields of activity included in the questionnaire are represented in each

size range of companies. In companies with 1 to 26 employees, financial management has the

largest percentage and quality management the smallest. In companies with 27 to 99 employees,

computer-based functions are implemented the least in project management. In companies with 100

or more employees, financial management, production planning and management, and materials

flow management all have the highest percentage in regard to the use of computer-based functions.

Generally, the chart demonstrates that in larger companies, there is an increase in the use of

computer-based functions for material flow management, product data management, and to smaller

extent, cash flow management.

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7.5. Use of technology-oriented systems

The companies in both countries have used CAD and CAM systems for the longest. The

Estonian companies have used all technology-oriented systems for a shorter period of time.

Figure 58. Average time that technology-oriented systems have been in use in Estonian and Finnish

companies.

In order to evaluate the use of technology-oriented systems, the respondents were asked the

following question: “Which technology-oriented systems does your company use or plans to use?”

When answering, the respondents had to indicate how many years the system had been in use, and

in case the company planned to start using the system, when the system would be implemented.

When analyzing the answers, only those companies were taken into consideration that had indicated

how many years they had used a specific system. Based on the answers, the average number of

years that various systems have been in use was found.

The sequence of the average time that various systems have been in use in Estonian and Finnish

companies is similar. CAD systems have been in use the longest (13 Estonian and 13 Finnish

companies that answered), followed by CAM systems (11 Estonian and 10 Finnish companies), and

in both countries, the CAE systems are in third place (2 Estonian companies and 4 Finnish

companies). On average, Estonian companies have used all the given programmes for shorter

periods of time than Finnish companies. In addition to the three systems mentioned above, Finnish

companies also use CAPP and CAPM systems (2 and 3 companies respectively).

Only three companies answered the question whether and when the companies plan to start using

some other technology-oriented system. One Estonian company plans to start using CAE systems in

2014 and another company plans to start using CAPP systems in 2012. The third company plans to

start using CAPP systems in 2011 and CAPM systems in 2013.

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7.6. Number of CAD, CAM, CAE, and CAPP software users

In approximately two-thirds of the Finnish companies, two to five employees use CAD, CAM,

CAE or CAPP software, and in about one-third of the companies the number of users is more

than 11. In the majority of Estonian companies the number of software users is between two

and ten.

Figure 59. Number of CAD, CAM, CAE and CAPP software users in Estonian and Finnish companies

To assess the number of CAD, CAM, CAE and CAPP software users, the representatives of the

companies were asked to answer the following questions: “How many CAD, CAM, CAE, and CAPP

software users are there in your company?” The six possible answers were provided in the

questionnaire and the respondents had to indicate the appropriate range of numbers. The units

indicated on the horizontal axis of the chart show how many companies have users in the

corresponding range.

In the majority of Estonian companies the number of users is between two and ten. In three

companies, the number of software users is between 11 and 50. In most of the Finnish companies,

two and five employees use the given software. In five companies, the number of users is between 11

and 50.

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7.7. Summary of ICT questions

The ICT questions were used to examine the following issues: software solutions used in the

management of business operations, the number of computerized workplaces, financial software in

use, computer-based functions used in production management, use of technology-oriented systems

and the number of software users.

ERP systems are the popular software solutions used in the management of business operations in

both countries. In addition, it turns out that Finnish companies make significantly more use of software

solutions than Estonian companies do.

In half of the sample companies the number of computerized workplaces is between 11 and 50, and

in the majority it is less than 50.

As far as financial software, all the Finnish companies in the sample used data tables systems in

2010. Generally, a greater variety of financial software are used in Finland, and in addition to data tables

systems, Finnish companies use other software simultaneously with data tables systems. From the

plans for 2015, it turns out that Finnish companies plan to continue using data tables systems. The use

of software packages for small companies and mid-sized ERP systems will increase in the Estonian

companies.

The use of computer-based functions used in production management is more popular in Finland.

As expected, almost all the sample companies use them in financial management and accounting. Over

two-thirds of the Estonian companies use them for production planning and management, while two-

thirds or more of the Finnish companies use them for materials flow management, supply chain

management, cash flow management and personnel management.

As expected, the use of computer-based functions in materials flow management and product data

management increases as companies grow. Estonia has lots to learn from Finland when it comes

to the use of computer-based function in production management.

