EXPORTING IRISH ARCHITECTURE

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The Royal Institute of Architects of Ireland 8 Merrion Square, Dublin 2, Ireland

Tel. +353 (0)1 676 1703 Fax. + 353(0)1 662 8593 Email: [email protected]

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INTRODUCTION

In May of 2011, the decline in the level of construction activity in Ireland entered its fifth successive year. This presents a sharp contrast to the preceding seventeen year period in which unprecedented levels of economic growth saw the Irish architectural industry expand and evolve, and in doing so build a world class portfolio of contemporary Irish architecture. With little sign of a return to sustained growth, or to the levels of construction activity of the preceding decade, there is now a consensus within the architectural sector that in order to avoid further erosion of the industry, and to maintain a current portfolio of contemporary Irish architecture, long term internationalisation of the sector is essential.

The Royal Institute of Architects of Ireland (RIAI) is the support and registration body for Irish architects and Irish Architecture, and is responsible for speaking on behalf of the industry as a whole. As such the RIAI will also be responsible for coordinating any international promotional efforts carried out on the industries behalf. Developing an Irish Architectural brand and promoting that brand internationally will be a long term, strategic process, and successfully placing Ireland among other leading architectural countries will need careful consideration and planning. Before engaging in such a process, there are two questions that will need to be answered: “What is Irish Architecture and how can it be developed it as a brand?”

An initial overview of architectural branding at international level would suggest that Denmark, Finland and the Netherlands have all achieved success in developing a strong national

architectural identity, with a relatively similar geographic and economic profile to Ireland. This research was commissioned out as an exploration of these three architectural industries with a view to indentifying the relevance of their export models to the Irish architectural industry. Such an analysis will provide a starting point from which the RIAI can develop its own national brand and industry export model.

The research was carried out by the RIAI and funded by Enterprise Ireland. The methodology was developed by John Graby and Kathryn Meghen in conjunction with Dermot Reidy of Enterprise Ireland. The report itself contains three industry case studies and one campaign overview, followed by an overall comparison with Ireland and the Irish architectural industry, with conclusions and recommendations based on this comparison. The research was conducted over a three month period and included over 19 hours of face to face interviews with architectural firms, industry bodies and government agencies.

This report is intended as both an introduction to architectural branding at industry level and an outline of the current position of the brand of Irish Architecture. It should promote discussion and debate on the direction of the industry’s internationalisation process and as such is not a finalised export strategy or industry action plan. It is the first step of in a process that will require the consensus and cooperation of all stakeholders. The RIAI can only achieve this through active engagement with its members. This research will provide the basis for that discussion.

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Case Study Structure

Each case study is laid out as follows:

1. A profile of the country’s export economy

This serves to highlight the challenges and opportunities each country has in common with Irish exporters. This is followed by a brief introduction to the history of design culture and what is currently being done to promote a national design brand internationally.

2. A profile of the countries architectural sector This details characteristics such as size, structure, international experience and geographical spread. This section includes a specific focus on the architectural export sector and its relationship to the industry as a whole. Such a profile provides the basis for a comparison with the Irish architectural sector and an assessment of the relevance of other international export models to Ireland.

3. The architectural export model

This addresses the issue of brand perception and the value of the countries national brand in a global marketplace. It also details the level of external support available to the industry and the benefits of this for firms who are engaged in exporting to remote markets. Finally, the issue of funding, benchmarking and industry evaluation is addressed.

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DENMARK AT A GLANCE

Name Kingdom of Denmark

Capital Copenhagen Population 5.5 million

Area 43000 km2

Currency Danish Krone ( €1 = 7.5dkk) Language Danish

Total GDP €207 billion GDP per Capita €26,000

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1.1 ECONOMIC PROFILE

THE EXPORT ECONOMY

Denmark is a country that is similar to Ireland in size and scale. It has a population of 5.5 million and a land area that is roughly 60% of the size of the Republic of Ireland, although the Kingdom of Denmark extends to include both Greenland and the Faroe Islands. It has a balanced capitalist economy with a strong welfare state. The current Government is a centre-right coalition of Venstre, the liberal party, and the Conservative People’s Party.

Danish people enjoy a high quality of life. The welfare system allows for both universal healthcare and free education at all levels. Denmark has the lowest level of income equality in the world, the highest level of freedom of press and the second lowest level of corruption. Danish people rate themselves among the happiest in the world, and the capital city, Copenhagen, has been rated by both the Economist and by the Mercer Index as one of the top ten cities in the world in terms of quality of life.

Denmark has a highly developed export led market economy. With a total Gross Domestic Product (GDP) of €207 billon, its economy is approximately 50% bigger than that of Irelands. Allowing for purchasing power parity, GDP per capita is the same as Ireland at €26000. To fund their welfare system the Danes pay the highest taxes in the world, with 44% of the workforce paying upwards of 63% income tax. Currently VAT stands at 25% with import tax on cars at 180%.

Similar to Ireland, Denmark has a relatively low level of natural resources. However, it has a diverse economic base with a variety of established industries including iron & steel, chemicals, food processing, machinery and transportation equipment, textiles and clothing, electronics, construction, furniture and other wood products, shipbuilding and refurbishment, windmills, pharmaceuticals and medical equipment. The Danish workforce is heavily unionized with eighty percent of workers belonging to a union. The Architectural sector alone has three separate unions. Despite this, the Danish workforce is rated by the OECD as the most flexible workforce in Europe. This is due to the system of Flexicurity developed in Denmark that allows firms to hire and fire staff easily, but in return guarantees workers a high level of welfare between jobs. In addition, most unions offer employment insurance that allows members between 47 and 90 percent of their salary should they be made redundant.

A limited domestic market has meant that Denmark has long been an export orientated economy. Denmark has consistently led a healthy trade surplus and last year reported a trade balance of €697 million. The 27 EU markets account for almost 70% of total commodity exports. Germany, Sweden and the United Kingdom accounting for almost 40% of all Danish exports with Germany being the most important single market, accounting for nearly 18% of Denmark’s exports. Agriculture makes up about 20% of Danish exports with the remaining 80%

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being taken up with manufactured goods such as machinery, medical instruments, pharmaceuticals and electronics.

