The metals and engineering industries were thriving, as were Norway’s oil exploration and processing services, shipbuilding and forestry equipment production, and even the pulp and paper industries, though the latter were beginning to show signs of a slowdown two years ago.
The steel producer SSAB was experiencing unprecedented demand for its products, such as the high grade Weldox steel, used in making the telescopic booms of mobile cranes. Swedish manufacturers Scania, Volvo and Kalmar, and the Finnish mobile phone giant Nokia were also contributing to the very healthy demand for industrial cranes and related services, with demand for new cranes even outstripping supply, according to Walter Heinrich, crane technology specialist for Inspecta Sweden.
But the world’s economy has been turned upside-down in the two years since then. Has Scandinavia been affected as badly as the rest of the world? Or, somewhat isolated in northern Europe as the region is, how much does the Nordic economy insulate itself, and has it found suitable niches to shelter it from the recession? Hoist spoke to four of the leading companies in the region to find out how the market looks today, and how it compares to this time two years ago.
The big player in the Scandinavian industry, of course, is Konecranes, a group of lifting businesses that offer a range of advanced lifting solutions to many different industries worldwide. Established 80 years ago, it has 9,700 employees in 485 locations in 43 countries.
“The situation in late 2009 was quite different from how it was in January 2008,” says Mikael Wegmüller, vice president of marketing and communications at Konecranes. “Throughout November and December 2008, markets dropped drastically and ended up in an economic downturn with low investments. We are seeing the same trend continuing today.”
It was a similar picture for the Erikkila Group, the Helsinki-based manufacturer of ergonomic light crane systems, lifting equipment, bridge cranes and robotic cranes. Its CEO, Juha Erikkila, says, “Our group order books are down to 65% of what they were in the previous year, and look likely to stay at this level over the winter. We’re seeing a lot of movement in the marketplace and discussions are taking place between CEOs concerning the reorganisation of their businesses and positioning businesses in new areas. However, we’re confident and look forward to being one of the winners in this arena.”
Mikael Holmberg, application manager, cranes and winches, for the Finnish company ABB Oy, is more circumspect, saying: “It is difficult for us to make statements about the market as a whole at present.
The general inferences from our own sales data are unreliable and we prefer to refer to market research from independent agencies.”
“Our business was booming into spring 2009,” says Leif Emblad, CEO of the Swedish manufacturer Tawi AB. “But from then until November, the slowdown accelerated. However, we have now turned the corner. When the figures are in for December 2009, they should show a very good month for us, though I believe things are still very slow compared to how they were two years ago.”
Over the past few months, manufacturers in Italy and Germany have told Hoist they have had to cut back on their production capacity to ride out the recession. In Scandinavia, the industry has responded in a variety of ways. While Tawi says it hasn’t had to cut back on production, Holmberg says: “Like other companies we have adjusted our total costs in response to the decline in revenues.”
Wegmüller says: “Our production capacities have been adjusted according to demand throughout 2009 in all our production units.” This includes reducing the use of temporary staff and shifting sub-contracting back to in-house production. In January, the company announced that, due to the continuing weak demand for maintenance services in the Finnish market, it was beginning statutory negotiations concerning possible temporary and permanent redundancies within Konecranes Service Corporation in Finland, which employs about 620 people.
Erikkila has reacted to the recession by reducing most of its sub-contracting and taking back production in-house in early 2009. “This greatly improved the situation for our staff,” says Erikkila. “We have cut back on some of our staff in the project department and in the back office, but have increased our activities in the sales and marketing departments.”
Meanwhile, all are using the downtime in different ways to prepare for improved market conditions when recovery comes.
“Konecranes is putting special efforts into streamlining its processes and organisation,” says Wegmüller. “We have continued to invest in IT and research and development. In addition we have put considerable emphasis on new product development and in training personnel.”
Erikkila has been using the slack period to develop new products and services which it will introduce within the next few months. “This includes building 2,000 sq m of new factory space which, along with the new products, will make us a stronger business once this recession is over,” says Erikkila’s CEO.
Holmberg says: “First and foremost it is important to take good care of our customers and make sure our installed base receives excellent support.”
Emblad says Tawi AB has been taking advantage of the opportunity to use the slowdown for comprehensive internal training of all staff. “We believe we are very well prepared for an upturn,” he adds.
For many in the industry, the slowdown is a good opportunity to develop new products or carry out research and development. Konecranes and Tawi say they are both continuously researching and developing new products.
Konecranes is pinning its hopes on its new heavy-duty process crane, Smarton, launched at the end of January. “The concept has been developed for demanding maintenance and heavy process use,” explains Wegmüller. “Smarton is based on a modular design, which means its capabilities can easily be extended with additional features such as automated positioning, defined working areas, maintenance monitoring and remote service diagnostics. The crane can be customised for several sectors in the process industry, such as steel warehouse, automotive, general manufacturing, power, workshops, automatic storage systems and mining.”
