Estonia is still a valuable production country for Finnish brands even though it’s not the cheapest anymore

Finnish design companies have used Estonian factories for decades due to cheaper labour costs, but nowadays, cheap prices are no longer the main reason to head to Estonia. Now, Estonia’s strengths are ecological values and simple logistics. Estonian designers are also interested in Finland. The sale booths reserved for them at the Ornamo Design Christmas event were sold out already during the summer.

This is the first time that Ornamo Design Christmas is implementing an international cooperation. Estonian designers were chosen as invitees because of the country’s centennial. Ornamo’s Project Manager Petra Ilonen says that the event will showcase high-quality design and craft from both countries. So far, 171 designers have signed up for the event, and 28 of them are Estonian.

“In industrial production, natural materials and small-scale manufacturing and on the other hand the know-how of slow quality handiwork are assets that both countries have. Both offer handmade or half-industrial jewellery, ceramics and recycled products as well as industrially manufactured clothing, textiles and accessories. There is no significant difference in the pricing between Finnish and Estonian design products, nor is there a difference in the products. Both countries design and manufacture high-quality products,” Ilonen says.

Ilonen reminds that when it comes to design, the neighbouring countries have long-time traditions of collaboration, as Finnish design companies, especially in the clothing, wood and furniture industries, have been using Estonian factories already since the 1990s because of cheaper labour costs compared to Finland. However, labour costs are increasing steadily in Estonia, so companies are currently heading to Latvia and Bulgaria for cheaper prices.

Local industrial production in the EU area

Jarkko Kallio, CEO of FRENN, one of the top brands in men’s fashion in Finland, confirms that for his company, cheap prices in Estonia are no longer the reason for the country’s popularity. Excessively large minimum quantities were just one of the reasons for why, in 2013, FRENN decided to start sewing work in Estonia instead of Portugal.

“Instead of cheap prices, Estonia offers us entirely different types of benefits. The entirety must be functional. Estonia is not a Prisma grocery shop for us, but a department store like Stockmann. However, the country’s service culture must keep up with the development, and they must look after the customer to ensure that the collaboration can continue even in the future,” Kallio comments.

According to Ilonen, particularly Finnish design entrepreneurs have ethical reasons to increasingly underline products’ Finnish and ecological origins, which can be seen in the smaller brands’ marketing. Estonia is perfect for this purpose as its geographical proximity makes it local production in the EU area.

“Estonia is considered a local area and, therefore, as a production country, it suits this sort of thinking. If the domestic market for a Finnish brand is Southern Finland, then in a logistical sense, it’s more ecological to produce products in Estonia, than, for example, Northern Finland, especially if the planned railway tunnel gets implemented. The carbon footprint decreases as production and markets are next to each other,” Ilonen clarifies.

Good working conditions in Estonian factories

There are no exact numbers of Finnish companies’ production in Estonia, but in Finnish Customs’ statistics, Estonia is, as an example, the eight largest importer of clothing. According to the Finnish Textile and Fashion organization, the number can be partly explained by Finnish companies’ production. Estonia as a production country has good availability of production capacity, quality, know-how, the possibility to order small batches and good connections, which enable close collaboration and product development.

“It’s easy to go and supervise the quality of the work. We visit once a month, but sometimes, we might even go to Tallinn every couple of weeks,” FRENN’s CEO Jarkko Kallio says.

“Also, Estonia has good risk ratings, so certificates that guarantee good working conditions are important for us. The country is not a ‘wild west’. We want to be assured of issues related to production and right now, Estonia has been the best solution for us,” he continues.

Design by Finnish and Estonian designers will be available at Ornamo Design Christmas at Cable Factory in Helsinki in December. The event is Finland’s biggest design-focused Christmas sales event with approximately 20,000 visitors last year. Visitors have a unique opportunity to meet designers at the event and get information of the product origins, materials and production methods.

Ornamo Design Christmas at Helsinki Cable Factory 7–9 December 2018.

For more information and interviews:

Project Manager Petra Ilonen, Ornamo, +358 44 743 3577,
Producer Mika Åhman, Lumi Accessories, +358 44 751 2362,