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6 Economic Structure and Industrial Strengths This chapter describes the economic and industrial pattern of the region. In the first part the general structure is described in figures, while the second part gives a mixed verbal and statistical description of some selected industries in the region. |
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The Swedish and Danish economies are good compared to the economies of the other OECD countries. Both economies are developing according to a controlled path of sustainable economic growth. The inflation rate was only 2.1% in Denmark and 1.6% in Sweden in 1997. In the same year (1997), the structural balances (net government savings) in per cent of GDP were –0,1 in Denmark and 0.6 in Sweden. Real GDP increased by 3.3% in Denmark and 1.8% in Sweden from 1996 to 1997. According to the Danish business magazine "Børsens Nyhedsmagasin", October 1998, both Denmark and Sweden rank among the best performing economies in the world. Denmark ranks as no. three and Sweden as no. five. The strength of the Danish economy is foremost strong economic indicators for the above mentioned low inflation rate and public sector budget balance. However, also indicators for employment and GDP per capita are giving proof of good economic performance. The strength of the Swedish economy is especially seen within labour cost competitiveness and public sector budget balance. |
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On the basis of existing investigations of the economic life in the Oresund Region, the following sectors have been identified as strategic industrial and important supporting industries within the Oresund Region:
The following gives a brief description of the state of these sectors in the Oresund Region. |
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The Oresund Region is viewed as the largest pharmaceutical and biotechnological centre in Scandinavia and one of the strongest in Europe according to the growth potential. The total Danish pharmaceutical export in 1997 came to DKK 15.8 billion. In this year the total pharmaceutical export rose to almost 20% more than in 1996. In 1996 about 90% of the total production was exported. For Danish industry as a whole, only 60% of the production was exported. A highly developed and efficient public health service, free of charge for the population, forms the basis for the high concentration of medical companies. Most health science takes place at almost 30 public hospitals in the region, facilitated by positive attitudes to clinical trials among both staff and patients, which also mean that survey results are highly reliable and very cost effective. The region ranks as no. 3 in Europe in biotechnological and medical research only surpassed by London and Paris. The region is especially strong in allergology and endorinology/metabolism, physiology, and biomethods. It is estimated that more than 30.000 people are working in the biotech industry, including 4.000 researchers with an academic background. Swedish companies like Pharmacia & Upjohn, Astra Zeneca, Novo Nordisk, Lundbeck and Gambro are major international players. The companies in this sector generate an annual export worth USD 4 billion. New medical and biotech companies are emerging in the Oresund Region, increasing the concentration of the medical industry in the region. Both homegrown companies and subsidiaries of foreign companies, mainly from the United States, has found the localisation attractive. In 1997 a co-operation, Medicon Valley Academy, between the universities, the hospitals, and the companies in the biotech industry in the Oresund Region was established. The co-operation is partly financed by the EU, aiming at increasing the research collaboration within the field, among others. |
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In a transport perspective the region is an international hub serving the northern part of Europe and Scandinavia, both in air and road transport. However, also within sea transport the ports of the region are important in a Baltic perspective as the Baltic Sea ports serve as feeder ports for the main ports in the region. According to the European Logistics survey 1996, Denmark ranks as number 1 within logistics and distribution in Europe followed by Holland as number 2 and Sweden as number 3. The logistics index measures the efficiency within lead-time, total logistics coasts, and safety stocks. Air Traffic The most important airport in the region is without competition Copenhagen Airport, which is no. 6 according to number of passengers in Europe. In handling more than 300.000 tons of cargo and 15 million passengers yearly, Copenhagen Airport is the North European hub, and one of the major transfer airports in Europe. Copenhagen Airport has 105 daily departures (non-stop) to destinations in Europe, including Sweden and Norway, and 30 intercontinental departures (non-stop) to Tokyo, Peking, Bangkok, Hong Kong, Singapore, Pakistan, South Africa, New York, Chicago, and Seattle, among others. Below is illustrated no. of daily flights and flight time for selected destinations within Europe. Figure 6.3 - Flight time and no. of daily departures, selected destinations, 1998
Source: Copenhagen Airport. The number of passengers on international flights is given below. A major part of the passenger traffic in the airport comprises transfer and transit passengers because several air traffic companies uses Copenhagen Airport as hub in Northern Europe, including of course Scandinavian Airlines Systems, which is the largest courier company in Scandinavia. Figure 6.4 - No. of Passengers, international flights, Copenhagen Airport, 1997
