Category Archives: Economy

The long awaited railway

It was a time when roads were of bad condition and horses were used for the transportation of goods. Don’t forget that Rauma had the biggest sailing ship capacity in 1892-1898 in whole Finland! But what to ship if there was no connection to the factories?

Rauma asked government for the railway already in 1880s, but the heads of state refused to invest in such a small town. Rauma was a city of 4000 people, just like Uusikaupunki. But Pori, which received the railway connection, had over 10 000 inhabitants. Pori and Rauma have for long been competing with each other for the same projects.

Rauma’s old locomotive

Besides the funds of the road transportation, which were derived from taxing the alcohol consumption, were low those days.

As the long-awaited 47 kilometers of railroad was ready, the town’s people were in an overly festive mood hooraying on the streets of Rauma.

Rauma would not be such an important export harbor these days if the town council had not decided to take action then.

Also the training center for teachers was established in Rauma due to the positive developments in transport connections. It would otherwise have gone to Pori.

Railroad history

The first regular rail service started in the United States in 1830. The same year in England. In 1850’s in Finland.
The railway was considered expensive and not suitable for winter traffic. The government was thinking of creating a transport network through building inland river-channels instead!

Compared to horse transport, the railway was fast and efficient. The Emperor Alexander II announced that a railway had to be built from Helsinki to Hämeenlinna. So the first railway in the country was already 35 years before.

In 1868, the Riihimäe- St. Petersburg line was opened (in order to be able to bring food from Russia during the years of hunger).

Rauma was the only municipality to build its own railway

Stenius supported the construction

In 1895, Rauma received permission to build a railway and government promised to give half of the money if the town of 4000 people found the other half. That was 20 times the size of Rauma’s annual budget. It is 9.5 million euros in today’s currency.

Merchant J. L. Stenius inherited 145,000 marks in his will for the construction of the track. The city borrowed another 1 million marks in bonds. Construction went fast and the track was completed with a smaller budget due to the delay. The price of iron and steel had almost dropped by half and the interest rates on loans had also declined.

When Rauma got its 47.5 km long railway line from Rauma harbor to Kokemäe Peipohja in Pori, it started transporting both cargo and passengers. Different wagons were merged into one. Wagons were rented from the government.

Construction

There was a lack of carpenters and sometimes the work was interrupted by excessive drinking, but otherwise the work progressed quickly and great damage was avoided on site. At some point, there 1,500 employees (in the town of 4000 people!) and accommodation problems occurred. Fifty families were homeless before the winter arrived. They were accommodated in summer villas, at a cholera hospital on Syväraumankatu street and at restaurant Suoja at the harbor.

An interesting fact

For 3 years the Rauma Town Hall clock was 14 minutes behind the railway station’s clock. In 1899 the official time of Helsinki was introduced in the whole city to avoid misunderstandings. But who needs a clock anyway, haha. The first 100 years the town hall clock showed hours only.

Railway station

The Rauma railway station is as old as the railway, built in 1897. The drawings are similar to that of Oulu railway station.  
The appearance of the building is unchanged, but the interior has been changed during renovations. The city sold the building to private hands 20 years ago. The current owner is planning to build a restaurant in the old premises.

Refugee port during the war

At the beginning of the World War I in 1914, all Finnish harbors were closed except the one of Rauma! Refugees started to use this as an opportunity to escape from Russia to Western Europe and vice versa. The port in Pori, Mäntyluoto, was open for the traffic of goods only. Or was it?

I have seen pictures of nicely dressed ladies sitting on top of their hat boxes on the sandy dunes of Rauma pine forest. The first refugees were of an upper class and could pay for the housing and food to Rauma families, in money or jewelry. They travelled in VIP wagons of the train. The rest were not doing so well and helping became a burden to the citizens of Rauma.

Why the port of Rauma was not closed by the Russian decision makers? I made a quick research and came to these conclusions (you may correct):
1. It was a winter port. The sea was ice free.
2. Same railway track width as in Russia.
3. Rauma port was active in foreign trade.
4. Affordable position as a recipient of Gevle and Stockholm traffic

The shipping offices moved from Helsinki to Rauma (also the branch office of the famous butter producer Valio).

