Experiences on Recording Global Production Arrangements

Transcription

1 Experiences on Recording Global Production Arrangements FGP case example and recording approach Teemu Koskiniemi, Statistics Finland 4th Meeting of the Task Force on Integrated Global Accounts and Global Production (IGA TF)

2 Contents Global Production activities in national accounts of Finland Experiences on global production arrangement records Theoretical framework FGP example Case firm Implementation recommendations of global production manual and typology 2

3 Global Production arrangements in Finland Global Production firms in Finland Identified on case by case analysis: ~70 firms in global production records (~25 processing abroad, ~20 processing in Finland, ~10 merchanting, ~15 FGPs) Significance level in Global Production arrangements: total turnover of a firm > 10 million High share of FGPs due to the dominance of IPP emphasized electronics industry in the past At the time, Global production category for wear apparel firms under consideration GP firms are identified in co-operation of business register, business statistics and NA Some of the global production enterprises are in the target group of LCU 3

4 Global Production identification and primary sources Main data sources are SBS, ITSS and ITGS (See annex in the final slide) We use ITSS to get the information about global production flows Turnover and purchases of merchanting and processing reported in SBS ITGS provides custom codes about processing Manufacturing of goods abroad (for non-identified firm SBS breakdown information does not match with ITGS and Prodcom) Monthly business survey (sales inquiry) provides information about domestic sales, sales abroad and sales from abroad to abroad Before the global production arrangement is recognized, the data sources indicate inconsistency Then, analyse the firm, identify the global production (in co-operation with the firm when needed) In order to get the information, communicate with the firm how to report the information in the survey Check the information received and the consistency of data Maybe it would be better to start with the question: Do you have global production arrangements? 4

5 Adjustments of Global production records in National Accounts Checking supply and use of the global production firm Final global production adjustments made in ANA, SUT and BOP Edited source data as input data Manual adjustments (by firm level) To output and intermediate consumption To foreign trade flows To supply and use table on product level Automatic adjustments to foreign trade flows (custom codes) Ongoing/launched projects in NA: NA-BOP integration (global production record adjusments in the same IT-system), IGA-project on Global Production, NA compilation project (QNA based accounts) 5

6 What Is a Factoryless Goods Producer? Here introduced example is not a pure case of FGP In the case, the FGP is a principal containing global head office of multinational enterprise group and multiple R&D-units The processor may be or not to be in the same enterprise group than the principal The information is incompleted whether the processor is a direct owner of input materials The principal is contributing to the production chain of goods with a valuable IPP The share of IPP is significant in the value chain FGP makes a margin on merchanting produced goods from abroad to abroad Net sales is income for the principal that has economic ownership of the IPP The margin is a return to the IPP developed in R&D-units The principal is identified as a FGP In the following slides, the old approach for recording the FGP shows how the merchanting margin used to be recorded in National Accounts of Finland (since the merchating margin showed up) 6

7 Global Production arrangements Factoryless Goods Production 7

8 FGP Case Example Primary data sources and source data consistency SBS Breakdown Turnover Manufacturing - Merchanting Services - Total Costs Materials - Merchanting Services and other cost (R&D, ICT, marketing, lisencies & royalties, etc.) Total Merchanting margin = FGP s output = International Trade in Services Survey Export Import Merchanting sales, net Services and other Sales Inquiry Sales, net Domestic - Abroad Of which from abroad to abroad

9 NA production account records (FGP case) Production account NACE 26 Output P Intermediate Consumption P Gross Value Added B1GPHT

10 Old approach for recording the margin in SUT and foreign trade (FGP) FGP s margin was divided to 3 service products: 70 % R&D services, 20 % services of head offices and 10 % agency services (*not a trade margin). The margin is recorded in export of services. Products have been chosen in relation to the specialist activities in Finland Supply Basic price CPA Output (NACE 26) * 500 Total supply Use CPA * 500 Total use Purchase price Export of services 10

11 New approach for recording the margin in SUT and foreign trade (FGP) FGP s margin is divided to the product of merchanted good (90%) and a trade margin (10%). The margin is recorded in export of goods. Supply Basic price CPA Output (NACE 26) Total supply Use Purchase price CPA Export of goods Total use

12 The margin is a return to IPP investment of FGP IPP is recorded in fixed capital formation and capital stock since ESA2010 Production account NACE 26 Output P P P Return to IPP investment IPP investment Intermediate Consumption P Gross Value Added B1GPHT

13 Why the new approach? To implement the recommendations of UNECE Global Production Manual The margin should be recorded in the export of goods Recommendation for both FGP and merchanting The global final demand does not match with the export of services (goods are purchased - not services) FGP or merchant makes the margin with the goods R&D-services and IPP are included in the value of the good We change the products in SUT and relocate the margin in exports from services to goods 13

14 Constant attributes in these approaches We decide to keep the margin on net base and take no re-classification in NACE industry Net based recording The manual recommends net recording For the margin of FGP, we apply only positive net record (different record in merchanting) The principal does not supply material inputs (not clear in all cases) There is no information about the content of intermediate consumption, what are the price indices, who is the counterpart country Industry classification: FGPs in manufacturing (instead of trade) until later definitions We have not implement the industry class recommendation of the typology To keep the firms that have outsourced production abroad in the manufacturing according to the final products they are producing globally Separate FGP firms from merchants because of the high IPP content in products: FGPs do more than buy and sell Determination of international guidelines for FGP (work in progress) 14

15 Time-series revisions We adopted the new approach in the statistical year 2014 The main FGP activity was already decreased at the time (no striking level change in the transition point) New and remaining FGP activities have a smaller significance We will revise our NA history from the mid-2000s Next time series revisions in 2019 Adoption of the new approach will revise our time series Supply and use tables (2010-) Foreign trade: the margin from services to goods Great impact in the structure of foreign trade BOP-series (coherent with NA from 2006) No impact on production account records Let the prices and volumes remain unchanged No impact to the history of GDP (although the product structure changes) 15

16 ANNEX FGP case company Identification and analysis in NA YTY business statistics data warehouse FINANCIAL STATEMENTS INQUIRY FOR ENTERPRISES * turnover from trade MARGIN not deliveries of products * no raw-material costs, high costs on R&D, marketing, subcontracting TAX RECORDS (Administrative data) Annual financial statements SALES INQUIRY * high share of turnover from sales abroad to abroad PRIMARY SOURCES INTERNATIONAL TRADE IN SERVICES SURVEY * records sales and purchases of factoryless production BUSINESS REGISTER * NACE manufacturing industry PRODCOM * production: no product information INTERNATIONAL TRADE IN GOODS STATISTICS (CUSTOMS) * small share of goods export compared to turnover GUIDELINES GUIDE TO MEASURING GLOBAL PRODUCTION (2015) * recommendations for FGPs FIRM S ANNUAL REPORT * Possible information about outsourcing production abroad SUPPORTING SOURCES EMPLOYMENT STATISTICS * major share of company workers are experts (engineers, designers etc.) ESA2010 and BPM6 ARTICLES ABOUT FGP LCU COMPANY VISIT * company defined itself to be FGP COMPANY, OUTPUT, PRODUCT AND INDUSTRY INFORMATION