The 2024 summer holiday season has already begun and more people will be taking theirsummer holidays very soon. The weather seems to have learned from the economic turmoil,returning from the drought and heat of spring to the normal cool and rainy early summer.However, we are used to this in Finland and there is always hope that the situation will changeagain when our summer holidays start! There are signs of improvement in the economy but itseems that the change for the better is always just a little further away. However, optimism issupported by the long-awaited first cut in the key interest rate and the return of inflation to itstarget level. Inflation in Finland was 1.5% in May and is forecast to be around 2% for 2024 as awhole. The first cut in the key interest rate and the unanimous view and expectation of the nextone in the coming months support the forecasts of increased economic activity. At the moment,however, it does not yet appear that this will have a significant impact on volumes in earlyautumn. But hopefully things will start to improve before the end of the year
The prices of raw materials and energy have clearly calmed down after the nervous jumps ofrecent years. The price level has remained more or less the same since last summer. There hasbeen some monthly variation due to different cost factors but the overall price has fluctuatedwithin a few percent. The energy supplement has remained moderate this winter, so thevariation caused by it has no longer been large. The bad news, however, is that prices seem toremain high compared to the pre-Covid era. Factories have either closed down completely orlimited production by reducing staff and shifts. In addition, stock levels have been driven downthroughout the steel supply chain. As a result, availability is not optimal and, with fluctuatingdelivery times, you have to be constantly vigilant to ensure that orders and forecasts cover your needs.
The Jame-Shaft situation follows the general trend. As last reported, the end of 2023 was veryquiet. In January, delivery volumes briefly reached a good level, as customers apparently waitedfor demand to pick up and replenish their reduced stocks. After this, demand slowed downagain, and March in particular was a big disappointment for Jame-Shaft. After that, things startedto improve again and in May the best invoicing for the current financial year was achieved. Thenit dropped again, with June billing coming in well below budget. Such constant fluctuations makeit very difficult to manage production capacity and costs. Despite the fluctuation, however, thetrend of Jame-Shaft’s order book has been somewhat upward recently.
In the financial period 1.7.2023 – 30.6.2024 we will not reach our targets and turnover will fall byabout 10%. Investments have increased our machine capacity and therefore our costs, so theresult will also be well below target. At the moment, however, the situation is reasonable andthe workers who were laid off in the spring have now all returned to work. However, there isplenty of spare capacity, so there is a good chance of responding to a potential increase in ordervolumes if only raw materials are available. Based on forecasts of a general economic recoveryand additional needs indicated by customers, we have budgeted for clear growth in the nextfinancial year. Hopefully, the forecasts are credible so that we can make full use of the additionalinvestments made.
Despite the lower turnover, our confidence in the future is strong and investments have continued. The new large multi-function lathe with robots, which was recently put into use, has been put into production quickly, and thanks to new customers and products, its load factor is already good.
The layout changes at the beginning of production caused by this investment have streamlined the beginning of production and improved the flow of production. We welcome you to visit us and see for yourself the renewed look of our factory. New investments were decided at the strategy days in May but can only be announced in more detail once negotiations with equipment suppliers are finalised.
Let’s hope that the forecasts are right and our order book continues to grow. Please be in active contact with us and anticipate any additional needs you may have in time to enable us to order the necessary raw materials.
We wish all our customers a nice and relaxing summer holiday and a successful and fruitful
autumn 2024.
Best regards,
Mika Tuunainen
Managing Director
Jameshaft Oy