Although closer to mainland Europe in location, Denmark is still positioned on the European fringe and faces many of the same exporting barriers as Ireland, particularly in relation to accessing remote markets such as Asia, the Middle East and South America. Furthermore Denmark has exporting issues to contend with that Ireland does not. For example, despite high level of fluency, English is not the first language of Denmark. In addition, Denmark is a high cost country for doing business. In an increasingly globalised economy, labour costs and high taxation had a negative impact on Denmark’s international competitiveness.

THE DESIGN INDUSTRY

Design is an important facet of Danish culture. The term Danish Design refers to a simple functionalistic style that is influenced by the German Bauhaus movement. The typical characteristics of Danish Design are clean uncluttered lines, subtlety, and the use of high quality craftsmanship and materials. Danish Design reflects the Danish culture of honesty, modesty, directness and simplicity. The design industry in Denmark consists of approximately 4500 companies and had an annual turnover of €470million in 2007. As an export led economy, Denmark has had a history of promoting the importance of design as a value adding component of its exports.

The development of Danish Design as an internationally recognisable brand is somewhat organic. Its roots lie in the furniture and industrial design that emerged after World War II and became popular in the 1950’s and 60’s.

Danish Design – PH5 Lamp, Egg & Swan Chairs

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Following WW2 there was an appetite in Europe for new fresh design. This was combined with a scarcity of materials and a consumer frugality that created a market for long lasting quality goods. This contributed to the popularity of Danish furniture and the subsequent growth of the design industry. This growth was fostered within Denmark by a culture that encouraged and promoted artistic and individual expression. This era produced designers such as Hans Wegner, Arne Jacobsen, Poul Kjærholm, Poul Henningson and Verner Panton. In the 70’s and 80’s Furniture design was overtaken in popularity by industrial design, with firms like Bang and Olufsen gaining worldwide recognition for producing cutting edge design products.

The characteristics of Danish Design also followed through into Danish Architecture. The period following WWII also saw the emergence of modernism in Danish Architecture with the use of simplistic functional designs that put equal emphasis on both form and function. Indeed, the

crossover was such that many of the leading architects of the time were equally successful in other design fields including industrial and furniture design. Following on from the success of designers such as Arne Jacobson, Danish architects achieved success on an international stage, long before internationalisation of architectural firms was common place. Examples include Jorn Uztons Sydney Opera House, Henning Larsens Foreign Ministry Building in Ryiadh and Johann Otto von Spreckelsen’s Grande Arch in La Defense in Paris.

In the last five years the Danish Government has renewed its efforts to promote Danish Design in order to allow Danish products to compete in a global marketplace where they are pitted against emerging markets with lower production and labour costs. The Governments strategy for design is simple “Boost growth in the design industry and this will in turn boost growth in the rest of the corporate sector”.

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1.2 SECTOR PROFILE

THE ARCHITECTURAL SECTOR

Architecture is an established industry in Denmark. There are currently 7000 registered architects in the country, 5700 of who are economically active within the industry. This translates into a ratio 1.3 architects per 1000 population, against a European average of 0.9/1000. Of these, 4400 are employed within the private sector, with the remaining employed in public sector positions.

Industry structure

Like Ireland, the structure of the Danish architectural sector could be described as fragmented. There are approximately 762 architectural firms in Denmark and 91 percent of these employ 10 staff or less. 50 percent of firms consist of only one member of staff. At firm level the pattern of fragmentation is continued; firms themselves generally operate on a smaller local level, with 19 percent of all architects working in a branch office of a firm (against a European average of 12 percent)

Firms generally operate as single entities; 71 percent of firms do not have a formal association

with another practice, and only 7 percent have a formal association with a firm outside their own country (although this may be due to the relatively low number of exporting firms).

The industry is dominated by a relatively small number of firms. Figures for 2009 show that firms with 75+ staff represent just 1.4 percent of the total industry (by firm numbers) yet account for 26 percent of the total revenue generated. Currently the dominant architectural firms in Denmark are CF Moller, Henning Larsen Architects, 3XN, Bjarke Ingles Group and Schmidt Hammer Lassen. These firms all have 50+ employees and are currently engaged in work outside of Denmark.

Employment breakdown

The following table provides a breakdown of the industry by employee type.

Title %

Architect 52.3

Architectural Technician 18.5 Office, accounting, Admin. 7.3 Technical Assistant 4.4 Cleaning and ancillary 3.0

Other 14.5

Total 100

Denmark’s architects

Registered architects 7000 Economically active architects 5700 Architects per 1000 population 1.3 Private sector architects 4400 Public sector architects 1300

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Architectural services

The Services offered by Danish architects are the same as those offered by their Irish counterparts and cover the entire spectrum of traditional architectural design services. Planning, building design and project management service account for 77 percent of the workload of Danish architects. The remaining 33 percent is made up of ancillary services such as landscape design, interior design and feasibility studies.

Given the predominance of small firms, it may be unsurprising that the most popular market for Danish architects is private residential, which accounts for 21 percent of the sectors total workload. This figure includes renovation and refurbishment projects. However, in the past 18 months large scale residential, commercial and industrial work has all but ceased and the industry has been surviving on a substantial public investment programme.

Architectural fees

The construction sector in Denmark was worth approximately €20.5 billion. The total value of the sector for 2010 was €308 million or approximately €70,000 for each architect in private practice.

Fees in Denmark are high; it is currently the most expensive country in Europe to hire an architect. Firm principals charge on average €114 per hour or almost twice the European average. This is a serious competitive issue for Danish firms looking to export to remote low cost markets. In 2010, firms in the exporting size bracket (50+) returned approximately 6% of their total revenue as pre-tax profits. This relatively low margin leaves little room for fee reduction as a method of improving competitiveness.

Industry Value

Construction Sector Value (€) 20.5 bl Architectural Sector Value(€) 308 ml Revenue per Architect in PP (€) 70000 PH rate for a principal Architect (€) 114 % of revenue as Pre Tax Profits for

exporting firms. 6

Representation and labour laws

In Denmark, the Title of architect is not protected by law; as such there is no direct equivalent of the RIAI. There are four separate unions that represent different groups within the industry:

Association Role

Arkitekt Forbundet

represents architects working in Denmark who have a qualification from a European school.

Konstruk Torfsbundet

represents construction architects working in Denmark.

Teknisk Landsforbund

represents landscape architects working in Denmark.

Dansk Ark represents Danish architectural employers.