The goods for the Russian state arrived to Rauma in bad condition. It had been stored outside in Sweden and got wet on the way. It could have been an arbitrary behavior of frustrated people. Not everyone was on the Russian side. Different books give different approaches on being faithful to the Russian government and about the relationship to the German enemy. Sea marks were removed from near the port to confuse the German enemies.

In 1950 Rauma sold the railway to the state as it was economically difficult to maintain. Rauma city received 175 million marks from the sale that it used for the construction of Otankoulu schoolhouse in 1952 (the yellow building near the baseball field and the beach).

Passenger traffic

Passenger traffic on the track ended in 1988 and from then on people were taken to Kokemäe by bus. The Tampere – Pori train stops at Kokemäe.

Freight traffic is still very lively, and the track was electrified in 1997, 100 years after its establishment.

The Finnish government was recently offering four towns of Finland to participate in a short pilot project to test if there was a need for the passenger railway traffic. Rauma was unfortunately left out of the project as the research showed low interest in passenger traffic (70 000 -100 000 passengers per year would only be 10% of the full capacity; 14-20 passengers per train). The railway station would have been built somewhere close to Prisma or Citymarket, cause its old building is under private ownership and in a distant place.

Matti Vahe ja Mauri Rautavuori, the experts of the Rauma railway history, are of the opinion that the city council’s brave decision to build the railway on its own was as good as today’s city council’s decision to rescue the shipbuilding business by purchasing the premises of the shipbuilding company that closed its doors in Rauma 7 years ago. Rauma Marine Constructions has a bright future ahead with orders for about 1 billion euros for the coming 7-8 years!

So it is all connected to each other. Rauma started to flourish as it got its own railway connection! The population has grown from 4 000 to 40 000 people. Rauma is a successful industrial town.

I just wish we had more people visiting the town. A spa would be an opportunity to get people visit Rauma all year round. But it’s another topic. Enjoy the many beaches of the Rauma town while it’s still warm outside.

Top 10 taxpayers of Rauma

You were hoping to see the list of rich people, but I show you which companies paid the most income tax to Rauma budget instead.

The salaries and incomes (dividends, sale of real estate, inheritance etc) of people are public in Finland! So maybe I just bring out one name to give respect for the support he has given to the town in taxes. One of the owners of Oras, Pertti Paasikivi, made 48 times the average Rauma income. He paid 39% of his revenues to the city budget in 2017.

In Rauma, as many as eight companies paid over € 1 million in corporate taxes in 2017. The largest, Länsi-Suomen Osuuspankki, paid 5 million euros taxes. ( 3.8 mEUR a year earlier).

Rauma’s corporate income tax is 20%. It is the difference between taxable income and deductible expenses. In 2017, companies in Rauma paid 31.1 million EUR in corporate income tax. Here is the list of 10 biggest Rauma companies in terms of taxes paid.

The first one: Länsi- Suomen Osuuspankki

OP Länsi-Suomi (officially known as Länsi-Suomen Osuuspankki) is one of OP Financial Group’s largest banks and the leading bank in its business area. The bank has 6 offices and 5 meeting places in four cities and six municipalities, as well as network, mobile and telephone services. The bank has more than 142,000 customers, half of which are owner-customers. More than 200 employees.

2. Rolls-Royce OY AB / new name is KONGSBERG!

The Rauma propeller equipment business is now done under the name of Kongsberg Maritime Finland.

British Rolls-Royce sold its loss-making shipping business to Kongsberg, a Norwegian defense equipment company, for £ 500 million. Read about the merger here.

In Finland, Rolls-Royce’s shipping business includes a factory that manufactures ship propellers in Rauma, which employs some 470 people. There are also activities in Turku and Kokkola. The company employs approximately 500 people in Finland.

The business to be sold includes engines and supplies for the oil refining industry. According to the Kongsberg press release, the deal did not include Bergen engines or Rolls-Royce fleet products.

In the future, the Rolls-Royce group will focus on three sectors: civil aviation technology, defense equipment industry and energy equipment and nuclear technology. The reason for the abandonment of the Rauma mill is the poor profitability of marine technology, which is the result of a decrease in oil and gas prices. Investments in search and production vessels have also decreased. The investment in Rauma’s production facilities is nearly 60 mEUR (Kauppalehti).

