Vital companies in rural areas

Today’s economy, which is based on the access to the right manpower and the spread of knowledge, has fundamentally changed the conditions for economic development in sparsely populated areas. However, despite a concentration of markets in urban areas, there are good examples of companies that have succeeded in more sparsely populated areas.

Companies are growing increasingly dependent on knowledge, through both education and exchange with similar companies. Often, different companies establish themselves in the same heavily populated regions in order to be close to education opportunities, knowledge exchange and potential personnel. However, despite these collected efforts to concentrate the market, there are good examples of companies that manage quite well in more sparsely populated areas. Many of these local companies that have succeeded have an economy based on regional specialization and clusters of similar economic operations. They often have a local background that goes a couple generations back in time, allowing them to take advantage of the proximity to the countryside. The companies learn, develop, adapt and vary themselves in order to follow along with a changing demand and produce new products without necessarily dispensing with their heritage.

 

Good examples of vital companies in rural areas

The existence of well-functioning labor markets with competitive forestry companies in rural areas can be seen against the background of the fact that there has been a need for forest to be felled and transported, and that those who worked with this have often been found in rural areas. As the forest industry was increasingly mechanized, with the advent of the chainsaw in the 1950s, new products and methods were developed in close collaboration between local work groups and forestry companies. Being near forest land was important, which contributed to the vitality of the rural area. Some of these companies created during the rapid development that began in the 1950s are still in operation. In Vindeln in Västerbotten, 50 km northwest of Umeå there is: Cranab, Indexator, and Vimek. In 2015, Indexator’s Vindeln operations had 130 employees and a turnover of 230 million Swedish Crowns (SEK), with exports making up 80%. Its products are developed in close collaboration with leading machine manufacturers, such as John Deere and Komatsu.

Martinsons is one of the largest family-owned wood processing and sawmill companies in Sweden. It has its roots in Västerbotten and its head office is in Bygdsiljum, where it began in the 1920s as a mobile sawmill. In 2015 the company had around 400 employees and a turnover of a million SEK. Today it has sawmills in Bygdsiljum, Kroksjön and Hällnäs, all smaller areas in the Swedish forest management landscape. The company makes wood products that are used in construction, and is a market leader in laminated wood. Most of its production is exported.

While there are certain geographical factors that can explain the economic development in both urban and rural areas, there is no reason to believe that companies in rural areas cannot be highly productive and successful.

Facts

Urban Lindgren, Jonathan Borggren, Svante Karlsson, Rikard H Eriksson, Bram Timmermans (2017), “Is there an end to the concentration of businesses and people?” in: E. Carina H. KESKITALO (ed.) Globalisation and Change in Forest Ownership and Forest Use. Natural Resource Management in Transition. Ed. by E. Carina H. Keskitalo. London: Palgrave Macmillan UK.

The study was conducted within the framework of PLURAL, a project financed by FORMAS “Starka forskningsmiljöer” 2012-2017.

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Urban Lindgren

Urban is a Professor in Human Geography and researches the interaction between competitiveness of businesses and the dynamics of local labour markets. Focus is on how a long-term competitiveness, assumed to spring from learning skills, can be converted into better products. Innovations often arise when people of different experiences interact. The acquired tacit knowledge is inextricably linked to the individual and interact more easily with others knowledge in limited geographical environments.

Jonathan Borggren

Jonathan Borggren is a senior lecturer and researcher in human and economic geography at the department of Geography and Economic History, Umeå University. Borggren's research revolves around the changing circumstances of the spatial economy following the gradual exit of the Keynesian economy in Sweden post-1990. Topics of interest include: labor mobility and high-impact firms (HIF), forest ownership and firm performance, the spatial diffusion of ‘talents’ and ‘creatives’ in the urban economy, seasonal buzz, biopolitics and waterfront redevelopment.

Svante Karlsson

Svante is a PhD and Assistant Professor in Human Geography, and conducts research on human geography, economic and political geography with a concentration on societal transformation and rural development, and the institutional framework for local development. The legislation surrounding the forest, in a broad interpretation, assigns rights and responsibilities to different groups, which means that the forest can be seen as a space for both action and influence. In pace with the changes in society and new groups claiming forest and other lands, various conflicts of interest can arise. Svante is active at Karlstad University.


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