Since the title of architect is not protected Arkitekt Forbundet and Dansk Ark form a collective organisation of architectural academia called the Akademisk Arkitektforening. This group in effect “approves” architects and allows it members to use the title MAA.

Employment rates

Employment rates are difficult to gauge in any architectural industry, especially one consisting of so many single person firms. However, in 2009, 76

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percent of architects were currently in full time employment with a further 8 percent working part-time. In reality, the figure for unemployment may be higher as many single person firms can be still economically active without actually winning any new contracts or generating any revenue.

Figures released by Dansk Ark show that the unemployment rate for architects for the first quarter of 2011 was 7.8 percent, down from 10.3 percent for the same period last year. This figure is weighed heavily by older experienced architects. For new graduates and architects under 30 years of age, unemployment rates are around the 30 percent mark, rising as high as 44 percent at the end of the last academic year.

ARCHITECTURAL EXPORTING

In the last five years the Danish construction sector has seen a marked increase in the level of revenue generated from overseas markets. Total overseas revenue for the industry increased by 30 percent between 2006 and 2008. Overseas revenue for architects only increased by 40% for the same period. Currently overseas markets account for 25 percent of the total revenue generated by the architectural sector; a jump from 14 percent in 2009. However, this increase is partly due to the recent decline in domestic revenues as opposed to a substantial increase in overseas activities.

How many firms are currently exporting?

It is not uncommon for Danish firms to compete for jobs in neighbouring Scandinavian countries. Between Denmark, Norway, Sweden and Finland there is good physical access and infrastructure, a similar business and operating environment, low cultural barriers and a common architectural style and construction methodology. This allows firms to “export” with little or no international

management expertise or resource commitment. As a result there are a lot of smaller Danish firms that compete for jobs throughout Scandinavia on a one off, ad hoc basis.

In terms of firms working further afield, there are relatively few firms who are involved in long term strategic operations outside of Scandinavia and Germany. These firms are:

CF Moller

Henning Larsen Architects 3XN

Bjarke Ingles Group Schmidt Hammer Lassen Julian De Schmidt Architects Dissing + Weitling

What is the profile of these firms in terms of size, experience & geographical presence?

In terms of age and experience, these firms have a mixed profile. The oldest firms, Henning Larsen Architects and CF Moller have been operating since the 1950’s and have a sizeable body of completed projects. Other firms Such as Bjarke Ingles Group and Julian De Schmidt Architects have been operating since the early 2000’s and have a smaller portfolio of built works.

These firms have all been successful internationally in that they have all completed one or more high profile projects in countries outside of Denmark. The distribution of this success varies; one younger firm has only completed a large signature project in Norway, whereas some of the older firms have completed projects in regions such as the Middle East, China, India, Africa and the North America.

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While Danish exporting firms have completed international projects in a wide range of sectors, they tend to compete largely in the Cultural, Educational and Healthcare sectors. CF Moller has an extensive portfolio of healthcare projects; Henning Larsen Architects, 3XN and Schmidt Hammer Lassen have had all had success with cultural buildings such as opera houses, concert halls and museums; and almost all of the firms mentioned have had some level experience in the educational sector designing schools, universities, libraries and research facilities.

The common thread in export activities for Danish firms is their choice of export strategy. All of the firms listed above compete internationally on a high design offering. The only exception to this is Dissing + Weitling who specialise in a specific niche market of bridge design. All other firms operate in a variety of markets; design a range

building typologies and offer design expertise (as opposed to construction or technical expertise) as their primary selling point. In line with this strategy, Danish firms tend to operate in a wide geographical spread with a base office in Denmark from which the majority of the design work is done. In some cases, particularly in geographically remote regions such as Asia and North America, firms have established regional branch offices but these offices still serve considerable geographical areas. In 2010, 75% of all international income for Danish architectural firms was derived from subsidiaries or regional branch offices, although this figure does include offices established solely for the purpose of overseeing the execution of a particular project.

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1.3 INDUSTRY EXPORT MODEL

INTERNATIONAL BRAND PERCEPTION

There is no universal client perception of Danish architectural firms outside of Denmark, and perhaps unsurprisingly, the further away from Denmark firms go, the less clear that client perception is. Within Europe, clients tend to be more familiar with the concept and brand of Danish Design. However in regions such as Asia, Africa and North America, clients tend not identify with Denmark as a country, but more with Scandinavia as a region; in effect, they are not buying a into Danish brand so much as buying a Scandinavian one.

So, what is Scandinavian design? In reality this is a question that many clients who commission Danish architects cannot answer themselves. There is an association of clarity and simplicity with traditional Scandinavian architecture, but many contemporary Scandinavian buildings do not incorporate any of these elements. Today Danish, Swedish, Finnish and Norwegian designers are creating contemporary buildings that respond to their own surroundings, and to their clients own tastes, using the same materials, finishes and facades as other non Scandinavian high profile architects.

In general, clients who commission Scandinavian architecture are buying into a cultural model as opposed to a specific style of architecture or design. These clients are attracted by a low hierarchy society model, and what they perceive as a direct, honest and democratic mindset. The perception of the Scandinavian brand is not

based on architecture and design but based on the concept of the region as being a successful, progressive and positive place to live. Danish firms are not selling architecture so much as selling Scandinavia through architectural design.

This is reflected in the sectors that Danish firms compete successfully in. In international markets, they tend to be most successful in human orientated architecture – hospitals, schools, universities, cultural centres, museums and opera houses. By way of contrast, and to illustrate the point, the top international architectural firms in the commercial high rise sector are all American.

The primary selling point of Danish firms is their national and regional identity. There is a drawback to this: the firm’s success or otherwise depends largely on the popularity and perception of their country in their target market and this is something completely outside of the firms control. For example, in 2005, a leading Danish Newspaper made international headlines by printing satirical cartoons depicting the prophet Mohammad. This promoted a wave of anti Danish protest across the Muslim world. For architectural firms that were in active in the Middle East and Asia at the time this sentiment had potential to undermine their ability to compete in the region and had serious implications for their business.

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INDUSTRY SUPPORT

In terms of research, development and promotion, architecture in Denmark is generally considered a construction industry activity, as opposed to a design industry activity. However much of the government effort in promotion of the brand of Danish Design is relevant and directly beneficial to exporting architects and the Danish architectural sector as a whole.

