Hackman Oyj Adp

views updated

Hackman Oyj Adp

Hameentie 135
P.O. Box 955
00561 Helsinki
Telephone: +358 204 39 11
Fax: +358 204 39 5708
Web site: http://www.hackmangroup.com

Public Company
Incorporated: 1790 as Hackman & Co.
Employees: 2,610
Sales: EUR 315.8 million ($270 million)(2000)
Stock Exchanges: Helsinki
Ticker Symbol: HACAS.HE
NAIC: 551114 Corporate, Subsidiary, and Regional Managing Offices; 332211 Cutlery and Flatware (Except Precious) Manufacturing; 339912 Silverware and Hollowware Manufacturing; 327112 Vitreous China, Fine Earthenware, and Other Pottery Product Manufacturing; 333319 Other Commercial and Service Industry Machinery Manufacturing

Hackman Oyj Adp, or the Hackman Group, is one of Finlands oldest family-owned firms. The founding family continues to hold more than 54 percent of its listed stock and nearly 90 percent of its K series voting rights stock, although the family is no longer involved in day-to-day operations. Yet Hackman has transformed itself from its historic forest products and stainless steel activities to operate as a holding company focused on two core operations: Hackman Metos, Europes leading manufacturer of professional kitchen systems and equipment, with operations in more than 20 countries, including neighboring Russia, Latvia, Estonia, but also in France, Italy, the Netherlands and Belgium, and as far away as Japan, Korea and Australia. Metos is the divisions main brand, especially in Scandinavia and increasingly in the companys other markets, where it also maintains a selection of regional brands added through various acquisitions. Hackman Metos is the companys largest division, providing nearly half of the companys total sales of EUR 315.8 million in 2000. Designor is the companys second core division, producing housewares featuring Scandinavian design under four main brands: Arabia, Hackman, iittala and Rörstrand, which are sold in shop-in-shop boutiques through third-party retailers. The company aims to promote the division to a world leader in Scandinavian-inspired houseware products. The company has transferred its remaining holdingssuch as its money-losing Hadwaco water filtration subsidiaryto a third division, Other Functions, which also includes administrative operations. Since the late 1990s, Hackman, led by chairman Stig Gustavson and president and CEO Tapio Hintikka, has significantly transformed its holdings, restoring the company to profits and simplifying its structure. Hackman Group is traded on the Helsinki stock exchange.

Trading Trade for Forests in the 19th Century

Johan Friedrich Hackman, native of Bremen and member of a merchant and trading family, went to Vyborg, then part of Sweden-controlled Finland, in 1777. In 1790, at the age of 35, Hackman founded his own trading company, Hackman & Co., importing and exporting goods such as salt, wine, sugar, herring, and other products between Finland and the other Scandinavian countries and European colonies around the world. The company shortly built up its own shipping fleet. Hackman added lumber in 1793, an activity which was to become one of the companys major growth areas in the following century. Already at the very beginning of the nineteenth century, Hackmans company had bought six sawmills in Finland, including one in the town of Sorsakoski. Yet the company was forded to continue without its founder, when Hackman was killed accidentally in 1806.

Led by Hackmans widow, and then by son J.F. Hackman Jr. after 1829, the company continued to prosper, successfully navigating the regions political turmoilsuch as Swedens loss to Russia in 1809, which established Finland as an autonomous region within the Russian empireand the later Crimean War in the middle of the century. Sorsakoski became a major center of Hackmans activity after 1833, when the company acquired Sorsakoski Manor and began industrial operations there.

Like many trading companies of the period, Hackman was ever-ready to reinvent itself and adapt to new opportunities. In 1840, for example, the company entered the coffee trade, using its own fleet of ships to transport Brazilian beans. The company continued in coffee trading until the 1920s. Another area of company interest became the nascent public utilities market, as Hackman helped install gas lighting to Helsinki and Vyborg in 1860. At the same time, the company continued to build up its lumber interests, buying up not only four additional sawmills, but also buy an increasingly large area of Finlands large forests.

Another Hackman activity begun during the middle and late 1800s was sugar refining, an area the company did not exit until the 1950s. More lasting was the acquisition of a candle factory located in Vyborgs Havi area. Hackman took Havi as a brand name, adding soap and other household products over time, before selling that division in 1998. Hackmans industrial activities meantime expanded to include production of silverware, knives, and scissors, an activity begun in 1876.