CAD and CAM systems have been used the longest in both countries. On average, the Estonian

companies have used technology-oriented systems for a shorter period of time. CAPP and CAPM

systems are used only in Finland, and here too, it is possible to learn from the better practices of

Finnish companies. Especially, since two Estonian companies have indicated that they plan to start

using CAPP and/or CAPM systems in the near future.

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8. Quality assurance and control

8.1. Quality management systems

Almost all the mechatronics companies in the sample have implemented quality management

systems based on the ISO 9001 standard. Almost half of the companies in the sample have

also brought their management systems into conformity with the ISO 14001 standard. An

interesting fact is that the same number of companies in Estonia and Finland have

implemented ISO 9001 and ISO 14001 standards.

Figure 60. Use of quality management systems in Estonian and Finnish companies

In order to assess the use of various quality management systems, the respondents were asked to

choose the systems used in their companies from the choice presented in the questionnaire. More

than one option could be chosen, and if necessary, another quality management system could be

specified. The units on the horizontal axis of the chart indicate the number of companies that chose

the given option.

The same number of Estonian and Finnish companies uses a quality management system that

conforms to the ISO 9001 standard. It is used by almost all the organizations. The ISO 14001

environmental management system is used in almost half of the organizations in the sample. The

other quality management systems mentioned in the questionnaire are used by only a few Estonian

and Finnish companies. Three Finnish companies use other quality management system standards.

They are NADCAP and AQAP 2010 “NATO certificate“.

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The larger companies use a greater variety of quality management systems.

Figure 61. Percentage of the use of quality management systems in various sized companies.

Figure 61 shows the percentages indicated by the respondents of the quality management systems

used in various sized companies. The percentages in each size range total 100% in the range. The

vertical axis describes the percentages of quality management systems in the corresponding size

range.

The figure shows that ISO 9001 and ISO 14001 are used in all companies, regardless of size. A

greater variety of quality management systems are implemented in companies with 100 or more

employee as compared to smaller companies.

Generally, based on figure 61, it can be stated that the large the number of employees in a company,

the larger the variety of quality management standards that are implemented in the organization.

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8.2. Types of control used for quality assurance

In both countries, the greatest use is made of final inspection, customer feedback and internal

control.

Figure 62. Types of control used for quality assurance in Estonian and Finnish companies

In order to evaluate the quality assurance, the representatives of the companies were asked to

answer the following question: “Which type of control does your company use for quality assurance?”

The respondents were given a choice of six differ control types and more than one answer could be

chosen. The units on the horizontal axis of the chart show the number of companies that chose the

given option.

Estonian and Finnish companies monitor customer feedback to almost the same extent and it is

executed in almost all the companies along with final inspections and internal controls. Estonian

companies make more use of internal process controls than do Finnish companies. Finnish

companies make slightly more use of RR tests, although companies in both countries make little use

of other methods.

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8.3. Key indicators

Estonian companies make the greatest use of the calculation of internal quality performance

and the monitoring of reject costs. Finnish companies tend to use the calculation of customer

reclamations (PPM), and calculations of internal quality performance.

Figure 63. Use of key indicators in Estonian and Finnish companies

For the assessment of key indicators, the representatives of the companies were asked to answer the

following question: “Which key performance indicators are used in your company?” The respondents

were given a choice of six different answers, and several options could be chosen. The units indicated

on the horizontal axis of the chart show the number of companies that chose the given option.

The Estonian companies make the greatest use of the following: the calculation of internal quality

performance, monitoring and calculation of reject costs, and the calculation of customer reclamations

or PPM. The Finnish companies make the greatest use of the following: the calculation of customer

reclamations or PPM and the calculation of internal quality performance.

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The larger companies make greater use of the calculation of customer reclamations (PPM),

and less use of the monitoring of reject costs, and the calculation of the time required for

inspection and reprocessing.

Figure 64. Percentage of the use of key indicators in various sized companies.

Figure 64 shows the percentage of the use of different key indicators in various sized companies. In

each size range, the answers totalled 100% for the range. The vertical axis shows the percentage of

key indicators in the corresponding size range.

The chart shows that many different key indicators are used in every sized company. The only

difference is the use of TPM, which is not implemented by companies with 1 to 26 employees.

Compared to the others, more companies with 100 or more employees use the calculation of

customer reclamations or PPM. Among companies with 27 to 99 employees, more use is made of

the calculation of internal quality performance, and in companies with 1 to 26 employees, the

monitoring of reject costs and the calculation of internal quality performance are used to the same

extent. Generally, it can be stated that larger companies make more use of the calculation of

customer reclamations or PPM.