In 2007 the Danish government developed a specific promotional policy for Danish Design. The objective of this was simple; generating growth in the design sector would provide a boost to growth in the rest of the corporate sector, particularly in the export market. This policy contained a number of initiatives:

1. Increase the scope of the Danish design centre

The Danish Design Centre is a museum in Copenhagen. It was opened with a view to building awareness of design and its economic effects among businesses, and to promote the Danish Design brand at home and abroad. The Museum houses both permanent and temporary exhibitions on Danish design and Danish designers. The centre is also responsible for implementing the Governments design promotion activities.

In 2007 the government increased the DDCs brief to include regional activities, including the provision of regional business links that would promote design to domestic companies at a local level. The centre also developed a framework for professionalism within the design sector and began linking businesses with strong growth potential to external investors. Furthermore, the centre developed targeted promotion drives aimed at specific industries not traditionally associated with design, such as food production and pharmaceuticals.

2. Increase commercial and international orientation of further education design study programmes

The main design schools in Denmark increased their commercial orientation by developing partnerships with the corporate sector and marketing their students’ competencies. Universities also established credit transfer agreements with other business schools, universities and engineering colleges to allow for a greater multidisciplinary profile within their design programs. These commercially oriented programmes were then benchmarked against the best counterparts abroad and tailored to meet corporate sector demand. To increase international presence, the schools introduced agreements with universities outside of Denmark to exchange students, tutors and researchers.

3. Strengthening the internationalisation of Danish design

Innovation centres were established in leading international research, innovation and business locations. These centres facilitate access to design environments in their respective host countries. The first of these innovation centres was opened in Silicon Valley, USA, in 2006. In addition, ‘Creative Denmark’ was established as an action group launched by the Danish Investment Agency which served to promote foreign investment in Denmark in areas such as fashion, textiles and furniture.

4. INDEX, international design week & travelling exhibitions

INDEX is an international design award sponsored by the Danish government. The theme of the award is “Design for a better Life” and it was established to promote Danish Design

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internationally. It has a prize fund of €500,000, the largest of any International design competition. INDEX is held every two years and is run in conjunction with Design week, a weeklong showcase that promotes Danish Design both to the industry and to the general public in Denmark.

It is anticipated that, following on from design week, travelling exhibitions will be organised by the Danish Design Centre in association with other relevant cultural institutions, including the Danish Architecture Centre, Danish Crafts, public authorities and the corporate sector. To date these travelling design exhibitions have not included architectural firms but there is currently plans to establish a joint marketing effort between the fashion and architecture industries.

5. Other Developments to promote design included:  Improvement of rights protection, including

design, patent and trademark rights  Development of Danish fashion zones

 Improved competencies of qualified designers in the workforce

AN ARCHITECTURAL EXPORT MODEL

Every international success by a Danish firm serves as its own advertisement for the brand of Danish Architecture. As the size of the architectural export sector is relatively small, each international success has a much greater ripple effect in promoting the sector as a whole than would be the case for larger countries such as the UK, the US or Germany. To capitalise on this the Danish export model works on two levels: firm level and industry level.

As there is a limited number of exporting firms, it is possible for institutional bodies to work closely

with the whole industry at individual firm level. By providing individual practical assistance to exporting firms, coordinating multi-firm activities and sharing information and experience, there is a positive net effect to the industry as a whole.

1. Promotion at firm level

There are three bodies involved with the international promotion of Danish architecture individual firm level: Dansk Ark, The Danish Export Association and local Danish consulates.

The body with primary responsibility for the international development of Danish architecture is Dansk Ark (see pg. 7). Dansk Ark work with their members at firm level to assist with the practicalities of internationalisation. In this way they are particularly beneficial to smaller firms or firms with less experience operating outside of Denmark. They currently have one full time employee, Peter Theibel, whose sole responsibility is the international promotion and development of Danish Architecture.

Within his role, Peters Theibel acts a central point of contact for all international Danish Architectural firms. Firms can contact him with information requests which he can then pursue with other relevant parties in the industry. For example, if a firm is considering a project in the UK but have no experience tendering in that market, Peter will contact other firms he knows that have relevant experience and seek first hand, impartial advice. In this way, it is possible to pool the collective knowledge and experience of Danish firms for the benefit of the industry as a whole.

For firms with less experience of internationalisation or firms entering new, international markets Dansk Ark, through Peter

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Theibel, provide advice on common legal and contractual issues as well as advice on local procurement issues, construction regulations, employment constraints etc. Dansk Ark will also with work with firms at an early stage to provide commercial guidance and assist with the development of international business plans, marketing strategies and value propositions. Dansk Ark has an arrangement in place with a large international accountancy firm and a large international law firm that allows Danish firms access to a hotline specifically international legal and financial queries. This service is provided free of charge.

As well as Dansk Ark, firms receive support from the Danish Export Association (DEA), an organisation similar to Enterprise Ireland. The DEA has organised a number of trade missions for architectural firms to potential growth markets. Some firms are sceptical about the value of these trade missions. However they acknowledge that even if trade missions do not produce tangible results in the form of new contracts, they do serve as positive networking opportunities that can result in new work elsewhere. Services by the DEA are provided on a fee paying basis.

At market level, local Danish consulates act as an important point of contact for firms. They can provide up to date information on local business opportunities and customs, and can act as a starting point and local facilitator for firms who have not yet established a physical presence in their country.

While these services are available to all members of Dansk Ark, for the most part, internationalisation at firm level is a process that firms enter alone. Firms tend to draw primarily on their own resources, contacts and experience

when entering new markets outside Denmark. This is particularly the case with larger firms who have already established an international presence.

That said, it is also important to note that firms with a history of independent internationalisation have been operating in what was, until recently, a relatively fertile international market. The relevance of the role of Dansk Ark as a facilitator and contact point will be strengthened in the next five to ten years as more firms begin the process of internationalisation, and the industry as a whole seeks to increase its international turnover.

2. Promotion at industry level

There are three bodies involved with the international promotion of Danish architecture individual industry level: Dansk Ark, The Danish Architectural Centre and local Danish consulates.

At industry level Dansk Ark promotes Danish architecture by targeting specific clients groups, media outlets and government departments. Initiatives are focused on key people identified within each sector. Dansk Ark do not publish or produce and general promotional material, either for client use or for internal use within the industry itself.