Forest and Steel Magnate in the 20th Century

The next generation of Hackmans took over upon J.F., Jr.s death in 1879. The new generation included J.F., Jr.s son, Wilhelm, who took charge of the companys operations, and J.F. Jr.s son-in-law, Carl-August Ekström, beginning the association of that family name with the companys ownership.

The inauguration of the Finnish Steamship Line, with Hackman acting as a investor, enabled the company to exit the shipping business in 1844, transferring its shipping activities to the new company. The company also transferred its Vyborg-based knife and cutlery production to its Sorsakoski facilities, which began to build up markets throughout Russia and the Baltic region and became the headquarters for the companys growing interests in steel product production in the next century.

Hackman also stepped up its forestry activities near the end of the 19th century, buying up still larger areas of Finlands forests. The company began shutting down its water-based sawmills by then, transferring those operations to a main mill at Pölläkkälä, which was bought in 1893. The company, which also operated a steam-powered mill since 1870, built a new steam-powered mill in 1910, near its eastern Finland forest holdings. That region became the site of a new Hackman activity in 1912, when copper deposits were discovered on company land. Hackman formed a cooperative with the Finnish government to exploit the deposits. Copper mining proved short-lived for the company, and Hackman sold back its share in the venture in 1924.

In the meantime, the company was swept up in the course of world history. During World War I, the company shifted its metal production to making scissors for cutting barbed-wire, bayonets, and other products to support the Russian war cause. The companys celebration of Finlands independence, granted in 1917, was short-lived, however, when the Russian civil war destroyed part of its sawmill operation and a large part of its export lumber stock.

Stainless steel production began in 1924 and helped the company weather the rocky economic climate of the postwar reconstruction period. The following year, after Wilhelm Hackman died, the companys leadership was transferred to his sons, Leo and Henry, while the companys ownership expanded to include the growing numbers of Hackman and Ekström family members. The new leadership expanded the companys operations again, building a pulp mill, then entering the household cleaning products market with the purchase of the Teka brand and production facility near Helsinki.

Diversified Postwar Conglomerate

Finlands war with the Soviet Union at the start of World War II saw the country split in half in 1940. Hackmans possessions, including a large part of its forest holdings, in Vyborg and other parts of the Karelian Isthmus were lost. The company transferred its Havi soap and candle production to its Teka plant, while taking up new headquarters in Helsinki. For the duration of the war, the company turned its production toward supporting the Finnish war effort.

After the war, the company was hampered by materials shortages, but was nonetheless able to expand its production of flatware with the opening of a new production facility. This activity took on greater steam for the company as the regions economy took on steam in the 1950s. The growth of a newly affluent and leisure-rich middle-class during the period stimulated demand for new products. Hackman responded by launching new silverware designs by noted Finnish and Scandinavian designers; by the end of the decade, the company had expanded its production to include a range of houseware products and kitchen utensils.

Company Perspectives:

We have defined our way of operating on the basis of the following shared values. (1) A strong business ethic. At Hackman we take responsibility for the environment and show concern for the employees. In our operations we adhere to high morals and the principles of sustainable development. (2) Customer orientation. Superior product and service quality are important to us, because that quality is the foundation of customer satisfaction. We collect customer feedback actively and develop our operations on that basis. (3) Openness and participation. At Hackman, openness, interaction and cooperation constitute an essential aspect of everyday life. We consider it important that employees participate in the development of their own jobs and the work community. This increases both motivation and work efficiency. (4) A willingness to change. We are constantly developing our personnel and our organization. We are always striving to anticipate whats ahead and to change in accordance with spirit of the time without forgetting our strong traditions.

Hackmans interests in both forestry and lumber products continued, however, as the company modernized its main sawmill at Honkalahti, giving it production volumes of some 4.5 million cubic feet by the beginning of the 1960s. During that decade the company also increased its forest holdings, now capable of supplying 20 percent of the companys own production needs. As an offshoot of its lumber division, Hackman began producing such construction trade products as wallboard and beams. The acquisition of Terätuote in 1966 brought the company into the manufacture of sawmill blades. Another new area of interest was the formation of a piping and related equipment manufacturing plant, formed in 1967 with Nyby Bruk of Sweden. That company, Putkihackman, was fully absorbed by Hackman in 1979.