In 2011, Rolls Royce brought more than half (n 16.4 mEUR) of Rauma’s corporate taxes. “The city of Rauma can thank the propeller manufacturer Rolls Royce as a true benefactor,” wrote newspaper Länsi- Suomi. Other good corporate tax payers in 2011 were Länsi-Suomen Osuuspankki, Alfa Laval Aalborg, Raumaster, Steerprop and Osuuskauppa Keula.

3. Raumaster OY

Approximately 70 per cent of Raumaster’s net sales for industrial conveyor systems come from exports. The company was founded in 1984.

Talouselämä magazine’s traditional 500 largest companies in Finland listed 8 companies from the Rauma region in 2018. Of these only one company received the perfect 10 points – the Raumaster Group. The company made EUR 8 million net profit with a turnover of EUR 115 million.

4. Forchem OY

In 2017, Forchem, a tall oil refinery in Rauma, paid a corporation tax of nearly 1.8 mEUR, a million more the previous year. The company’s net sales in 2015 were 135 mEUR and the number of employees was 45. Forchem is one of Rauma’s largest companies in terms of turnover.

5. Oras OY

Oras Group, which manufactures kitchen and bathroom fittings and valves, employs 1443 people in 20 countries. Oras Group is owned by the family company Oras Invest.

The Group has two strong brands, Oras and Hansa. The group’s headquarters are in Rauma and factories in Rauma, Burglengenfeld in Germany, Kralovice in the Czech Republic and Olesno in Poland.

The factory in Burglengenfeld in Germany will be closed soon and its production will be shifted to the Polish plant. The role of Rauma will be stronger as the production is shifted to the rest of the factories. There are about 500 employees in Finland.

Oras Group’s net sales for 2018 were 228 mEUR and operating profit was 7 mEUR. Net sales decreased by 7%. In the Nordic countries, Oras faucet products were well traded, but sales in the Hansa brand in Central Europe declined. “We lost market shares in cheaper price groups. In advanced tap products, the market share remained good in Central Europe. Demand for Oras Touchless taps is growing in Europe.”

6. LähiTapiolan Lännen Keskinäinen Vakuutusyhtiö

LähiTapiola Lännen operates in South and Central Satakunta and Vakka-Finland as a leading and financially sound insurer in home, farm and corporate insurance.

The company has 61,000 customers and 95 employees. In 2018, non-life insurance indemnities were paid to customers in the amount of EUR 724 million, an increase of 11 percent compared to the previous year. The company is the market leader in car insurance.

7. Kivikylän Kotipalvaamo OY

The turnover of Kivikylä Kotipalvaamo increased by 13% in 2017 to EUR 64 million. It was a good result in the meat business, where competition is tight. “The company was not even doing the discounts and campaigns.” In 2017, the company employed 285 people.

Since 2010, the company has been the name sponsor for the Lukko ice hall. Co-operation has given Kivikylä its national visibility.

8. Alfa Laval Aalborg OY

Alfa Laval Aalborg operates in designing and manufacturing of oil-fired boilers and exhaust gas economizers for ships as well as heat recovery systems for land-based industrial power plants but also waste heat recovery solutions for process industry.

Turnover for 2018 was 50 million euros. Rauma employs a total of 65 people.

Alfa Laval Aalborg is part of the Swedish Alfa Laval Group, but the company’s history dates back to 1964, when Uusikaupunki’s Shipyard started manufacturing boilers in Uusikaupunki. Subsequently, as a result of the acquisition, the company became the owner of the then docking company Finnyards, becoming part of Pipemasters Oy. In 1994, the product range also included heat recovery systems for power plants. The Danish company Aalborg Industries A / S acquired Pipemasters Oy in 1997. The company changed its name to Aalborg Industries Oy. As a result of the acquisition in 2011, the entire Aalborg Industries Group was transferred to Alfa Laval and thus formed the current Alfa Laval Aalborg Oy.

9. Osuuskauppa Keula

Osuuskauppa Keula runs a number of shops in Rauma. The company is owned by its 30,000 customers.

Keula’s net sales for the past year (2018) were 152 mEUR, of which operating profit was 4 mEUR. The company employs 500 people.