Last year as part of an initiative to promote Danish architecture abroad, Dansk Ark invited a group of international journalists to Copenhagen for a tour of the city and its architecture, including trips to specific high profile offices. Flights and accommodation costs were covered by Dansk Ark and the trip was part funded the Danish Government. The trip was themed “Design for a better life” and focused on the quality of life offered in Copenhagen as a result of good architecture and urban design. It was considered

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a success and Dansk Ark have organised a second trip for later this year. It will be themed “Design for better healthcare” and will showcase Denmark’s health system and recent healthcare projects.

This method of using Denmark as a showcase for Danish architecture also extends to potential client groups. Last year Dansk Ark organised a similar trip for a group of seventy potential clients from the Swedish construction sector. The showcase was considered a success and resulted in a contract for a €300 million residential project being awarded to a Danish Architectural firm. These potential clients were identified by Dansk Ark themselves in the course of their own research and business intelligence work.

Similar work has also been carried out by the Danish Architecture Centre (DAC), a communication and development centre for architecture in Copenhagen. The centre was established and funded by the ministry of culture with a brief to promote and generate awareness of architecture and urban design within the general public. Traditionally, the main focus of the DAC has been on domestic promotion of architecture, however, in 2009 the DAC organised an international showcase of Danish architecture which was exhibited at various cityscapes, international construction exhibitions and at the Danish Expo Pavilion in Shanghai in 2010. The DAC has also exhibited smaller versions of its showcase at a number of international architectural museums. This showcase is part funded by the Danish Ministry of Culture and part funded by the participating firms. Some smaller firms have found this to be a useful promotional tool, while others question its narrow focus and ability to reach potential clients. It is generally acknowledged however that, in architectural

circles at least, it is a positive step towards establishing an awareness of the Danish architectural brand.

At industry level, local Consulates also play a role in the promotion of Danish architecture abroad. In a specific example, Peter Theibel of Dansk Ark described a strong awareness of Danish Architecture in the eastern Canada. He credits this to the Danish embassy in Toronto who have carried out strong promotional work in the region and have developed the theme of “Cool Copenhagen”, a showcase that promotes Danish cultural and business.

FUNDING AND BENCHMARKING

Funding

On page 15 is a list of the agencies and initiatives that are involved with promotion of the Danish architectural and design industries. Dansk Ark has an international budget of about €70000 in addition to having one full time employee in a permanent international role. When asked about the difficulty of directing membership funds towards activities that only benefit a small number of firms, Peter Theibel pointed out that international firms represent a disproportionate number of employees and turnover. Furthermore, the budget is aimed not only at large firms, but also at engaging small firms who are not currently involved in work outside of Denmark.

In addition to the funding provided by Dansk Ark, promotional initiatives are funded by the Danish foreign ministry, the Ministry of culture and the Danish Export association. This is possible because the recognition of the Danish Government of the brand advantages of having high profile Danish buildings around the world,

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not just for architecture but for all Danish exports.

Benchmarking

The success or otherwise of these promotional projects is measured largely by collecting feedback from the participants. In some cases, it can be quantified by the number of contracts that have been a direct result of a particular

promotional trip. However, as promotional trips and tours are often most valuable as networking opportunities, quantitative benchmarking is not always possible. In the case of assessing the value of Peter Thiebels own role as international consultant, it is easier to asses this in quantitative terms. His role allows him to review to work he has done and then asses this in the context of the amount of contracts that this work has brought in for Danish firms.

A SUMMARY OF DANISH PROMOTIONAL BODIES & INITIATIVES

Initiative /agency Organised by Funded by

Dansk Ark - Membership subscription

Danish Architecture Centre - Ministry of Culture

Peter Theibel, Intl. Consultant Dansk Ark Dansk Ark

Financial & Legal hotline Dansk Ark Dansk Ark

Promotional tours within Denmark Dansk Ark Foreign Ministry

Trade missions Danish Export Association Danish Export Association, Participating Firms

Danish Architectural Showcase Danish Architecture Centre Ministry of Culture, Participating Firms

ARCHITECTS FEEDBACK

Danish architects interviewed for this research had mixed views about the benefits of the international work of Dansk Ark. Most firms felt that while the work of Dansk Ark, the DAC and the Export agency were all beneficial for wider architectural promotion, they felt that ultimately firms won contracts through their own efforts. They all felt that had none of these services been available they would still have achieved their current international positions. It is important to note however that all firms interviewed were

larger established firms and that these services may more beneficial to younger firms starting out.

One smaller firm were very enthusiastic about the efforts of the DAC and had heard anecdotally that their services and promotional tours had been beneficial; however they had not taken part in any of these activities and had no firsthand experience. With regards to trade missions and architectural showcases, while firms saw no direct benefits to these, there was consensus that these served as good networking opportunities and

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served the purpose of the wider promotion of the Danish Architectural brand.

Interviewees also found limited value in Peter Theibels work as an information intermediary. One business development director claimed “I don’t really have cause for it. Copenhagen is a small city, if I need to know about China I can call up the one of the other firms directors myself, meet for coffee and have that

conversation”. When asked about the potential difficulties in firms exchanging commercially sensitive information, the same interviewee explained “they will tell me what they want to, people will share information that is available, but they won’t give me details of clients of new projects for example”. Again, it is important to note that this is a service that by its nature would be more beneficial to smaller, less experienced firms not interviewed for this research.

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FINLAND AT A GLANCE

Name Republic of Finland Capital Helsinki Population 5.38 million Area 338145 km2 Currency Euro Language Finnish Total GDP €166 billion GDP per Capita €24,000

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2.1 ECONOMIC PROFILE

THE EXPORT ECONOMY

In terms of land area, Finland is approximately four times the size of the island of Ireland. It has a population of 5.2 million, most of whom are based in the southern region in the area around the capital city of Helsinki. It has a highly industrialised mixed economy. Similar to its Scandinavian Neighbours, Finland has a strong welfare system and ranks among the top countries in the world in terms of quality of life. Healthcare and education are free at all levels and last year the OECD ranked the Finnish primary education system as the best in the world. It is the third least corrupt country in the world according to Transparency International and was ranked as the seventh most competitive economy by the world economic forum last year.