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8.4. Internal process control

Internal process control is carried out in both Estonian and Finnish companies with the help of

measuring devices.

Figure 65. Methods for internal process control in Estonian and Finnish companies

In order to assess the measures for the companies’ internal process control, the respondents were

asked to answer the following question: “How is internal process control organized in your company?”

A choice of six different answers was provided and more than one answer could be chosen. The units

indicated on the horizontal axis of the chart show the number of companies that chose the given

option.

The greatest similarity occurs in the use of measuring devices by Estonian and Finnish companies.

All the Estonian companies and almost all the Finnish companies use measuring devices for the

calculation of internal quality performance. The differences are that Estonian companies make

somewhat more use than Finnish companies of Poka Yoke and control automation systems, including

visual control that was indicated by one respondent under “others”. Slightly more Finnish companies

use intelligent control.

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8.5. Use of measurement equipment

Significantly more use is made of different measurement equipment in Finnish companies

than in Estonian companies.

Figure 66. Use of measurement equipment in Estonian and Finnish companies

In order to determine the rate of the use of various measurement equipment the respondents were

asked to answer the following question: “Which measurement equipment is used in your company?”

Six different possible answers were provided and more than one answer could be chosen. The units

on the horizontal axis of the chart show the number of companies that chose the given option.

From the chart, we see that the companies of both countries primarily use masters and calibrators.

The greatest difference is that Finnish companies make greater use of all measurement equipment.

Estonian companies primarily use masters and calibrators and make the least use of 2-D and 3-D

measurement equipment. Along with masters and calibrators, almost all the Finnish companies use

specialized measurement equipment and a large number also use 1-D and 3-D measurement

equipment.

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Larger companies use a larger variety of measurement equipment.

Figure 67. Percentages related to the use of measurement equipment in various sized companies.

Figure 67 shows the percentages of the various sized companies that use measurement equipment.

The answers provided in each size range of companies total 100% in the range. The vertical axis

shows the percentage related to the type of measurement equipment.

The use of masters is most popular in companies with 1 to 26 employees. Companies with 27 to

99 employees, make the most use of calibrators. All the different types of measurement equipment,

except for 2-D measuring devices, are represented relatively evenly in companies with 100 or more

employees.

Generally, it can be stated that large companies make use of a greater variety of measurement

equipment, which is why the percentages for masters and calibrators decreases.

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8.6. Indicators being measured

Finnish companies make measurements of a greater variety of parameters.

Figure 68. Parameters being measured in Estonian and Finnish companies

In order to examine the parameters being measured by the companies, the respondents were asked

to answer the following questions: “Which indicators do you measure in your company?” Twelve

different indicators were provided as possible answers in the questionnaire and the option was

provided to specify some other unnamed parameter. The units indicated on the horizontal axis of the

chart show the number of companies that chose the given option.

Practically all the companies in both countries measure length and angle, and only one Estonian

company indicated that it did not measure angles. The greatest difference is the fact that significantly

more Finnish companies measure gears and pressure.

A large number of the Estonian companies also measure flatness and almost half also measure

cylindricality, surface roughness, threads and mass. Under “others”, one Estonian company added

the measurement of signals. Almost all the Finnish companies measure flatness and cylindricality

and threads. In the questionnaire, one of the Finnish companies indicated that it measures some

other parameter, although did not specify.

Generally, a conclusion can be drawn from figure 68 that significantly more parameters are measured

by Finnish companies than by Estonian companies.

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8.7. Calibration of measurement equipment

In the companies of both countries, the measurement equipment is calibrated primarily in-

house by their personnel and some of the measurement equipment is calibrated outside the

company.

Figure 69. Calibration of measurement equipment in Estonian and Finnish companies

In order to assess how the calibration of measurement equipment takes place in the companies, the

respondents were asked to answer the following question: “Where are your company’s measuring

instruments inspected/calibrated?” Four possible answers were provided and more than one answer

could be chosen. The units indicated on the horizontal axis of the chart show the number of

companies that chose the given option.

The complete wording of the abbreviated answer on the chart is: “Some calibrations are done by our

own personnel, some of the measuring devices are calibrated outside the company” and this is

preferred by the companies in both countries. An even number of companies in both countries

answered that daily calibration and settings are carried out in-house. There is one company in each

country where all calibration is done outside the companies. A difference between the two

countries is that there are slightly more Finnish companies that carry out all calibration in their own

calibration room. .

