PRODUCTION
Areas of Expertise
Sweden’s expertise are mainly concentrated in the areas of service offerings and generating innovation. In 2010 the European Commission published their Innovation Union Scoreboard, ranking Sweden as the leading country for innovation in the EU (source). Sweden’s country-profile website lists the following “The Ten Innovations You Didn’t Know Were Swedish.”
Forbes' 2013 Global 200 list included 26 Swedish companies. Their combined market value totaled approximately $500 billion with $2.26 trillion in assets and over $34 billion in profits. (source)
Of Sweden’s 5.1 million-people labor force, 71% are in services, 28% work in industry, and 1% are in agriculture (source). What physical industry and manufacturing that there is in Sweden is largely concentrated in the southern region. This is because geographically, there are more forests, natural resources, fiords, and transportation options in this area. Sweden’s supply of forestry is top in the industry and pulp / paper industry exports account for approximately 10% of world exports (source).
Secondary production includes refined petroleum oils, iron, steel, precision equipment (including telephones), chemicals, processed foods, and motor vehicles. Agriculturally, Sweden produces barley, wheat, sugar beets, meat, and milk (source).
(click map to enlarge)
This tree-map, created by Harvard Atlas of Economic Complexity, depicts Sweden’s exports by sector and proportion. Total exports account for approximately $181 billion annually, and imports account for $158 billion (source).
Labor
Sweden’s labor force has a flattened pay scale compared to Western Europe and the US, with unskilled labor being paid a proportionately closer amount to well-educated workers (source). Sweden has the lowest proportion of “low wage” workers (as defined by the EU) than any other member state, accounting for just 2.5% of their labor force compared to the EU-27’s 17% average.
Sweden ranked as the second-highest country in the EU for non-wage costs, coming in just below France. The average non-wage cost is 26.1%; Sweden rates at 31.6%. The following chart shows a wage and salary comparison among EU nations, delineating other labor costs from wage and salary (source).
As used by the graph, labor costs are costs paid out by an employer to its employees. Labor costs have three parts: gross wages/earnings (the volume of which is related to the amount of hours worked), social contributions payable by the employer, and other costs (i.e. taxes, training costs, recruitment costs, etc.). The employee's gross wages or earnings are then split up further - into taxes, social contributions paid by the employee, and finally, net earnings.
Sweden's ranking and salary distribution could potentially be attributed to the fact that, as of 2012, 98% of Swedes completed secondary school (source). Worldbank assessed Sweden’s primary school enrollment as 2% above high-income OECD nations. According to Child Trends, the following infographic displays Sweden’s workforce readiness following academia (source).
Transportation, Infrastructure and Energy
Over the last two to three decades, Sweden has regulated major industries, including public transportation, airlines, power production, and telecommunications. “Virtually no restrictions protect domestic interests or restrict foreign operations from establishing themselves locally” (Nations Encyclopedia). The government of Sweden as well as private companies have heavily invested in expanding modern transportation, industrial infrastructure, and communication networks.
Sweden has:
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84 km of natural gas pipelines
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1,439 km of expressways
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2,5052 km of navigable waterways
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12,821 km of railroad track
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163,453 km of paved highway
In 2000, Sweden completed a 16 kilometer tunnel from Malmö to Copenhagen, the capital of Denmark. The Swedish merchant fleet has over 160 ships and all major ports and harbors are equipped with modern terminals for container handling. In 1999 Norway's Schoyen Gruppen and U.S. Goldman Sachs acquired the public transit company Swebus, which holds approximately 30% market share in Sweden and employs 5,200 people. Stockholm’s subway system sold its 60% equity majority to the French CGEA Transport company.
By allowing industries to privatize, Sweden is successfully increasing industry competition to provide consumers with lower pricing and improved services. In 2000 alone, telecommunication investments accounted for 6% of GDP. In 2010 the number of ISPs was approximately 6 million with the estimated internet user population equally 8.4 million. By 2012 over 11.6 million mobile devices were on the grid in addition to 4.3 million land lines (source).