Finland has a highly industrialized mixed market economy. It has a total Gross Domestic Product (GDP) of €166 billon, making its economy approximately 15 percent bigger than that of Irelands. GDP per capita is on a par with Ireland at €24000. The services sector accounts for almost 67 percent of total economic activity and Finland has the fourth largest knowledge economy in Europe, next to Sweden, Denmark and the UK. Manufacturing is also an important part of the Finnish economy, making up 31 percent of all economic activity. Primary production (mainly forestry) makes up the remaining 2 percent.

Similar to Ireland, International trade is central to the Finnish economic system and accounts for 60 percent of the total GDP. It is the only one of the Nordic countries in the Eurozone. Finland’s main

trading partners are Germany, Russia, Sweden, the United Kingdom, Netherlands, China and the United States. Its principal exports are chemicals, wood, metals, engineering, electronics and telecommunications. This dependence on foreign trade led to one of the deepest contractions in the Eurozone in 2009, despite being one of the best performing economies in the EU until that time. However, more recently a pick-up in consumer demands internationally and an increase in domestic trade saw a recovery in growth in 2010.

In terms of its geographical position, Finland is better placed to export than Ireland. However, it is still faced with similar export barriers such as language and cultural difficulties. Given the low relevance of physical borders to the export of services, it could be argued that Ireland is in a better position to export despite being located on the European fringe.

THE DESIGN INDUSTRY

Finnish design is reflection of Finnish culture: its characteristics are simplicity, clarity, functionality, quality craftsmanship and durability. This reflects Finnish culture; Finns are known for their directness and honesty and describe their own culture with the term Sisu, a Finnish word loosely translated into English as strength of will, determination, perseverance, and acting rationally in the face of adversity.

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Finnish Design emerged in the early 20th century. In 1917 Finland achieved its independence from Russia and its artists and craftsmen were encouraged to create a distinctive identity for the new nation. This was facilitated by an economic boom that lasted for most of the 1920s. In the 1935s Alvar Aalto set up his studio to design furniture and went on to become Finland’s greatest design export. Today, he is still the basis for the current Finnish design brand.

Finland saw a second economic boom in the 1950s and the migration of rural dwellers to urban centres resulted in an increase in high density housing. The lack of space in new city homes, combined with a scarcity of materials and a growing market for Scandinavian and Nordic design saw a boom in Finnish design and Finnish products, and the development of Finnish Design as a brand focused on practicality, efficiency and durability. The 1950s through to the 1970s saw the emergence of Finnish Design as a global brand and many iconic design pieces came from Finland during this period.

The last 30 years have seen a slowdown in the development of Finnish design and the modern brand still relies heavily on Alvar Aalto and the success of the industrial designers of the 50s, 60s and 70s. However, in the last ten years the Finnish Government has once again focused their attention on design and the creative industries as a means of product differentiation for Finnish exports, and they have begun active promotion of the creative industries both within Finland and abroad.

The main driver of sign is an organisation called Design Forum. Design Forum was developed as the promotional arm of the

The main driver of Finnish design is an organisation called Design Forum. Design Forum was developed as the promotional arm of the Finnish Arts and Crafts Guild and their sole brief is the promotion of Finnish Design both in Finland and abroad. Initiatives have included the creation of a number of design awards and the establishment of the Finnish Design Museum. In Helsinki a specific design district has been designated as a means of fostering a creative community and promoting synergy between different creative disciplines. Helsinki has also been selected as the global design capital for 2011.

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2.2 SECTOR PROFILE

THE ARCHITECTURAL SECTOR

Finland currently has 3600 qualified architects, approximately 2200 of whom are considered economically active within the industry. This translates into a ratio 0.7 architects per 1000 population, against a European average of 0.9/1000. The public sector employs almost one third of all economically active architects in Finland, with a 700/1500 split between public and private sector positions.

Industry structure

Similar to Ireland and Denmark, Finland has a fragmented architectural sector. There are 363 architectural firms in Denmark and 151 of these have only one member of staff. The average Finnish firm has 7 employees and only three firms have upwards of 30 employees.

At firm level the pattern of fragmentation tends to be less prevalent; only 9 percent of all architects work in a branch office of a firm (against a European average of 12 percent). Finnish architects tend to expand their catchment area through developing networks and associations. 43 percent of all architectural firms have a formal association with another practice. This is the

second highest level of practice association in Europe, where the average is only 12 percent.

There are a number of large firms that provide architectural services as part of wider multi-disciplinary groups. However, in terms of providing purely architectural services, PES Architects, Innovarch and Tommila Architects are the largest and most high profile firms.

Architectural Services

Finnish architects offer the same range of services as their Irish counterparts and cover the entire spectrum of traditional architectural design services. It is common for architectural firms to provide design services as part of a wider integrated design team that is formalised from project inception stage. Multidisciplinary firms are also common, as are architectural firms who have formal associations with complimentary design consultants.

Finnish architects work across an even spread of markets. The healthcare, education, industrial, retail and office sectors each account for between 5 and 9 percent of the total industry income. Housing, both public and private, tends to take up a larger portion of architects services and accounts for 10 and 16 percent of total industry income respectively. This figure is explained in part by the number of small firms that are involved in local private residential projects.

Finland’s architects

Qualified architects 3600

Economically active architects 2200

Architects per 1000 population O.9

Private sector architects 1500

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Architectural fees

The construction sector in Finland was worth approximately €27 billion in 2010. The total value of the Architectural sector for 2010 was €117 million or approximately €53,000 for each architect in private practice.

At an average rate of €66 per hour, Finnish architects cost less costs then their European counterparts (average €70 P/H). This may be due to the fact that Finnish architects tend not to follow the industry norm of charging based on a percentage of the total build cost; this method of pricing is only used on about 10 percent of construction projects. Instead they charge by the hour (42%) or by pre-agreed lump sum (46%).

Finnish firms exporting to China, specifically those exporting to population centres such as Shanghai and Beijing, have found that their fee’s are in line with those of the local architects and this has been to their advantage when competing with other Nordic and European firms who are operating from a higher cost base.

Industry Value

Construction Sector Value (€) 27 bn

Architectural Sector Value(€) 117 mn

Revenue per Architect in PP (€) 53000

PH rate for a principal Architect (€) 70

Representation and labour laws

In Finland, the title of Architect is protected by law in so far as designers cannot legally call themselves Architects unless they have attained a recognised architectural qualification. However, it is not necessary to qualify as an architect to engage in building design, and architects (or building designers) are not required to register with any licensing body or registration board. Therefore, the industry is open to anyone who wants to practice architecture, so long as they do not use the specific term “Architect” in their trade description.

