Rising prices along with economic fall are nailing the casket of simple outsourcing closed. The lifebuoy of local enterprises will be effective production and quality, writes aripaev.ee.

“Outsourcing doesn’t mean welding two pieces of metal. We have to do outsourcing based on knowledge,” the chairman of the board of the small trailer producer AS Bestnet, Tonu Lelumees, pointed out to show how outsourcing is changing. As the CEO of a company that buys springs and dampers from China through outsourcing, he doesn’t see a large threat coming from Asia. The prices of raw materials are rising there as well.

On the contrary, Lelumees thinks that as the eastern world takes over simple outsourcing, Estonia’s industry could specialise on complex outsourcing, speedy production, and quality. Especially so as Estonia has a similar culture to the rest of the western world. “As the economy cools, more attention should be paid to outsourcing!” he adds.

According to Jaan Meikup, the CEO of Paide Masinatehas, the falling economy and rising prices mean that something more complex than simple outsourcing has to be focused on. For example, Paide Masinatehas exports the complex equipment and the Chinese only the simplest elements to a Scottish company. Both the quality and location helps Estonians stay in the market. For example, Finland also does outsourcing by producing paper machines for the rest of the western world.

Leino Laurimae, the sales engineer of Schneider-Electric Eesti AS, which produces electric equipment, considers doing outsourcing to western electronics companies to be quite perspective. The threat from Asia will be best battled with quality. In addition, it is cheaper to transport automated parts weighing a couple of hundred of kilos from Estonia than from the Far-East.

Heido Vitsur, Tallinn’s economy advisor and economy professor, commented that Rolls-Royce also makes very valued airplane engines as a way of outsourcing. Such specific outsourcing is rather a form of cooperation than simple outsourcing.

“Such outsourcing, where Narva’s girls work for Elcoteq for EEK 3000, doesn’t have any future prospects. The cheap competition from east would be too much. We have to concentrate on doing more complex outsourcing,” Vitsur said.

According to him, Estonia needs to invest in quality and making production more effective. The fact that from the cultural point of view the western world already knows us will only be beneficial.