Now led by Herrick Hackman, son of Henry, and Gunnar Ekström, Hackman continued to diversify in the late 1960s, buying the manufacturing and market rights for Halltek panels in 1969, and opening a purpose-built facility for the production of sinks in 1970. The company also merged its Teka and Havi branches that year, now grouped under the Havi brand.

Hackman converted to limited liability status in 1969, changing its name to Oyj Hackman Ab that year. Three years later, the company hired Heinz Ramm-Schmidt to lead its operations, the first time in its history the company had been led by someone from outside of the Hackman family. The company next looked beyond Scandinavia, buying part of Harding & Vick Ltd., based in England, in 1974, then taking full control in 1978 to establish a new subsidiary, Hackman UK Ltd. Through the rest of the decade the company deepened its interests in the building products market, notably with the launch of DIY-market products and the development of the Kerrotex-brand of boards. At the same time, Hackman continued to build up its position in the household items sector.

Continuing Change in the New Century

The companys next managing director, Curt Lindbom, took over in 1983 and put the companys tradition of continuous change into overdrive. From its base in silverware and household items, the company now extended its reach into the professional food industry, such as acquiring Koltek in 1983 and adding the companys valves and other food-processing equipment components. This acquisition led the company to enter the market for professional kitchens in 1985, with the acquisition of Dacona Ab. In the second half of the decade, the company made a series of investments in the dairy and other collection systems equipment sector, cheese-making equipment, and other farm-related equipment, such as sack-filling systems. Other acquisitions, including those of Mäntysuopa in 1984 and Nordtend, of Sweden, in 1989, strengthened the companys Havi candle and detergent subsidiary.

Key Dates:

Johan Friedrich Hackman arrives in Vyborg (formerly in Finland).
Hackman sets up his own trading company, Hackman & Co.
The company begins acquiring sawmills while developing shipping activities.
The company buys manor in Sorsakoski and begins production of cutlery and cookware.
The company begins importing coffee from Brazil.
The company acquires a candle factory in Havi, Vyborg, which forms the basis of the Havi soap and candle division.
Begins production of scissors, knives, and other silverware in Nurmi, near Vyborg.
The company invests in Finnish Steamship Line, which assumes shipping of Hackmans export-import trade.
The company acquires large forest holdings.
Production is converted to barbed-wire scissors and bayonets during World War I.
The company begins stainless steel production, and two years later adds a pulp mill near Vyborg.
The company transfers Havi factory to Riihimäki and moves its headquarters to Helsinki.
The company opens wallboard plant at Honkalahti.
Factory for beam production is built.
The company acquires 50 percent of Terätuote Oy, a maker of blades for sawmills, completing shareholding in 1985.
The company reincorporates as Oy Hackman Ab.
The company acquires share of Harding & Vick (UK), completes shareholding in 1978, and renames subsidiary Hackman UK Ltd.
The company acquires Koltek Oy to enter food-processing equipment industry.
The company buys Dacona Ab (Sweden), a maker of professional kitchen equipment.
The company makes first public offering on Helsinki OTC market.
The company buys Nordtend Ab (Sweden) and Nordtend AS (Norway).
The company acquires Arabia, Gustavsberg (Sweden), Rörstand (Sweden), iitalal, and Nuutajäjarvi to establish new Hackman Tabletop division.
The company exits sawmill sector and begins shifting concentration to cutlery and tableware production, acquiring factory in Hungary.
The company buys Fürst Bestecke (Germany), adding to cutlery production, and establishes Hadwaco, a specialist in water-purification systems.
The company converts shares to listing on Helsinki main board; Hackman family maintains control of 89.9 percent of voting rights.
The company begins rationalization program to focus on Hackman Metos and Hackman Designor divisions.
The company acquires full control of Hackman Metos, Dihr International (Italy), and Frost Team (Norway); it sells off Havi Candles.
The company acquires Nordien Systems (Sweden) and International Catering Systems (Belgium).

Hackmans household products became increasingly international at the same time, with acquisitions in Sweden and Norway especially giving the company a new Nordic region focus. Meanwhile, the company continued to invest in its sawmill activities, automating its operations in an effort to remain competitive. Yet the companys operations in these areas were quickly outclassed by its far-larger rivals.