“The only thing we have not reorganised is research and development,” says Erikkila. “We are introducing new products to the market place this year and are determined to continue developing them even when we began to feel the recession bite. This development project had been agreed and embarked upon before the recession began and has been ongoing for two years.”
ABB is similarly upbeat about the need to continue R&D. “When times are tough it is especially important to keep the product portfolio competitive,” says Holmberg. “We’re therefore continuing to invest in product development. This will also ensure that we are in a good position to grow when the recovery comes.”
Will the market pick up in sync with everything else, or do the four companies see themselves ahead of or behind the curve?
Konecranes considers its business to be late cyclical, says Wegmüller. “That is, we are slightly behind the curve as it takes time before customers gets the capacity utilisation rates up or the need for replacement investments arises, either by expanding production or looking for productivity enhancement.”
ABB explains that, as a supplier of components to OEMs, it is late in the cycle. Erikkila agrees: “We were one of the last to be affected by the recession and will be one of the last to start up again.
“Prices are coming down and some companies will take advantage of this and invest in 2010. The winners will be the suppliers with the lowest prices.”
Given that all sectors of Scandinavian industry were flourishing two years ago, with the exception of pulp and paper production, which got an early taste of the approaching downturn, have any end-user markets shown themselves immune to the recession?
Konecranes thinks none stand out. “Activities in power generation, such as wind energy, nuclear power and waste-to-energy, remained the most stable in 2009, or were least affected by the economic downturn,” explains Wegmüller. “But we didn’t really find that any specific product segment provided any more shelter than another. These trends seemed to remain consistent throughout the past year, without any variation.”
ABB agrees: “The current crisis affects all markets, so there is no niche in which to find shelter,” says Holmberg. “But some end-user markets have seen smaller declines than others. For example, the decline in food and beverage has been less than average. This difference causes shifts in our product mix and may direct our efforts in product development, for example by committing more resources to the development of low-power drives for crane applications. The current economic crisis took many by surprise. The question is whether recent developments will continue for some time, or whether the recovery will cause a return to business trends before the crisis started to unfold.”
Tawi has also found that the food and beverage sector is holding up well, along with the pharmaceuticals market, and both have done so consistently throughout the downturn.
So what can the industry expect over the next two years? “It goes without saying that 2009 was a tough year for the whole industry,” says Wegmüller, “so it wouldn’t be prudent to comment on the next two years at this time or try to foresee the future that far ahead. That said, at Konecranes we are certainly geared up and looking forward to the near future. We’re expecting great things especially of our new heavy-duty process crane, Smarton.”
The smaller companies are exercising a little more caution. “Looking ahead over this year and next, we believe the real hard times are still to come in 2010,” believes Erikkila. “Of 2011, we can only guess at a little recovery, but who knows? The European Union does not look very competitive at the moment. We think those countries in Europe outside the EU will benefit from the currency differences at least throughout 2010 and possibly even over the following few years.”
“Because we are late in the cycle, at ABB we anticipate a slow first half of 2010,” says Holmberg. “But we expect business to pick up in the second half of the year, or early 2011.”
Tawi believes the upturn will come even sooner. “We are optimistic for both the next two years, though it may be a few months into 2010 before things start to get going,” says Emblad.
Case study
In 2009, Tawi received an order for a total of 26 units of VacuCobra cargo lifters in two of Swedish airline SAS’s largest airport cargo ground handling facilities, Stockholm Arlanda AP and Gothenburg Landvetter AP. Each cargo loading/weighing station is equipped with two units of vacuum lifters, suspended in a separate lightweight aluminium crane bridge. The bridges are installed in a gantry system which covers a working area around 10 x 15m. Each pump is equipped with a remote control for energy saving. A service agreement is included in the installation.
VacuCobra is a strong, compact, versatile piece of equipment with one-handed operation designed to make quick work of handling boxed loads of all shapes and sizes weighing up to 50kg. Its suction cup can secure boxes of all shapes and sizes to lift and move them in total safety from the side, as well as from the top.
Bottom swivel and angle adaptors rotate the goods, not the lift itself, to achieve the highest possible precision and give full freedom of motion when gripping the load.
A quick-release function, incorporated into the VacuCobra handle as standard, further increases handling speed of loads. The machine’s fingertip control can also be quickly adjusted from the right to the left of the handle.
As quick as manual lifting, the machine takes the strain off the body, offering improved safety for operatives as well as improved productivity. The VacuCobra’s compact size makes it easy to manoeuvre without compromising speed or accuracy.
It can also be used to help eliminate manual handling in airport baggage areas.