The company’s business areas are supermarket and specialty goods, ABC business and restaurant business. In Rauma they have one Prisma, 7 S-market shops, 9 Sale shops, Kortela ABC gas station-shop, service station Talliketo, 6 ABC-automatic gas stations, Emotion cosmetics shop, hair salon Rauman HiusPrisma, Amarillo bar-restaurant, 2 Presso cafes, PizzaBuffa, Laitilan Tupa restaurant at the Laitila gas station and Hesburger burger sales points at Prisma supermarket, ABC Kortela gas station and Laitila Business Center.

Keula’s market share in Rauma’s food trade is about 52% (2019). Rauma Prisma supermarket area will be expanded by 3000 m2. The renovation costs 10mEUR. The current Prisma of about 13,000 square meters was opened in 2007. The investment proved to be very profitable and the last long-term bank loan was disbursed in January 2019.

Keula was established 115 years ago. In 1903, Otto Palen, a man from Rauma, invited 30 craftsmen and professionals gathered at the temperance society (the association of sober people) on Kalatori market in Rauma. As a result of this unanimous meeting, the Rauma cooperative society was established. Three years later they bought on Kauppakatu the city’s most beautiful house. In 1913, the Rauma Cooperative had already 9 stores.

10. RTK Palvelu OY

RTK-Palvelu Oy is a Finnish specialist in real estate services, employing over 3,000 professionals in over 30 locations. Turnover is n 115 mEUR.
RTK Service is part of the Finnish Contineo Group, which provides nationwide cleaning, real estate and industrial services and customer-oriented personnel services. Contineo also offers sporting entertainment and a variety of restaurant and event services. The Group includes RTK-Palvelu Oy, RTK-Henkilöstöpalvelu Oy, Rauman Lukko Oy and Helmiranta Wellness and Experience Center.

The top taxpaying companies. The taxable income and the taxes they paid to Rauma city in 2017.

Rauma port

Rauma is known as Finland’s largest export port for paper. The port area belongs to the town of Rauma, but it is operated by an international port operator Euroports.

The latter employees 550 people in Rauma.

Rauma port in a nutshell:

  • Finland’s largest paper exporting port
  • Western Finland’s largest container port
  • The most important articles: Chemical and mechanical forestry industrial products, containers, project transportation and bulk goods
  • Exports and imports of about 6 million tons
  • Channel depth 12 meters!

Vessel traffic in 2018 according to the port of Rauma:

In 2018, the total traffic at the Port of Rauma was 5.84 (-1.9 %) million tons and 263 000 TEU’s (-5.5 %):
– 4.14 million tons (-1.2 %) of export goods,
-1.60 million tons (-6.4 %) of import goods
-domestic traffic of 0.09 million tons

1 158 vessels visited the port in a year ( 9 vessels less than in 2017).

Positive increases in volumes in export could be seen especially in paper and general cargo. Approximately 1/3 of Finnish paper is exported via port of Rauma. Shipments of sawn goods were less than expected, thus halting a positive growth. The most significant growth in import was in round wood.  A decrease in the export of liquids and grain and in the import of oil products, general cargo and grain could be seen.

According to Tanja Angelova, the administrative director of Port of Rauma, the overall traffic volumes and container volumes have decreased a bit in 2018. Larger vessels have though been able to enter the port thanks to the deepening of the berth.

 “Even though we are behind in volumes compared to 2017, we do believe that we can increase the amounts again in 2019. We already have all the operating conditions for this,” she wrote in a press release.

“The completion of the expansion of the container terminal was the most significant event of the year 2018 together with the start of the construction of a new expansion area.”

An old picture of the harbor from 1890 lent from the internet site vanhatkuvat.fi.

Check here which vessels are at the deck right now

UPM paper mill

I am quoting a very nice article from the paper factory’s website, which says it all about the UPM Kymmenen paper mill, the energy production and the amazing waste management that they have in cooperation with the city.

The forest industry has been the cornerstone of the Finnish town of Rauma for over 100 years. The UPM Rauma mill has an indisputable role in sustaining the vitality and appeal of this small coastal town.

Each year, tens of thousands of tourists travel to the town of Rauma on the west coast of Finland. Rauma is most famous for its historical wooden house district, called Old Rauma, which is a Unesco World Heritage site. Amidst the district’s idyllic alleyways, houses and backyards, one can still sense the spirit of a medieval town.

Despite the historical surroundings, life in Old Rauma is as modern as in the newer parts of town. For example, all Rauma’s districts use district heating produced in the UPM Rauma mill site next to the town.