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8.8. Providers of calibration services

Estonian companies use more accredited calibration laboratories, while Finnish companies

use just as many unaccredited laboratories.

Figure 70. Use of providers of calibration services in Estonian and Finnish companies

In order to assess the companies’ preferences for providers of calibration services, the

representatives of the companies were asked to answer the following question: “Which providers of

external calibration services are used?” Four possible answers were provided in the questionnaire

and the opportunity was provided to add some unnamed type of service provider. More than one

answer could be given. The units indicated on the horizontal axis of the hart show the number of

companies that chose the given option.

In the companies of both countries, accredited calibration laboratories or national standard

laboratories are the most popular. Unlike Estonian companies, Finnish companies use the same

number accredited laboratories as unaccredited calibration laboratories.

Only a few Estonian companies use accredited calibration laboratories along with other service

providers. One company indicated it used another service provider, but did not specify in the

questionnaire. Finnish companies use accredited and unaccredited laboratories to almost the same

extent, and other services providers are used by few companies. One Finnish company indicated the

use of another provider but did not specify.

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8.9. Importance of accreditation in the selection of calibration services

providers

Finnish companies consider the accreditation of laboratories to more important than Estonian

companies

Figure 71. Importance of accreditation for Estonian and Finnish companies in the selection of

calibration services providers

In order to assess the importance of the accreditation of calibration laboratories, the respondent were

asked to answer the following question: “How important is accreditation as a factor when selecting a

provider of calibration services?” The importance could be assessed as follows: not important at all;

somewhat important; or very important. In addition, it was possible not to provide an assessment by

indicating the option “don’t know”. Although more then one answer could be given, this was only done

by one Finnish company (that indicated “somewhat important” and “very important” simultaneously).

The units indicated on the horizontal axis of the chart show the number of companies that indicated

the given option.

The majority of companies in both countries indicated that the accreditation of the laboratory was

somewhat important or very important. Two Estonian and two Finnish companies indicated that the

accreditation of the laboratory was not important at all. Compared to the Estonian companies, three

more Finnish companies considered the accreditation of laboratories to very important.

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8.10. Sufficiency of calibration services providers

The majority of Finnish companies are satisfied with the number of available calibration

services providers, while there is some dissatisfaction among Estonian companies.

Figure 72. Satisfaction of Estonian and Finnish companies with the availability of calibration services

providers.

The representatives of the companies were asked to answer the following question: “Are there

enough providers of calibration services?” Three possible answers were provided – there are not

enough; there are some; there are enough. In addition, it was possible not to provide an assessment

by indicating the option “don’t know”. Every respondent indicated one answer and only one Finnish

company did not answer the question. The units indicated on the horizontal axis of the chart indicate

the number of companies that chose the given option.

The chart shows that none of the Finnish companies considered the number of calibration services

providers to be insufficient, or totally sufficient. The majority of the Finnish companies thought the

number of calibration services providers is somewhat sufficient. Two Estonian companies thought

the number of service providers is insufficient and approximately two-thirds of the companies thought

the number was somewhat sufficient or totally sufficient.

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8.11. Importance of the traceability of the measurement results when choosing a

calibration services provider

Finnish companies consider the traceability of measurement results to be more important than

Estonian companies.

Figure 73. Importance of the traceability of measurement results for Estonian and Finnish companies

In order to assess the importance of the traceability of the measurement results, the respondents

were asked to answer the following question: “How important is the traceability of the measurement

results when choosing a calibration services provider?” Three possible answers were provided – not

important at all, somewhat important, and very important. The fourth option was “don’t know”. Each

company indicated one option and only one Estonian company did not answer the question. The units

on the horizontal axis of the chart show the number of companies that chose the given option.

Three Estonian companies indicated they thought the traceability of the measurement results of the

calibration services provider is unimportant. However, all the Finnish companies (except for one that

didn’t know how to answer) indicated that the traceability of the measurement results of the calibration

services provider is either somewhat or very important.

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Traceability is more important for the larger companies.

Figure 74. Importance of the traceability of the measurement results of the calibration services

provider for various sized companies.

Figure 74 shows the percentages related to the importance of the traceability of the measurement

results of the calibration services provider for various sized companies. The vertical axis indicates the

percentage for each option in each size range. The answers given in the given size range total 100%

for the range.