Association Role

Finnish Association of Architects (SAFA)

An organisation that represents individual architects, retired architects, and architectural students in Finland. SAFA deals with issues such as architectural education, ethics and industry

standards, and promotion of architecture from a cultural standpoint. SAFA is a non-profit organisation that is funded by subscriptions and publications. Membership is voluntary.

Association of Finnish Architects Offices (ATL)

An industry body that represents Finnish architectural firms. It deals with issues such as the development of the commercial industry as a whole, lobbying, marketing, and partnering with other industries. ATL is private organisation funded by its members. It shares an office with SAFA.

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Employment rates

Employment rates are difficult to gauge in any architectural industry, especially one consisting of so many single person firms. However, in 2010, 69 percent of architects were currently in full time employment with a further 4 percent working part-time. Only 1 percent of architects claim to be unemployed or not working. In reality, the figure for unemployment may be higher as many single person firms can be still economically active without actually winning any new contracts or generating any revenue.

ARCHITECTURAL EXPORTING

Architectural exports account for approximately 7% of the total revenue generated by the Finnish architectural sector. This figure has been increasing over the last 5 years and SAFA expect this upward trend to continue. According to research carried out by the Finnish Institute of architects in 2009, Finnish firms are currently involved in exporting to Russia, Hungry, Sweden, Croatia, Saudi Arabia, Germany, Greece, Holland, China, the USA, Egypt, Lithuania, Poland, Norway, Latvia, Estonia, Spain, Switzerland, Romania, Japan, Ukraine, Vietnam, Mongolia, India, Nigeria, Libya, Mozambique, Jordan, Ethiopia and Zambia.

In reality, Finnish architecture is not as wide spread as this research would suggest. Many firms who export do so on a once off single project basis, but focus primarily on Finland and the domestic market. In addition, many of the countries listed above include multidisciplinary firms who offer architecture as a service, but not necessarily in the countries listed.

How many firms are currently exporting?

Finland’s biggest architectural export markets are Russia and China. In addition, it is not uncommon for Finnish firms to compete for jobs in neighbouring Scandinavian countries. The high quality physical access and infrastructure, few cultural barriers, a common architectural style and construction methodology, and a similar business and operating environment make exporting within the region a relatively simple process. This allows firms to “export” with little or no international management expertise or resource commitment. As a result there are a lot of smaller Finnish firms that compete for jobs throughout Scandinavia on a one off, ad hoc basis.

Based on this definition of exporting, SAFA estimate that there are between 30 and 40 firms engaged in work outside of Finland. However, when multidisciplinary firms and one off projects are discounted, SAFA could only identify two firms Finnish that were engaged in long term strategic architectural exporting. These are:

 PES Architects  Tommila Architects

What is the profile of exporting firms in terms of size, experience & geographical presence?

Taking the wider view of architectural exporting, there are two strands of architectural exporters in Finland: single firms who specialise in architectural design, and multidisciplinary firms who offer architecture as a service. Single architectural firms are small and compete locally and in neighbouring countries while multidisciplinary firms tend to be larger and compete further afield. Of the three largest multi

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disciplinary firms, two are subsidiaries of larger multinational design and construction groups.

Individual Finnish architectural firms compete mainly through international architectural competitions. Until 1999 this practice was part funded by Finnish Government. Under this system, the Government covered 50 percent of

the cost of architectural competition entries, which was then refunded if the firm was successful. However this was stopped by EU competition law. In addition, firms have also obtained commissions through co-operation with Finnish companies operating internationally, and through networks and contacts in the field developed through previous projects.

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2.3 INDUSTRY EXPORT MODEL

INTERNATIONAL BRAND PERCEPTION

Finnish architecture is seen as being simple, sleek and environmentally friendly. It is closely associated with natural materials and the Finns have a strong reputation for superior quality timber construction. Finnish architecture is also seen as being of a human scale with a high level of importance placed on flexibility and the experience of the buildings users. Finnish architects abroad have a reputation for being reliable, efficient and for developing good working relations with their clients.

What is this perception based on?

The reputation of Finnish architecture abroad is based largely on the legacy of Alvar Aalto. The image of his clean white lines and simple architectural language still influence client perception today. Much of the countries architectural history is centred on Aalto and his buildings.

Finland’s outdoor culture, its close association with the timber industry and its history of building traditional timber houses has helped Finland develop an image of sustainable and environmentally friendly architecture.

Finland’s social and political history and culture also feed into its architectural reputation. Finnish Architects have found it beneficial to becoming from a country with no colonial baggage, and no history of global conflict. Generally Finns have a good image worldwide and this feeds into their export brand. Furthermore, Finland is seen as

being a successful and progressive society, and often ranks high in quality of life indices and social awareness surveys. The Finnish culture of brevity and directness has earned the Finns a reputation as being a hardworking and efficient people. Architects have found this to be helpful when developing networks outside of Finland.

In reality Finnish architects do not feel their reputation is necessarily a justified one. Many architects feel that in both sustainable construction, and in timber construction, Finland is not any better than most European countries. They also feel that, in reality, Finland’s green credentials in the architectural sector are somewhat lacking and this is an area that needs improvement.

Some architects have also expressed frustration at the lack of any strong design presence since Alvar Aalto. They feel that contemporary Finnish architecture no longer reflects this traditional image and that there is a need to achieve a new presence internationally in order to update their design reputation.

Finland or scandinavia?

The reputation of Finland is closely tied to that of Scandinavia. Beyond Russia and northern Europe most clients see no difference between Finnish architects, Danish Architects, Norwegian Architects and Swedish Architects. Although the Finns have traditionally tried to distance themselves from Scandinavia, they will concede

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that in terms of architectural branding, it is a positive association for Finnish Architects.

