In Finland, it is almost impossible to form a picture of the financial efficiency of the technical sector of municipalities from public sources, let alone compare the superiority of multi-faceted operating models. This is evident from a recent report by Taloustuktuikma.
Municipal technical works require a lot of machines, equipment, material, personnel and premises. Large amounts of capital are committed to them, but is the return on capital monitored?
The economic study investigated the scope and efficiency of the municipalities' technical sector on behalf of Suomen Yrittäki, INFRA, Koneyrittäki and Rakennusliitto. The source was the municipalities' public financial statement information and the information of the municipalities' owned infrastructure business establishments, agencies and joint stock companies to the extent that they were public.
- Even politicians find it difficult to monitor, for example, the productivity of municipal technology or to compare practices between municipalities. A diverse skein would require extensive commercial training, Research Director of Taloustukkima Pasi Holm ponders.
- Those elected in April have a responsibility to influence the matter, chairman of Suomen Yrittäjie Jyrki Mäkynen says.
Capital use and use efficiency are not monitored
In the end, it was only possible to examine the property management and procurement strategies of the municipalities on a general level. What seems to be missing the most is the control of capital use and efficiency monitoring.
The surveyed municipalities buy substances, goods and supplies for an average of 420 euros per inhabitant per year. Helsinki buys for around 800 euros. Machines and equipment are owned for an average of 116 euros per member of the municipality. In Helsinki, the figure is 290, in Vantaa 85 and in Espoo 75. The municipality's own production seems to increase material costs and increase the amount of capital tied up in machines and equipment - precisely the one whose return is usually not monitored.
- If the municipality's balance sheet is not working, it is worth considering purchasing services. It can be easier for a company to use machines and equipment efficiently, for example in infrastructure maintenance and infrastructure projects around the clock where there is demand. Different partnerships are also worthwhile. If the work is done yourself, the company form is worth it, because then the operation can be more easily compared to a private person, Holm sums up.
The repair debt must be dealt with
When social security tasks are transferred to the provinces, the municipalities can focus on their vitality. Municipal engineering has a repair debt of more than two billion euros, which requires the municipal technical services acquired by municipalities to be cost-effective.
- Municipalities must be aware of these repair debt issues, because they will not be solved by themselves. Municipalities' contracting expertise must be developed and at the same time ensure the transparency of procurement operations as well as the operations of municipal companies, vice-chairman of Koneyrittäjai Markku Suominen to call for.
Good communal technology helps to keep the area vibrant
Vitality is effectively influenced by investing in community technology and by accepting private service providers as equal partners in technical services as well.
Municipalities must develop their operating environment in such a way that it is worthwhile for both existing and new companies to locate in the municipality. The location decision is easy to make when road connections, public transport and water supply are working, and there is no repair debt in vital technical structures.
According to Jyrki Mäkynen, chairman of Suomen Yrittäjie, municipalities now have many reasons to develop the way in which technical services are produced.
- Wider access of private operators to the municipal market than at present would bring productivity gains through better organization of capital and projects. A culture of experimentation must be created in the municipalities, which enables the development of functions and thus the growth of productivity. This requires changing and flexible networks, where public and private are equal partners.
The winner will network
According to the organizations in the survey, the winner of the future will be the one that is able to manage different networks with agility, i.e. to flexibly acquire services from companies of different sizes in their own region, finding the most suitable person for each task.
- This requires market knowledge and constant dialogue with companies. The effort put into networking will be returned many times over in the taxes that the companies pay to the municipality and in the savings that can be obtained by streamlining one's own inflexible production organization, chairman of INFRA ry Nina Lindström says.
21 municipalities participated in the economic survey comparison: Espoo, Helsinki, Hämeenlinna, Joensuu, Jyväskylä, Kotka, Kouvola, Kuopio, Lahti, Lappeenranta, Mikkeli, Oulu, Pori, Rauma, Rovaniemi, Salo, Seinäjoki, Tampere, Turku, Vaasa and Vantaa.
ADDITIONAL INFORMATION:
Yrittajat.fi/kunnetin-infra-kuntoon
Jyrki Mäkynen, CEO, Suomen Yrittäjät, 0400 364 791; jyrki.makynen(a)yrittajat.fi
Nina Lindström, president, INFRA, 050 456 8122; nina.lindstrom(a)rta-yhtiot.fi
Markku Suominen, vpj , Machine entrepreneurs, 044 0794977; markku.suominen (a)koneyrittajat.fi
Pasi Holm, research director, Taloustutkimus Oy, 010 758 5212; pasi.holm(a)taloustutkimus.fi