The figure shows that the largest number of those who consider the traceability of measurement

results to be unimportant is among companies with 1 to 26 employees. This size range also has the

largest percentage of companies that did not know how to answer the question. However, in

companies with 100 or more employees, 70% of the respondent considered the traceability of

measurement results to be very important and the remaining 30% considered it to be somewhat

important. Generally, based on this chart, one can conclude that the importance of the traceability of

measurement results increases in large companies.

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8.12. Use of Metrosert and MIKES services

The companies of both countries primarily use Metrosert and MIKES calibration services.

Figure 75. Use of national standard laboratory services by Estonian and Finnish companies

In order to determine the use of national standard laboratory services, the representatives of the

companies were asked the following question: “Which MIKES or Metrosert services has your

company used?” Nine services were provided as possible answers on the questionnaire and more

than one option could be chosen. The units indicated on the horizontal axis of the chart show how

many companies chose the given option.

The companies in both countries use the services of national standard laboratories to the greatest

extent. Estonian companies use almost all Metrosert calibration services, while almost half the Finnish

companies use MIKES calibration services. The service used least by Estonian and Finnish

companies is the creation of a calibration system, solution of measuring problems and R&D services.

One of the main differences is that Estonian companies use measuring services and

measurement process somewhat more than Finnish companies. However, Finnish companies use

training services (incl. measurement uncertainty training) and expert services somewhat more than

Estonian companies.

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8.13. Summary of quality assurance and control

In the quality assurance and control section, the following aspects were examined: quality

management systems, types of control used for quality assurance; key indicators used in the

companies; internal process control; use of measurement equipment; indicators being measured; and

the providers of calibration services, including their use sufficiency, importance of their accreditation,

and the importance of the traceability of measurement results.

The quality management systems used most often by the companies are ISO 9001 and ISO 14001

standards, whereas, as expected larger companies use a greater variety of quality management

systems.

Of the different types of control used for quality assurance, the companies in both countries used

final inspection, customer feedback and internal control to the greatest extent. In Estonia, internal

process control was the least used method. RR tests were used relatively little in both countries.

Internal process control occurred in both Estonian and Finnish companies mainly in connection with

measurement equipment.

A greater variety of measurement equipment (incl. 2-D and 3-D measurement equipment) is used in

Finnish companies; also a greater variety of measurements is made and the parameters are

sometimes more complicated than in Estonian companies. As expected, a greater variety of

measurement equipment is used in larger companies.

Estonian companies have a greater preference for accredited calibration laboratories, while Finnish

companies use the same number of accredited and unaccredited laboratories. However, at the same

time, Finnish companies consider laboratory accreditation to be more important than Estonian

companies do.

Most Finnish companies are satisfied with the number of providers of calibration services, while there

is some dissatisfaction among Estonian companies. The companies in both countries primarily use

the services of Metrosert and MIKES measurement laboratories. Of the services provided by national

standard laboratories, the companies in both countries primarily use calibration services.

Finnish companies consider the traceability of measurement results to be more important than

Estonian companies. The traceability of measurement results is also more important for large

companies.

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9. Cooperation

9.1. Participation in various forms of cooperation

Estonian companies cooperate little and have practically no experience in cluster-based or

quality-related cooperation. All Finnish companies actively cooperate.

Figure 76. Participation of Estonian and Finnish companies sin various forms of cooperation.

In order to determine the participation of the companies in various forms of cooperation, the

representatives of the companies were asked to answer the following question: “What types of

cooperation does your company participate in?” Six possible answers were provided in the

questionnaire and more than one answer could be chosen. The units on the horizontal axis of the

chart show how many companies chose the given form of cooperation.

The greatest difference that can be pointed out is the higher level of participation by Finnish

companies in various forms of cooperation. The Finnish companies checked off various forms of

cooperation 38 times while Estonian companies checked them off only 15 times. The most popular

form of cooperation among the companies of both countries was supply chains and networks of

companies.

Along with supply chains and networks of companies Estonian companies also cooperated to a

lesser extent with their group’s companies and in their industry associations. Three of the companies

stated that they do not participate in any of the forms of cooperation. Only one company participates

in cluster-based cooperation and none of the Estonian companies in the sample participate in quality

associations. All the Finnish companies participate in at least one of the given forms of cooperation.

Along with supply chains and networks of companies, the Finnish companies also participate in

cluster-based cooperation and industry associations. Three Finnish companies indicated that they

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participate in quality associations. In conclusions, it can be said that Finnish companies cooperate

more actively than Estonian companies.