Source: Copenhagen Airport. The air traffic to and from the airport is increasing rapidly. The number of international passengers has increased by 10% from 1996 to 1998. The traffic through the airport is expected to increase additionally, and consequently the capacity of the airport has been extended and will be extended additionally in pace with the growth in traffic. Copenhagen Airport is also used as North European cargo distribution centre as show in the figure below. Figure 6.5 - Cargo, Copenhagen Airport, 1997
Source: Copenhagen Airport. The turnover of cargo in Copenhagen Airport has increased rapidly during the 90’s. From 1990 to 1997 the volume has increased by 85%. According to the Copenhagen Airport itself the major advantages of the airport are
Sea Transport Within Sea transport the activities are concentrated at the three major ports in the region. Taking goods transport by rail into consideration, Trelleborg port (direct route between Sweden and Germany) also plays a significant role. Below is given data for the turnover of the three largest ports in the region. Figure 6.6 - Sea Transport 1997
Source: Statistics Denmark, Statistics Sweden, Sjöfartsverket and Port of Copenhagen. The major shipping companies with activities in the Region includes Mærsk, Lauritzen and DFDS and ASG-Gotland. But also the public owned ferry company Scandlines handles a large part of the sea transport activities in the Region. Road and rail transport The region is linked to the transEuropean rail and road network. The transport hub within road traffic is also illustrated by the major part of the international Scandinavian road traffic that passes through the Oresund Corridor. However, the development of new ferry routes both within road and rail directly between Sweden and Germany has diminished the importance of the Oresund Corridor. Despite development of alternative routes, 70% of the total Swedish exports are shipped from Scania by ship, by road, or by rail. The road transportation sector is concentrated in two areas of the Øresund Region. Partly in the Southern part of Greater Copenhagen close to the airport serving both Greater Copenhagen as well as international transports to and from the European Continent. Partly in the area of Helsingborg in Scania mainly linked to the port of Helsingborg, serving a large part of Sweden, but also international transport activities to and from the European continent are based in this northern transport centre of the region. As leading companies in the field of road transportation within the region, the following companies in the region should be mentioned: DFDS-transport, DSV – Samson-transport, DanTransport ASG, and Bilspedition. |
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It is estimated that companies within IT and Telecommunication employ approximately 30.000 persons in the region. The IT industry in the Danish part of the Oresund Region employs more than 25.000 people and represents a total turnover of DKK 36 billion. The majority of the activities in the Oresund Region are located in Greater Copenhagen. However, also Scania covers a significant part of the sector both in terms of employment and in terms of competence. The activities in Scania are mainly located in the Lund/Malmo area and the activities in this area are closely related to Lund University, to the Ideon Science, and the Technology Park, which have some 150 companies. Ericsson has two R&D centres for mobile telephony adjacent to the park. Start-ups that originated in Lund and have shown successful growth include Axis Communications, Framtidsfabriken, and Netch Technologies. On the Danish side of the Region there is a strong and long tradition for activity within this sector. The world’s first computers were installed at the premises of the Technical University of Denmark in Greater Copenhagen. The Danish forces within this sector have traditionally been in the areas of design, integration, and communication, but Denmark also has a strong programming tradition, both C++ and Turbo Pascal having been developed by Danes. Furthermore, Denmark has made a strong mark on financial management systems, developing three of the leading systems: Concorde, Navision and PPU Maconomy. Among other forces of the sector within the region (and in Denmark and Sweden as a whole), the quality of the telecommunication infrastructure, the EDI, and the competence within cellular telephones should be emphasised. The Copenhagen telecommunications infrastructure is highly developed, meaning that subscriber and transit exchange are 100% digitalized, and the annual uptime is over 99%. Likewise, Denmark is number 3 in Europe when it comes to ISDN subscriber penetration, and ISDN is available to anyone anywhere in the country. Denmark is also the European leading country in the implementation of EDIFACT-based EDI (the European EDI standard). The Danish government is actively supporting the use of EDI in public procurement. With 15 years of experience in building and operating cellular networks, and one of the world’s highest cellular penetration rates, Greater Copenhagen has a lot of experience in this field. As an example of the status of technological development, a Danish company, DanNet, has developed a technology that allows it to serve as a clearinghouse (billing NMT, GSM) for 50 countries. Another example is that the big three cellular operators (Nokia, Ericsson, and Motorola) all have software development units in Copenhagen. Lead on consumer access to media’s Finally the capacity of the population in the region according to computer access should be mentioned. With one of the greatest consumer access to the information society’s media (telephone, Television, PC) in Europe according to the Global Competitiveness Report 1998, Danish and Swedish users are very sophisticated and the workforce actually has the world’s highest computer literacy. Furthermore, Greater Copenhagen has one of the world’s highest concentrations of LANs. The market thus constitutes an ideal test market for new products aimed at the European market, considering that it is small and statistically well covered, with a highly developed infrastructure.
