Lost jobs starting to return

Foreign investment and the increasing advantages of keeping production in Denmark sees some jobs return from Asia, but unemployment levels are expected to remain gloomy

The outflow of jobs from Denmark seems to be slowing according to numbers from Statistics Denmark and reports from the business sector.

“We have spoken to many businesses and my impression is that the outflow of jobs is flattening out,” Jan Stentoft Arlbjørn, a professor at the University of Southern Denmark, said. “I think a lot of jobs are returning to Europe and many even to Denmark.”

New numbers from Statistics Denmark suggest that one in five businesses moved jobs out of the country between 2009 and 2011, which was slightly less than during the period between 2001 and 2006.

“Lots of businesses left the country during the economic boom, both because they couldn’t find enough workers here and because salaries were substantially lower in Asia,” Arlbjørn said.

Arlbjørn added that many businesses have now realised that there are drawbacks from moving production to Asia despite the low salaries they can pay workers there. Transport costs are often higher, quality is lower and there is less security that deliveries will be made on time.

Electronics firm Kamstrup – which makes 85 percent of its sales abroad – is one of the businesses that chose to retain production in Denmark by increasing efficiency and automatization.

“It was necessary for us to keep production in Denmark because of the high level of automatization and technological development,” Kamstrup CEO Per Asmussen said. “But it has also allowed us to grow and expand our workforce. Keeping production in Denmark, rather than moving to a low income country like many other international businesses have done, was the right choice for us.”

While there are no statistics available for the number of jobs returning to Denmark, some evidence suggests the flow of jobs has started to reverse.

For example, Chinese baby nutrition firm Biostime is financing half of the cost of expanding Arla’s baby formula factory in Videbæk, west of Herning.

Once the factory is complete, the factory will provide 20,000 tonnes of formula to the Chinese business.

“The Chinese want European milk and are investing in Videbæk because we have built up many years of experience and expertise producing milk substitute,” Arla spokesperson Astrid Gade Nielsen said.

While Statistics Denmark reports that employment levels were unchanged between the third and fourth quarters of this year, large-scale lay-offs are soon expected from Dong, Vestas and Danske Bank.

According to Nykredit Markets, November saw 2,237 announced lay-offs – up from 900 last November – while unemployment is expected to rise by 15,000 by the end of 2013.