Various sized Finnish companies and one large Estonian company participate in cluster-based

cooperation.

Figure 77. Percentages related to the participation in various forms of cooperation by Estonian and

Finnish companies.

Figure 77 shows the percentages related to various forms of cooperation based in various sized

companies. In the size ranges for each country, the total number of answers in each range was

considered the total for the group. For instance, six Estonian companies with 1 to 26 employees

answered the question for a total of 6 answers. Therefore, in the given bar, the six answers equal

100%. Thereafter the answers given for each form of cooperation within in each group were totalled.

For instance, of the Estonian companies with 1 to 26 employees, one company participates in an

industry association. The number of answer was divided by the total number of answers in the group

and the result is the percentage of the specific form of cooperation in this group. For instance, only

one company indicate participation in an industry association and the total number of answers in this

group was six. Therefore, the percentage of participation in industry associations is one-sixth or

16.7%.

The vertical axis on the chart indicates the percentage of participation in the various forms of

cooperation.

The greatest difference was in cluster-based cooperation – Finnish companies from all the size

ranges participate in clusters, while Estonian companies with 100 or more employee are the only

ones participating in clusters. In addition, Finnish companies with 27 to 99 employees and those with

100 or more employees participate in quality associations, while no Estonian companies participate in

quality associations. The largest percentage of Estonian companies with 1 to 26 employees

participates in supply chains and networks of companies; while the largest percentage of companies

with 27 to 99 employees is those that cooperate with companies in their group. Only companies with

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100 or more employees participate in clusters. Finnish companies of all sizes participate in clusters

and companies with 27 or more employees participate in quality associations.

Based on figure 77, it can generally be stated that the larger the company the more forms of

cooperation it participates in.

9.2. Reasons for participating in cooperation

The main reason for companies to cooperate is for the development of supply chains, but

Finnish companies also place great importance on the development of joint competences and

network manufacturing.

Figure 78. Reasons for Estonian and Finnish companies to participate in forms of cooperation.

To understand the reasons for cooperating, the respondents were asked to choose the appropriate

answers from five different options. More than one answer could be chosen. The units on the

horizontal axis of the chart indicate the number of companies that chose the various reasons.

The greatest similar in figure 78 is that the reason given by the most Estonian and Finnish

companies for cooperating is the development of supply chains. In a comparison between the two

countries, Finnish companies have indicated joint training and development of competences, as well

as network manufacturing, significantly more than Estonian companies have.

The other reasons for cooperation in Estonian companies, besides the development of supply

chains, are quite evenly represented. One Estonian company has listed the reason under “other” as

the better use of technological capacities.

Generally, it can be stated that Finnish companies place more importance than Estonian companies

on joint development and network manufacturing.

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9.3. Main cooperation partners

The main cooperation partners ranked by importance are the same for both Estonian and

Finnish mechatronics companies. The most important cooperation partners are customers

and suppliers for the companies in both countries, but Finnish companies have given them a

higher assessment than Estonian companies have.

Figure 79. Importance of cooperation partners for Estonian and Finnish companies

In order to determine the cooperation partners, the representatives of the companies were asked to

answer the following question: “Who are your company’s main cooperation partners?” The

respondents were asked to rate the five groups of partners that were provided from most important to

least important. When making the analysis, each respondent’s ranking was interpreted into an

assessment on the scale of 1 to 5, and to get the final result, the values were transformed to a scale

of 1 to 100. The units indicated on the horizontal axis of figure 79 show the average transformed

assessment of the companies for the various cooperation partners.

The greatest similarity is the ranking of the Estonian and Finnish companies’ cooperation partners.

Estonian companies rank customers and suppliers as the most important cooperation partners, but

they also rate other production companies, universities and development institutions, as well as

governmental support institutions higher than the Finnish companies do. However, the Finnish

companies are differentiated by the importance assigned to customers and suppliers by the higher

marks given to them.

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9.4. Objectives of cooperation

The companies consider the main objectives of cooperation to be increased productivity,

savings, and sharing skills and knowledge.

Figure 80. Importance of the cooperation objectives for Estonian and Finnish companies

In order to assess the cooperation objectives, the respondents were asked to answer the following

question: “What are the objectives of cooperation?” The respondents were again asked to rate the

five cooperation objectives that were provided from most important to least important. When making

the analysis, each respondent’s ranking was interpreted as it was for the previous question. The

ranking was viewed as an assessment of assessments on the scale of 1 to 5 for each separate

objective and the values were transformed to a scale of 1 to 100. The units indicated on the horizontal

axis of figure 80 show the average transformed assessment of the companies for the each

cooperation objective.