Food production and food processing in the region is mainly concentrated in Scania, though one of the most well known Danish food production companies, DANISCO, has its headquarters in Copenhagen. However, its activities are scattered all over Denmark and in former Eastern European countries among others. Scania has a long tradition of farming and food processing in addition to plant and animal breeding, and processing of agricultural raw material. Production of adequate packaging and distribution of agricultural goods form part of the activities within this industrial complex. Thus, one of the strengths of this sector in Scania is the complete chain from soil to table, because all links of the value chain are present in the region. Among others should be mentioned Svenska Nestlé, Procordia, Scaniamejerier, Van den Berg Foods, and PLM as examples of companies in the industrial complex.
6.3.5 Media and Graphic Industry The media and graphic industry is a strong competence field especially in Scania. With the development of computers the existing know-how within this field has contributed to the emergence of new media forms. Graphic design of World Wide Web pages for the Internet and development of multimedia products for computers are two examples of such media forms. Thus, this sector has strong links to the Information-Technology sector. On the publishing side there are among others Bokförlaget Bra Böcker, Liber, Studentlitteratur, Allers Förlag, Hemmets Journal, Bibliotekstjänst, Sydsvenska Dagbladet, and Nya Arbetet. In the graphic field there are for instance Parajett, Bongs Fabriker, Egmont, and Aller Tryck. Besides education at universities, e.g. at the newly established IT-Institute at the Lund Institute of Technology and under the auspices of AmuHadar, whose multimedia production has received international honours, there is the recently established Malmö Hacker Academy. The graphic industry in Scania is also closely related to the food industrial complex through the packaging industry. |
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Tourism activities in the Oresund Region generate an annual turnover of about DKK 20 billion and about 26.000 man-year. The tourism sector is a very important sector in the Oresund Region, and it gives a strong contribution to the foreign exchange balance. For example, about 75% of the turnover in the tourism sector in Copenhagen derived from foreign tourists in 1996. The main tourism attractions of the Oresund Region are found within culture and nature and today the tourism market in the Øresund Region includes the following segments:
Culture The Region has a culture life of high international standard foremost concentrated in the urban areas of the region with Copenhagen as the centre. Annual recurring events like "Copenhagen Jazz Festival" and "Festival of Fools" are visited by many tourists. In 1996 Copenhagen was nominated as "European Cultural City". The region’s abundantly and varied cultural supply and activity level is indicated by the numerous cultural institutions in the region: Figure 6.7 – No. of institutions in selected categories 1996
Source: "Oresundsområdet" by Chr. Wichmann Matthiessen (ed.), the Oresund Region 1998 Many resources are being allocated to the culture sector in the region. The municipalities in the region spend a high share of it budgets on culture and leisure compared to other municipalities in Denmark and Sweden. Figure 6.8 – Spendings on Cultural Activities in 1996
Soruce: "Oresundsområdet" by Chr. Wichmann Matthiessen (ed.), The Oresund Region 1998 In addition, the Government subsidises several international culture institutions in the region such as the Royal Theatre and the National Museum in Copenhagen and Stadsteatern in Malmo. For instance, in year 2000 a big culture event will take place from September to December, entitled "Kulturbro 2000". Kulturbro 2000 will be a joint Danish/Swedish manifestation including the most prominent cultural institutions on both sides of the sound. Subtitled "On the border", the theme of Kulturbro 2000 reflects the cross border nature of culture as well as the threshold of the new millennium. During the 90’s larger investments in the culture institutions have been made too; a new museum of modern art, Arken, situated in Koge Bugt Strandpark just 20 km from the centre of Copenhagen was opened in 1996. In addition, several significant culture institutions have been extended, for example the Danish Royal Library and the Danish National Museum of Art, both situated in the centre of Copenhagen. Finally, the cultural sector plays an important occupational role in the Oresund Region, also compared to other European city areas: Figure 6.9 – Employment in the cultural sector 1997
