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Following a recent merger, Ovako combined the skills and experience of the long established companies Ovako Steel AB, Imatra Steel Oy, and the four separate divisions of Fundia AB: Fundia Wire, Fundia Special Bar and Fundia Bar and Wire Processing. The merger has brought together, in Imatra, Ovako and the subsidiaries of Fundia, three of the key organisations in the long steel industry, and has made Ovako a force to be reckoned with.
The three companies have been working in the same industry for many years, and this merger means that, instead of competing for market-share they have consolidated their strengths to eventually become a world leader. The new group, Ovako, has European market-shares of 10 to 40 per cent in different product segments, which makes it one of the strongest companies currently producing wire rods and bars. Senior vice president and general manager of the Wire division, Anders Moliis-Mellberg outlines some of the reasoning behind the merger: “The rationale was that we could streamline the production, to make it more efficient; and obviously, as a larger group we could get a wider market coverage. The merger will definitely strengthen our place in the global market.”
By achieving this Ovako has ensured a higher level of competitiveness within the industry and, perhaps more importantly it has secured more profit from its products. Removing the duplicated systems in place in the three separate companies means that Ovako can stay well positioned in the European productivity race.
Along with this the company’s major aims for the merger were to form a strong company that specialises in producing long steel products, such as bars and rods, to provide customers with a more efficient service. Joining the three different companies expertise also allows Ovako to provide a wider range of products and services to its many customers. In all the merger puts Ovako in the strongest position its ever held, and makes it an important player in the industry.
Although the separate companies that took part in the merger, they operate in similar areas they focus on different, specific details of the business. Fundia, as a company, was founded in 1992 with the consolidation of three other Nordic manufacturers, but some of its mill operations have history dating back to the 1600s. Before the merger, there were four separate divisions of Fundia, wire, special bar, reinforcing, and bar and wire processing.
The Wire Division, which produces wire rods for the automotive and general engineering industries, is based in Finland and has two factories in Finland and one in The Netherlands. The steel works and rolling mills employ some of the most up to date techniques that enable Ovako to supply its customers with the highest quality merchandise.
The Bar division of the company is constantly developing and improving, and can, thanks to the wide range of casting technology alternatives, billets, blooms and ingots, offer the customers the appropriate products for all purposes.
The Bright Bar Division treats raw materials, in bar form, directly from the separate Ovako plants and converts them into a variety of other products. This is usually the last stage for Ovako’s products before they are distributed.
Although Ovako has the largest portion of the market-share in the industry it still has a great deal of competition to deal with. Anders explains how the company stays ahead of the game: “We are always aiming to upgrade our products in order to increase the value for our customers; the product quality is very important. But our main focus is on logistics, so that we can get products for the customers, trouble-free, and they can consider us as a reliable supply source. Everyone is making the same product, so it is a matter of reliability. We have a good reputation for being somebody the customer can trust, and I think that reputation is very important in this business.”
In this highly competitive industry Ovako now dominates, providing its customers with a reliable service in all forms of steel bars and wires. Having achieved this solid market position its new aim must be to maintain that position, and keep the standard of quality and reliability at the level the three separate companies were at. Ovako group covers all of the areas available to a long steel manufacturer except reinforcing products. Dealing with all of these avenues Ovako has a large amount to think about and must put all of its efforts into holding its market-share.
The net sales of the three companies for 2004 were 1.3 billion euros, and the company has 18 production sites globally. To continue to run the sites as they stand Anders describes how the company has had to streamline its operations: “There is a lot of very tough competition in the business which means that we have had to rationalise our operations; so today every employee has a certain, specific responsibility to carry out. We don’t have the opportunity to employ people to supervise our workers, we have to place our trust in everyone who works for us to do their job. I think that we may have one of the most reliable teams in the Scandinavian industry.”
The unification of the efforts of the already strong companies has meant that the new Ovako is going to have to focus on this year’s output in order to work out any disparities that may exist between the originally separate entities. Obviously the plans for the company can’t extend much further past this goal. “We are focusing on consolidating the benefits of this merger. I think it’s going to take a considerable amount of time, at least the next few years. Because of this it’s a bit early to speculate on the future plans, but our aim will always be to grow strong and to become one of the key players in the European field,” continues Anders. “Any improvements that may be made to the new, larger company in the future will be made in small steps, rather than giant leaps. There is always room for improvement, but gradual progression is the recipe that we believe in.
“Any expansion I can see would be towards the east of Europe. We have customers moving there, and in order to meet their needs we will have to move our operations in that direction. We’ve always had a market there, and people have been saying that we will move for almost the last ten years, but I think that now is the perfect time to realise these plans,” says Anders. These solid plans for the development and strengthening of Ovako’s market position signal the beginning of a new era within the long steel product industry.
VTR
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