The forest industry has been the main source of income in Rauma for several generations. The town’s first saw mill was established in 1912 and a pulp mill followed soon after that. Rauma’s first paper machine started production in 1969. This strong start led into one of the largest concentrations of Finnish forest industry, that at one time employed up to 4000 people. Today, the traditional mill site consists of a paper mill, pulp mill, tall oil distillation plant and a power plant, which employ altogether over 700 people.

The UPM Rauma paper mill is mainly known for its three paper machines that produce coated and uncoated magazine paper for magazines, catalogues and marketing materials.

But there is more to the mill than paper: it generates heat, treats wastewater and creates stability for the town by providing reliable employment. The mill also collaborates with various other parties and helps attract other businesses to Rauma. A stone’s throw away from the historical centre of Rauma, there is a busy exportation port waiting for new freight to be transported all around Finland.

In 2014, over 5.5 million tonnes of goods were exported. Being close to the port creates clear savings for UPM. Instead of storing paper reels in the mill, the company transports them with specially designed trucks directly to the port warehouse to be loaded onto ships. “This arrangement improves our cost efficiency and competitiveness. The less the paper reels are handled, the less they get damaged. This is very important to our customers”, says Timo Suutarla, general manager at UPM Rauma.

Providing district heating and clean water for the town

Also located in the UPM mill site is the Rauman Biovoima energy company that generates district heating for the town and acts as its partner. It ensures that the people of Rauma have heating and warm water throughout the year. Over 99% of the district heating used by the town is generated locally next to the paper mill.

The power plant is among the top users of recovered fuel in Finland. It utilises forest residue from the surrounding region, commercial and industrial packaging waste and energy waste from Rauma.

In 2013, the power plant invested in recovered fuel usage by acquiring equipment to improve the receiving, handling and storing of recovered fuels. Thanks to its investment, the plant has been able to replace almost all imported fossil fuel with renewable Finnish fuels. Using domestic fuel creates savings, thus further increasing UPM Rauma’s cost efficiency. In addition to district heating, Rauma also benefits from the mill’s wastewater treatment plant.

In addition to its own, UPM Rauma treats all wastewater produced by the town. The figures are dizzying: the plant can process 1.2 cubic meters of wastewater in a second. This means that the average annual wastewater created by one household can be treated in one minute.

oznor

Word of the exceptionally efficient wastewater treatment has reached other businesses as well. “HKScan, a large Finnish meat processing company, decided to construct their new poultry processing facility in Rauma partly because of the wastewater treatment plant”, says Suutarla.

The efficiency of the plant is demonstrated by the environmental status of the Sea of Bothnia, which has in recent years seen significant improvements. The positive change has also been widely noted among high-ranking Finnish policy makers. However, those who take most pleasure in the healthier sea are the ordinary people who have cottages or boats on the coast — and in this historical marine region, there are plenty of them.

Important wood buyer and employer

The Rauma paper mill’s annual production capacity is nearly 1 million tonnes of paper. This requires plenty of raw wood material, which is almost exclusively sourced from Finland, mainly from areas around Tampere and Turku.

cof

“Finland’s forests grow by approximately 100 million cubic metres a year. Rauma has an important role in its utilisation, as we annually use about 1 million cubic metres of the new growth”, Timo Suutarla says.

Wood sourcing has a notable effect on employment in various fields, including transport, forest planning and clearing. UPM Rauma employs 520 people directly and over four times more indirectly.

In Rauma, everybody knows somebody who works at the paper mill, and it has often provided livelihood for many generations of local families.

cof

UPM Rauma

  • Production capacity: 970,000 tonnes of paper 150,000 tonnes of fluff pulp PM4 is Finland’s largest paper machine.
  • Raw materials in paper production: Over 1.3 million cubic metres of spruce and 165,000 tonnes of pulp annually
  • Employees at the mill site: 720. Indirect employment effect of UPM Rauma: 2,100

    SOURCE: https://www.upm.com/news-and-stories/articles/2016/07/the-giant-of-rauma/

The company logo, the griffin, was designed by Hugo Simberg in 1899. It is probable that the griffin was chosen as the company logo because it represents a guardian of the northern forests. The griffin logo is the oldest continuous company logo in Finland.
UPM stands for the United Paper Mills.