Will IKEA make the Arctic Bloom?

Maybe there is hope for poor regions on Europe’s peripheries after all. All that is needed is a stupendously wealthy sugar-daddy, like IKEA boss Ingvar Kamprad, willing to ignore advisers and pump hard-earned money into places most people would rather forget about.

In November 2006 Swedish furniture giant IKEA opened its doors in the unlikely location of Haparanda, a town of 10,000 inhabitants hugging the Finnish frontier near the Arctic Circle.

Haparanda is both financially and culturally starved and considered to be outside Sweden’s normal sphere of interest. The country’s capital, Stockholm, is over 1,000 kilometres south and its designer shops and dot-com millionaires might as well be on another planet.

Here the climate is cold and people are unwilling to smile when they, occasionally, meet in the snowy street. In mid-winter it is pitch dark well before 2 pm and depression, suicide and divorce rates are all well above the national average. The criminal scene, however, is lively enough to warrant three judges to look after a district of 50,000 people dispersed over an area the size of Belgium – which has over 10 million inhabitants.

"Nobody who is not from Haparanda would ever willingly move there," says one ‘exiled’ law clerk. There is, however, one big exception to that rule. Finnish-speaking Haparanda is the Swedish equivalent of Florida for retired Finns, who come here to spend their last years. They have spent all their working life in Sweden and want to stay in the country while getting care in their native tongue.

The concentration of elderly people may explain why there are two undertakers but only one pizzeria on the main street. Culture visits twice a year in the form of plays staged in the local cinema. Some desperate retired people even turn to the court's criminal sessions for entertainment.

The Geographical Pull

In Haparanda, IKEA founder Kamprad found support for his vision from local political strongman Sven-Erik Bucht, who dreamed of the border town becoming an "International Trading Centre," pulling in shoppers from a vast surrounding area.

Viewed together with Tornio, the Finnish town of 22,000 people just across the river, Haparanda seems somewhat less isolated. The cooperation between the towns – formerly jointly known as Euro-city – is very strong. The water from the Lapin Kulta brewery in Tornio is cleaned on the Swedish side and the police, fire and hospital services all cover for each other.

When Sweden opted to stay out of the eurozone, Haparanda and other border councils joined anyway. They could not afford to do otherwise. Finland is the financial engine of this region and has over 180,000 inhabitants in cities within 150 kilometres of Haparanda, including two university towns. One of them, Rovaniemi, is probably best know for being the home of Santa Claus.

From a Swedish perspective, it was a controversial move to place a new IKEA in the extreme north considering that there are only two outlets of the world’s most famous furniture shop in the northern half of this long, drawn out Scandinavian country.

Kamprad is obviously betting on Swedes’ extraordinary willingness to travel colossal distances to buy ‘Flygel’ desk lamps and ‘Billy’ bookcases. Many think nothing of doing a return day-trip of over 1000 kilometres to their ‘local’ IKEA for their company outing or team-building experience. Kamprad, one of the world’s richest men, clearly hopes this behaviour will be copied by people from northern Finland, Norway and Russia. It is, for example, a mere 600 kilometres to Murmansk in Russia, where 600 000 people live.

Kamprad says he is interested in strengthening the economy of the northern regions of all four countries whose borders nudge against each other in the Arctic tundra. He has pledged over 100,000 euros a year for a decade to strengthen the region’s economy – although one might ask if this is motivated by a genuine interest in raising living standards in this financial backwater, or simply a security measure to protect IKEA’s massive investment.

The Result – Reviving an old Smuggling Centre

For the time being, Kamprad appears to have won over the doubters. The most positive target of one million customers a year was doubled only a few days after the store’s first anniversary. The original 19 tills have now been upped to 25. The shop has even been forced to close ten times since it first opened, because of a rule limiting the maximum number of shoppers to 3,500.

Of 1,800 job applicants - 65% from Finland -143 started working in IKEA and unemployment plunged to 3% in a region once infamous for its lack of work. The number of staff has now risen to 226 and the store will expand its parking, storage, and restaurant areas so that 510 people instead of only 450 will be able to enjoy the delights of meatballs and lingonberry jam simultaneously. A further 500 new jobs have been created by suppliers and in a new shopping centre that will physically link Haparanda and Tornio over the border.

IKEA has single-handedly brought Swedes and Finns closer together, created hundreds of jobs and stimulated economic growth in a once depressed region. But not everyone is delighted by the arrival of the blue and yellow budget furniture store. “There is no big spill-over of IKEA customers here," Hanna Jönsson, café owner in Haparanda’s old town, told local newspaper Norrbottens- Kuriren. At least one store has closed down already, but shop- keeper Satu Lompolo says: "We mustn't give up."

Another criticism is that many of the IKEA jobs are part-time and thus traps for workers, especially women. The unemployment rate has also edged up again since the store’s opening - partly because many IKEA jobs are seasonal and partly because outsiders have flocked to Haparanda now there is the hope of work there.

IKEA has proved a lift for the area and, at least partly, for the town - which is now planning new attractive housing along the river near the furniture store. As the head of the local council, Christina Lugnet, writes on the HaparandaTornio website: "The immigration is continually positive. Haparanda has got more than 40 new inhabitants this last year."

Maybe the town is once again coming to life through trading - like in the days when smuggler barons, allegedly lighting their cigars on wads of burning banknotes, crossed the then Russian border after Sweden had ceded Finland to Russia after the 1809 war.

Then too Tornio was the main town. In fact, Haparanda did not exist until 1809 when it was built as a Swedish border post when Finland was lost. Maybe now, with Kamprad's help, Haparanda can - at long last - fulfill that trading role.