The greatest similarities of the Estonian and Finnish companies were the ranking of the cooperation

objectives. The companies in both countries ranked increasing productivity as most important, which

was followed by saving on costs with improving one’s reputation being the least important. Estonian

companies are differentiated from Finnish companies by the higher rating that they give to the

importance of exchanging information. However, Finnish companies give higher marks than Estonian

companies to increasing productivity, saving on costs and sharing skills and knowledge.

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9.5. Extent of the cooperation area

The companies in both countries cooperate mostly within their own country and the rest of

Europe.

Figure 81. Extent of the cooperation area of Estonian and Finnish companies

In order to determine the areas wherein the companies participate in cooperation, the respondents

were asked to answer the following question: “What is the extent of your company’s cooperation

area?” The respondents were asked to choose from five options and more than one option could be

chosen. The units indicated on the horizontal axis of the chart show the number of companies in the

different cooperation areas.

The greatest similarity on figure 81 is the fact that the majority of Estonian and Finnish companies

cooperate within their own countries or the rest of Europe.

The same number of Estonian companies has indicated they cooperate within their own country and

the rest of Europe. Only one Estonian company has indicated that their cooperation area includes

China, Brazil, India, Russia, Kazakhstan, Ukraine and Belarus. However there are more Finnish

companies that cooperate outside of Europe.

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Cooperation outside Europe is carried out primarily by Finnish companies with 27 to 99

employees and companies from both countries with 100 or more employees.

Figure 82. Percentages of cooperation areas for various sized Estonian and Finnish companies

Figure 82 shows the percentages of the cooperation areas by country and various sized companies.

The vertical axis shows the percentage for the area in the corresponding country or company size

range. The answers for the size ranges for the companies in each of countries total 100% for the

range.

A similarity that can be pointed out is that the cooperation area of companies with 1 to 26 employees

in both countries only extends to their own countries and the rest of Europe. Among the countries that

cooperate outside of the Europe, the only Estonian companies represented are those with 100 or

more employees. However, among the Finnish companies include companies with 27 to 99

employees that cooperate in other areas.

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9.6. Summary of cooperation

In the chapter on cooperation, the following topics were examined: participation in various forms of

cooperation; reasons for participating in cooperation; main cooperation partners; objectives of

cooperation; and the extent of the cooperation area.

Estonian companies cooperate significantly less than Finnish companies and have practically no

experience with cluster-based and quality-related cooperation. In both countries, most cooperation

takes place in supply chains and networks of companies. Of the Estonian companies, only one, with

over 100 employees, participates in a cluster, and it can be said generally, that the larger the company

the more diversified the forms of cooperation.

The primary objective of participating in cooperation is the development of supply chains, but Finnish

companies also place great importance on the development of joint competences and network

manufacturing. .

The ranking of the main cooperation partners is the same for the Estonian and Finnish mechatronics

company – the most important is cooperation with customers, this is followed by suppliers and other

production companies. In a comparison between the countries, for Finnish companies, cooperation

with customers and suppliers is most important, while for Estonian companies other types of

cooperation are also important.

The companies in both countries consider the primary objective of cooperation to be increasing

productivity, savings on costs and sharing skills and knowledge.

The companies of both countries primarily cooperate within their own countries and the rest of Europe.

Finnish companies cooperate to a small extent with partners located outside of Europe. Companies in

both countries with less than 26 workers do not cooperate outside of Europe.

Based thereon, a development opportunity that might be proposed is that cooperation for smaller

countries could be supported. Cooperation with suppliers and customers is considered to be the most

important, and therefore, more emphasis could be based on this, if it is not sufficiently good. Since the

main objectives of cooperation are increasing productivity, saving on costs and sharing skills and

knowledge, it would pay to organize initiatives directed at these objectives.

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10. Summary and conclusions of the analysis of North-Estonia and

South-Finland companies and the study of Western European

technological areas

The problems and trends that were ascertained by the analysis of the Estonian and Finnish

companies, as well as the experiences of clusters in resolved similar problems, are highlighted below.

Cluster services which there is need for based on the study of Estonian and Finnish

companies

From the study of Estonian and Finnish companies, it turned out that, on average, the

customers from the automotive industry generate the largest percentage of turnover for

Estonian mechatronics companies; and in 2010 the largest part of the turnover for the

companies in both countries earning the most profits was generated by companies in the

automotive industry.