Energy production and usage per capita in Sweden is the highest of all European countries. The national electricity grid, Svenska Kraftnat, is state-run. Optimizing natural resources, 47% of power is hydro-produced and 8% is thermal. Despite a vote in 1980 to phase out nuclear energy by 2010, 45% of energy production is from nuclear plants. This is because the law is still pending in the Riksdag due to parliamentary opposition. Sweden is in the process of deregulating the electricity market to allow households to freely choose their energy supplier (source).
International Trade
In 2010, approximately 1,300 US companies had established themselves in Sweden and 600,000 Swedes were employed by foreign companies overall, with the US representing the largest individual investment. Top industries for employment included computer software or hardware, pharmaceuticals, telecom or finance. The US Department of State assessed the openness to and restrictions from foreign Investment with Sweden and concluded that Sweden has a:
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Competitive, corruption-free economy
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Stable political and macro-economic environment
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Access to technology, products, skills, and innovation
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Rapid technological adoption
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Outstanding telecommunications network
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No withholding tax on dividends, low corporate tax, and favorable holding regime
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Minimal product market regulation
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Well-trained well-educated labor force
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High degree of efficiency, trust, and transparency (ranked 4th out of 183 by Transparency International)
Union membership is declining in Sweden but still represents 71% of the labor force. Similar to other Nordic countries’ unions, unions defend generous amounts of sick leave and unemployment insurance. The National Swedish Confederation of Trade Unions (LO) is distinct from political parties and government although it maintains close ties (source).
In the World Economic Forum’s 2011-2012 report, Sweden ranked third out of 140 countries in overall competiveness and productivity (source). Sweden’s Economic Complexity Index (ECI) is 1.78978, ranking it fourth on the ECI scale (source). Trade relations between the US and Sweden are very positive. The U.S. is Sweden’s fifth largest export destination. According to the US Department of State,
"Sweden is highly dependent on exports, is strongly pro-free trade, and has one of the most internationally integrated economies in the world. The government has been expanding its export base away from the traditionally European market, seeking to grow in Asia, South America, and the United States. Combined with a well-educated labor force, outstanding telecommunications network, and a stable political environment, Sweden has become more competitive as a choice for U.S. and foreign companies establishing a presence in the Nordic region" (source).
For both importation and exporting, Sweden intentionally simplifies the process to encourage trade. They are ranked as one of the easiest countries, requiring approximately 3 documents (source).
Most raw imports are duty-free. External EU tariffs apply to industrial products from the US at an average rate of 2 – 14%, value-added tax (VAT) on food and select products is 12%, other imports have up to 25% VAT. Restrictions apply to protected agriculture segments, cars, and certain aspects of the Far East and Eastern Europe (source).
Atlas Media maintains a current database of Sweden’s import and export information with comprehensive graphical representations. The following image is a fragment of their analysis:
Legal Entities
The following agencies are responsible for quality assurance, product and service regulation, and protecting the rights and safety of Swedish citizens.
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Swedish Data Inspection Board: supervises the protection of individual privacy
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Swedish National Board for Consumer Complaints: acts as a court with the primary task of impartial examination of disputes between consumers and companies
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Swedish National Supervisory Board of Public Accountants: deals with issues concerning the approval and authorization of auditors
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Swedish National Export Credits Guarantee Board: promotes Swedish exports by issuing guarantees
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Swedish National Board of Trade: responsible for issues relating to foreign trade, the Internal Market and trade policy
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Swedac (SWEDAC): charged with making products and services safe and reliable
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Swedish National Board of Agriculture: regulates agriculture, horticulture and reindeer husbandry
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Swedish National Food Administration: regulates food quality
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Swedish National Board of Fisheries: regulates fishery activities
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The Medical Products Agency (MPA): responsible for the regulation and surveillance of the development, manufacturing and marketing of drugs and other medicinal products
Management Style
Sweden is an egalitarian society that continually seeks results and improvements. Managers are not seen as all-knowing, but believe rather that the person delegated to performing a task is the expert. Direct and explicit instructions should be avoided. Instead, advice, suggestions, and facilitation are encouraged approaches to coaching. Making unilateral decisions are important in Swedish culture and consequently this leads to elongated decision time frames and much input from members. Opinions are valued and group decisions respected. Social distance is minimal between managers and subordinates due to this open and consistent information flow. Promotion typically arises from successful management of responsibilities rather than hierarchical status.