INDUSTRY SUPPORT

The architectural industry in Finland is made up of a large number of small firms that are focused mainly on the domestic market. There is little or no strategic exporting by Finnish architectural firms and as a result there is no formal support systems in place at either firm or industry level. Although support is limited, there are a number of external agencies that have an impact on the international promotion of Finnish architecture:

The Finnish Association of Architects (SAFA)

SAFA plays the biggest role in promoting Finnish Architecture abroad. Their efforts are concentrated primarily on awards and publications. Every year SAFA hold the Finnish architectural awards and a book is published of all winning and runner up projects. This serves as an annual yearbook of Finnish Architecture and is sold through their website. SAFA do not keep track of international sales of this book and do not measure is relevance as an international promotional tool.

Last year SAFA organised a two day seminar in Shanghai entitled Snowball Architecture that was designed to showcase the similarities between Chinese and Finnish architects and to serve as a networking event. The event was run at the same time as the Shanghai EXPO, but was not a part of the exhibition. SAFA intend to gauge the success of this event by collecting feedback from participant firms but as yet this has not been done.

In addition, SAFA have assisted architects in organising their own international lectures and showcases at international construction trade fairs.

SAFA have also been involved in the preparation of the successful bid for Helsinki Design Capital 2012. They feel that while the direct benefits of this for Finnish architects may be limited, it will be a valuable tool in the wider promotion of the Finnish Design brand and will help to strengthen the association of Finland with good design. They feel that this will be valuable to architects looking to promote themselves internationally.

The Finnish Association of Architects Offices (ATL)

Much of ATLs work overlaps with SAFA, but ATL are a representative body for Architectural firms and therefore are more of commercially focused. Despite this, at firm level ATL provide no direct assistance to firms looking to export. However last year, in conjunction with the Finnish Embassy in Italy, ATL organised a four day architectural showcase entitled Experience Finland. The exhibition travelled to Turin, Rome, Catania, Florence and Trieste.

The Museum of Finnish Architecture

The museum of Finnish Architecture is responsible for cultural promotion of Finnish architecture within Finland. In addition to this, the museum occasionally runs exhibitions abroad and coordinates Finnish additions to international architectural exhibitions.

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AN ARCHITECTURAL EXPORT MODEL

The current model

Given that the current industry model refers to the activities of two firms, a profile of these firms and their export activities may be more beneficial than a general description of an industry export model:

1. PES Architects

PES Architects is a design firm based in Helsinki. The firm was founded by its chairman Pekka Salminen in 1968 and currently employs approximately 35 people who are based mainly in its Helsinki Office. PES Architects has previous experience working in France, Germany and Croatia but is now focused exclusively on the Chinese market which currently provides approximately 50 percent if its turnover.

PES Architects has never had a definite export strategy and has traditionally won work through architectural competitions; according to Pekka Salminen: “Eight years ago I went to China to select a stone for a building here in Finland, and I came home with a hotel project”. Although this hotel project did not materialise, they did set up a temporary office in china and began to enter architectural competitions. Subsequently they completed a number of large projects and following the completion of a high profile Opera house this year, they received their first non competitive commission.

Salminen feels that being Finnish has little to do with the appeal of his office. As most of his work has been won through architectural competitions he believes that the quality of the architecture and the design offering is more important than a Finnish brand.

Despite operating successfully in china for 8 years, PES has had a somewhat organic development. They have no non-architectural staff on their management team and they concede that in the future, money will have to be invested in developing the business in order to remain competitive. That said, at 35 people the firm is small enough that it can remain flexible should there be a lull in the Chinese workload, and therefore having a strong commercial focus is not as essential as it is for firms of a larger size.

2. Tommila Architects

Tommila Architects was founded in 1977 by its current managing director Murai Tommila. It currently employs 25 people, the majority of whom are based in its head office in Helsinki. They have experience in a range of sectors but specialise in urban planning. In recent years the focus of their international work has been on China.

Tommila Architects currently has 6 offices, one in Stockholm, one in Helsinki and four in China. Up until the mid 2000’s, international work was won mainly through architectural competitions, with additional work brought in through international commissions from existing Finnish clients. However, in the last 5 years, they have moved away from a competitions based model to one based on an integrated export team made up of a number of complimentary disciplines. This is done through a separate company DigiEcoCity, of which Mauri Tommila is the current CEO.

DigiEcoCity is a design and development firm established to build large scale urban design projects. They are a private company made up of a variety of design, technology and environmental consultants. They develop new urban centres based on technological, ecological and design

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principals. Their work includes not only the traditional construction design services but also integrated technological and environmental design.

DigiEcoCity’s pilot project was the planning of a new town north of Helsinki with residential accommodation and workspace for a population of 100 000. Currently, they are developing two sites in China, each being five square kilometres in size, and each accommodating a population of 70 000. For these Chinese projects, DigiEcoCity secured the all the initial investment, procured both sites and provided all construction design services. They are designing all aspects of the city life, including municipal services, infrastructure and the local political system.

In terms of external support, Tommila Architects have never received assistance from external agencies when exporting. According to Murai Tommila, the only interaction with external agencies was to participate in architectural competitions organised by SAFA, which he felt was beneficial when Tommila Architects was starting out. Historically, all of Tommila Architects international work has been won through their own competition efforts and their own international network.

The success of DigiEcoCity has been due in a large part to indirect support from Tommilas own political network. The idea of multidisciplinary exporting has received support across political parties and last year the Tommila was part of a delegation led by the prime minister of Finland to promote Finnish exports in china. Tommila has worked closely with Finnish Minister for Trade and Employment on export strategies for Finnish services, and both of EcoDigiCities Chinese projects have received direct personal support

from the both Finnish Prime Minister and from the Vice President of China.

The emerging model

While there is no defined export strategy for the sector, SAFA have been exploring the idea of architectural exporting as a means of facilitating growth in the Finnish architectural sector. There is currently an ongoing discussion between Finnish architects, SAFA and the Ministry of Trade and Employment as to what the best export path is for Finnish architects.

1. What architects suggest:

Some Finnish architects have pointed to countries such as the Netherlands and Switzerland where a small number of star architects have developed a reputation for high quality architecture that has helped the industry overall. They feel that promotion of Finnish architecture as a high end design product would have the same effects for their own industry.

Finnish architects have also suggested a number of practical initiatives they feel would be beneficial to the industry:

 Publication of an export manual or database with business intelligence information on specific growth countries. Such a database could contain information on local laws, construction practices, culture etc…

 Development of international marketing channels for Finnish architecture: many firms cannot afford specific marketing and PR staff and they feel that a central architectural promotional unit would benefit the industry as a whole.