Based thereon, it would pay to consider the initiation of cooperation with the automotive industry

cluster in the Rhone-Alps region of France. One opportunity for creating contacts might be the

Techday event organized by the automotive industry, the objective of which is to introduce the cluster

members’ capabilities related to the auto industry to local and foreign customers and subcontractors.

In the comparison between Estonian and Finnish mechatronics companies it turned out the

Estonian companies serve more small and mid-sized companies, while the Finnish companies

serve more large companies.

It also turned out that among several of the clusters that were examined a problem for a significant

number of their members is their small size, which results among other things from their limited ability

to fulfil large orders. This was resolved, for instance, by initiating development programmes for small

companies. One of the methods used in these programmes was organizational diagnostics directed at

small companies, and consulting and training based thereon. In addition, in order support small

companies in a cluster, a joint database of subcontractors and providers can be compiled and

marketed and/or the preparation of joint offers can be coordinated.

Based on the study of Estonian and Finnish companies, they forecast the increased use of

Balance Scorecards, Lean Principles and 6-sigma management techniques by 2015.

In the clusters that were examined, as far as the implementation management techniques, the

implementation of Lean Principles is primarily supported. The methods used included consulting with

companies on site, organizing seminars and training, providing opportunities for employing interns,

organizing factory visits and providing analyses of the production line.

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From the study, it turned out that by 2015 the percentage of turnover from customers in Central

and Western Europe should increase for Estonian companies, while for Finnish companies, in

addition to Central and Western Europe, the importance of the Nordic and Russian markets

should increase.

The clusters support internationalization by sharing business information monitoring and experiences,

organizing joint foreign missions, organizing thematic conferences and networking events (Techday

example) and consulting on expert activities. An interesting example of a mission directed at a specific

target market is the market mission to India organized by the French auto industry cluster, the

objective of which was to become familiar with the Indian market and its most important automotive

companies and the content of which was to visit expositions and meet with vehicle manufacturers (e.g.

Tata Motors) and parts producers, individual B2B meetings, and offering local help and logistics

packages.

In addition, it turned out that Estonian and Finnish companies participate in cooperation

primarily for the purpose of developing supply chains.

In the clusters that were examined, joint improvement projects between clients and suppliers are

organized for the purpose of developing supply chains. For instance, projects are organized for the

standardization of operations and information exchange, for the improvement of stock management,

for the standardization of packaging, and finding opportunities for joint development and production. In

one cluster, a supply chain club was established, where the clients and suppliers share good

practices. In one cluster, the involvement of the suppliers in the product planning and development

stage is promoted, by having the cluster supporting seminars, training and diagnostics on the subject.

Possible supplementary cluster services

Collection and forwarding of business information

The business information that is collected and forwarded deals primarily with the following: customer

segments, market situation (including sheltered target markets), financing opportunities, economic

news and best practices. The methods used by various clusters for forwarding business information

include newsletters, extranet, monthly industry monitoring reports, annual industry market studies, and

access to specialized databases.

Creation of networks

The purpose of creating a network in the cluster is to organize meetings between the members and

the sharing and exchange of information. The methods for creating networks in various clusters

include informational meetings, thematic workshops and seminars, meeting between cluster members

based on specific needs, factory visits, joint participation in international events, and the creation of

thematic platforms for the exchange of ideas and sharing of experiences on a given topic.

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Increasing productivity

In addition to supporting the implementation of Lean management, cluster programmes are organized

for increasing productivity which involves the following: consulting, organization of seminars, and the

monitoring of company results. Support and training is also provided to companies in connection with

the introduction of new software.

Development of human resources

The objective of human resources development in the clusters is finding and developing human

resources based on the needs of the companies. The methods for this include the determination of

fields of activity with high added value, monitoring the development of jobs, introducing the necessary

fields of activity and improving their reputations, providing training, help in the recruitment of

specialists, administration of job exchange portals and marketing activities at conventions.

Coordination of development projects

In regard to development projects, the clusters support finding project ideas, consulting, searches for

financing and partners, as well as help in the production of prototypes and making modification for the

series manufacturing of prototypes. Workshops and creative sessions are organized to find new ideas.

The feasibility of project ideas is controlled, help is provided for finding partners, project competitions

are organized and information is provided on financing opportunities.