Approaching its 200th anniversary, Hackman went public with a listing on the OTC market of the Helsinki Stock Exchange. From silverware, Hackman expanded into tableware in general with the acquisition of porcelain brand Arabia, glassworks brand iitaala, and other porcelain and related facilities in Finland and Sweden in 1990. The company created a new division, Hackman Tabletop that year. The following year marked the end of the companys sawmill operations. Unable to compete against the industrys larger players, the company sold off its last mill in 1991, ending nearly 200 years in that sector. In 1994, Hackman joined the Helsinki exchanges main board. Yet control of the company remained solidly within the Hackman family, which maintained a grip on nearly 90 percent of the companys voting rights, and nearly 55 percent of its stock overall.

Yet in the mid-1990s, Hackman was clearly heading toward a crisis. The company found itself unable to keep up in the increasingly capital-intense forestry sector. At the same time, its holdings in stainless steel production and in the chemicals industry were not strong enough to carry the company. A decision was made to enter new industrial areas and, where possible, extend its existing operations into complementary areas.

The company began a vast expansion program, and by mid-decade it had some 17 divisions and a widely diversified range of industrial production. A new subsidiary was formed as a joint venture when Hackman Professional Kitchens merged with Metos, owned by Instrumentarium, creating Hackman Metos Ltd. Hackman later increased its share from its initial 60 percent to full control. At the same time, the company combined its Hackman Housewares and Hackman Tabletop divisions to form Hackman Designor. Fueling the companys expansion was the sale of its vast forest holdings beginning in 1995.

Yet the intense pace of Hackmans expansion quickly bogged the company down into a new financial crisis. Paying too much attention to adding new operations, the company had begun to neglect its existing operations, many of which slipped into losses toward the end of the decade. By 1997, the companys shareholdersespecially the 118-strong Hackman familyvoted to replace the companys management and board of directors, including CEO Tapio Hintikka, formerly with Nokia. The new management quickly moved to simplify the companys structure, cutting it back to two new core divisionsthose of Hackman Metos and its professional kitchen systems and equipment specialty, fully acquired in 1998, and Designor, its range of tabletop items featuring Scandinavian design. The company sold off most of its other holdings, often in management buyouts, while preparing the sale of others, such as money-losing Hadwaco. As part of this divestment program, the companys Havi subsidiary was sold off in 1998.

By 2000, the newly refocused Hackman Group saw its profits once again on the rise. The company now concentrated on increasing the presence of its two main divisions as international brands. By then, as much as half of the companys sales came from outside of Finland, and an increasing share came from beyond the Scandinavian market. Aiding this development were such acquisitions as that of Dihr International in 1998, which established the Hackman Metos division as one of Italys leading professional dishwasher producers. That same year, Hackman purchased Norways Frost Team, a major supplier of professional kitchens to that country, and Pakkaskone, of Finland, which specialized in counters and display units for the restaurant and confectionery markets and held the leading position in the Scandinavian market.

The year 2001 saw continued progress toward establishing Hackman Metos as one of Europes leading manufacturers of professional kitchen equipment and systems. The company acquired Nordien System AB of Sweden, together with its U.K. subsidiary, in June of 2001, strengthening the companys production of support equipment for professional dishwashers systems. By then, the company had already moved into the Belgian market, with the purchase of International Catering Systems, which focused on marketing and distributing professional ovens. Designor, meanwhile, had also begun to look outside of Scandinavia for further growth. In 2001, that division reached a distribution and cooperation agreement with Frances Guy Degrenne, which called for the French tableware maker and retailer to introduce Designors brands in France.

Hackman Groups rising profits and strong dual focus gave the Hackman family hope to see their company continue to grow at the start of its third century of existence. Yet internal tensions within the extended family, which included opposing strategic viewpoints, and the familys overwhelming grip on both the companys voting rights and its shares, which caused Hackman to remain undervalued on the stock market, suggested that a revision of the companys shareholder base remained a possibility for the near future.

Principal Subsidiaries

Hackman Designor Oy Ab; Hackman Europe B.V.; Hackman Furst AG; Hackman Invest Oy Ab; Hackman Metos Oy Ab; Hackman Prosessi Oy Ab; Hackman-MKT Oy; Hadwaco Ltd. Oy; Kiint Oy Sorsakosken Teollisuustalot; Rondex Oy Ltd.

Further Reading

Hackman and Guy Degrenne Form Strategic Alliance, M2 Communications, June 25, 2001.

Hackman Improves Result, M2 Communications, August 2, 2001.

The History of the Hackman Group, Helsinki: Hackman Group, October 2001.

M.L. Cohen