Source: "Oresundsområdet" by Chr. Wichmann Matthiessen /ed.), The Øresund Region 1998 Nature The nature in the region is unique compared to other large urban areas, especially because of the long coastline and because Sweden and Denmark have invested in environmental protection and anti-pollution for many years. Today the region represents one of the cleanest city areas in Europe because of low traffic density, low rate of environmental undesirable production, and a technological lead within noise and waste management. The Region has a long tradition for protection of nature, which dates as far back as in 1910-20. Almost 10% of the area of the region are protected as nature reserves. Both in Denmark and in Sweden the coastal areas are protected and everybody has a right to walk by the coastal line. Thus, the coastal line on both sides of the Sound offers many opportunities for leisure activities, such as sailing, diving, and angling almost all year and swimming in the summertime. The land site also offers various forms of leisure activities such as golf, wilderness experiences, camping, walking, and biking-tours, and visits to historic attractions (castles and manor houses). There are for example 80 golf courses in the Oresund Region. Congresses Copenhagen has a lead position as Congress City (no. 8 in 1997). The capacity of the Congress facilities are about 2.000 persons, however, the capacity will be expanded in year 2000 as the hotel capacity of Malmo/Lund will be included. For instance Scania Conventions Centre has a capacity of 1.000 persons and Star Hotel in Lund 900. Temperature and daylight The average temperature in July is about 17.0C and in January 0. 0C. Because of the northern location the length of the day is changing during the seasons. On the shortest day of the year in December there are almost 7 hours of daylight and on the longest day of the year in June there are 17 hours and about 30 minutes daylight.
6.3.7 The Housing and Construction Sector The Housing and Construction sector in Scania is dominated by a few large development companies including both development, contracting, planning consultancy, and building materials. Skanska AB covers about 20-25% of the market, NCC 15-20%, and PEAB about 10-12% of the market. Contrary to the Swedish part of the sector, the companies in Greater Copenhagen are more separated within each of the technical disciplines. Thus, in Denmark the sector includes producers, which in general can be characterised as small building development companies operating on an atomised market, building contractors, consulting engineers, architects, and investors. International competence in the region within this sector is especially found within consulting engineering. The three largest consulting engineering companies with home base in the Oresund Region are Danish, and they are ranked among the 20 largest consulting engineering companies in Europe and are among the 40 largest consulting engineering companies in the world according to a survey made by the Swedish Federation of Architects and Consulting Engineers in December 1998.
First of all business services is one of the largest industrial sectors with approximately 115.000 employees in the region. The 19.000 companies in the sector are mainly concentrated in Greater Copenhagen. It is estimated that 75% of the employment within this sector is related to activities in Greater Copenhagen. The sector includes activities within professional services, technical services, and operational services. Business services cannot be said to be a strategic sector itself, as it mainly operates on the national market serving companies within other industrial sectors. However, the sector plays a central role for the integration process in the region. In pace with increasing interest for business activities in the business sector as a whole, the demand for transnational business services will increase. Thus, as providers of consultancy services in the broad sense, the leading companies within the sector are more or less forced to be on the front edge of the integration process.
The retail trade sector is not said to be a strategic sector, but it is an important sector first and foremost to its size of employment with almost 73.000 employees. About 50.000 are employed on the Danish side of the Region and the remaining 23.000 on the Swedish side.
The strategic position of the financial service sector in the Oresund Region is based on the companies in the Danish part of the region, including the banks, the insurance companies, the credit institutions, the exchange agencies, and the finance and advisory companies located in the capital area. As a whole about 83.000 people are employed within the financial services. Existing investigations of this sector indicate that the Oresund Region is not viewed as one unified market by the companies within the sector. Currently, the market is divided into two separate markets, especially the market for financial products for private customers seems to be entirely separated in a Danish and a Swedish part. |