Traditional industrial cities are facing considerable challenges in moving to the knowledge economy, and Finland’s second city of Tampere is no exception.

The city has strong traditions in forestry, textiles and mechanical engineering. Yet, its pulp and paper industry, in particular, has faced considerable competition from Asian emerging markets over the past decade. 

Nokia's fortunes

It was during the heyday of telecommunications giant Nokia that Tampere really boomed, however, with the company housing several R&D centres and plants in the city. But the fortunes of Nokia – especially its mobile devices division (which Microsoft purchased in 2014) – have waned over the past few years, which is partly why the city’s unemployment rate has reached 14%. 

“The nature of blue-collar jobs in the city has changed considerably during the past decade,” says Anne-Mari Järvelin, director of PR and partnerships at Tampere University of Technology, which has 8500 undergraduates and 1500 postgraduates. “That has created a bit of a mismatch between the skills that are available in the city and the demand. Work related to the industrial internet has now become very important to the city. The transition is reflected in the types of research programmes taking place at the university.” 

Eero Tomi, CEO of Finnish operations for US diesel engine specialist AGCO Power, says: “The city has a great industrial tradition, which nowadays is becoming more technology-oriented. Software is of growing importance in diesel engine technology and the Tampere region is knowledge-rich in that field.” 

Mr Tomi's company has invested more than €20m in expanding its diesel engine production plant in the town of Nokia near Tampere. The plant's annual production has jumped from 38,000 to 50,000 engines. 

Skills on the streets

In an odd way, Tampere has benefited from the decline in Nokia’s fortunes because a large pool of talent has been freed up as a result. Many former Nokia employees have founded their own small companies or been recruited by firms at the cutting-edge of technology, for example in mobile networks and in mobile gaming technology. 

Tampere University of Technology has also started to put more emphasis on collaboration with small and medium-sized enterprises and is developing links with thousands of smaller firms in the city. Some 70% of its students’ diplomas are completed in co-operation with local firms. As part of the work for their final thesis, many students have an internship with a company. 

“Our company’s founders studied in Tampere,” says Miika Mäkitalo, CEO of M-Files Corporation, a Tampere-based document management specialist that employs 200 engineers. “We have invested here because the pool of talent is excellent. Not only the universities but Nokia’s footprint has been very important. Half of our engineers have come from Nokia.” 

Today 10,000 people in the city work in ICT, half of them in mobile phone-related technology. Tampere has started to build an international reputation in mobile gaming and advanced networking technology, but the city has maintained its more traditional engineering tradition in a number of areas. 

“There is a lot of talk about Tampere being a mobile competencies cluster,” says Timo Hammar, executive vice-president of network-based command and control systems and information security technology supplier Insta DefSec, part of family-owned company Insta Group, based in Tampere. “However, the city has many companies that operate throughout the ICT industry. We are very happy that Intel and Microsoft have strong presences here as we can attain specific competencies from them.” 

Educational background

Insta Group has three other main subsidiaries: Insta Automation, specialising in industrial automation; Insta ILS, providing lifecycle services for the aviation industry; and Insta Innovation, which focuses on virtual technology. The firm employs 800 engineers (including 250 in the Insta DefSec division) and has built a 7500-square-metre office and industrial building in Tampere’s Sarankulma business park. 

Local businesses say the strong links between the city’s universities and industry have helped them to grow. “Tampere’s universities carry out research directly related to our work in machine efficiency and automation,” says Jorma Tirkkonen, senior vice-president at Cargotec, a Finnish company specialising in cargo-handling machinery. “They are at the vanguard of innovation and it means that we always have high-quality interns who know our business well.” 

Kalmar, a market leader in container handling equipment, port automation and services, and part of Cargotec, has developed a 20,000-square-metre technology competence centre in Tampere. This is home to six laboratories focused on mechanical and electrical testing, power lines, hydraulics, automation and new technology development. Despite being based 150 kilometres inland, Kalmar also has the world’s largest container handling automation test site at Tampere: in an area of five hectares, it tests out giant port shuttle carriers, straddle carriers and terminal tractors. In total, Kalmar has 350 engineers at the competence centre and testing site.  

Riding the wave

The fact that the Finnish Metals and Engineering Competence Cluster (Fimecc) – a leading international innovation platform that boosts co-operation between companies and research institutes – is headquartered in Tampere has also helped the city’s industry to keep abreast of emerging technologies and the latest innovation. 

A research facilitator and initiator, 70% of Fimecc's funding comes from the private sector and 30% from the public sector. Some 160 companies in the metals and engineering fields are members. “There is a strong indication that companies are entering a new wave of industrial development labelled as the Internet of Things or industrial internet,” says Fimecc CEO Dr Harri Kulmala. “Our organisation designs and manages innovation activities carried out by universities and companies at the interface of software and mechanical engineering. It explores the technologies of the future. Our work should help Tampere and Finland to be at the centre of future technological innovation.” 

Local firms say that the municipal government is proactive, listens closely to their concerns, and attempts to promote the city to foreign investors in many ways. This has helped them to weather the challenges the city has encountered during the past few years, including anaemic economic growth in the eurozone. 

“The municipality is keen to involve companies in decision-making about the city’s future,” says Veli-Pekka Vatula, Tampere site manager for mobile communications group and platform engineering group Intel Finland, part of Intel Corporation, the US computing and communication components maker, which employs 230 highly skilled engineers in Tampere. “Creative networking is very easy in a city of this size and that helps to get ideas developed and problems solved quickly.” 

Relocation incentive

Intel Finland specialises in three main areas of research: new technologies for cameras and imaging; security technology for mobile devices and networks; and reference platforms that support companies in the development of next-generation products using the latest technologies. 

Vatula cites Demola – a programme in which university students develop product and service demos together with companies under the guidance of New Factory, Finland’s leading start-up accelerator – as a good example of the municipality’s willingness to try out new ideas. 

“We help international companies to connect with local R&D partners and we provide free relocation services for companies interested in business opportunities in Tampere region,” says Petri Nykänen, a director at Tampere Region Economic Development Agency Tredea, the area’s inward investment agency. 

Tampere is overcoming the challenges of moving from the industrial age to the industrial internet age, and looks set to be at the forefront of technological innovation in Finland during the coming decade.

The costs of this report were underwritten by Tampere Region Economic Development Agency Tredea. Writing and editing were carried out independently by fDi Magazine.