Imatra Steel Oy Ab History

Company Perspectives:

Our aim at Imatra Steel is to be the best supplier in the supply chain through consistent profitability, top quality, and first-class performance. We place heavy priority on developing our operating efficiency, customer partnerships, and networking abilities in order to create added value and ensure continued customer satisfaction with our service. Our personnel share a common challenge to reach outstanding performance through systematic and continuous learning processes. Care for our customers, personnel, owners, and the environment is a vital part of our corporate culture. Our values are goal-consciousness, honesty, and keeping promises.

Key Dates:

1630:

Antskog iron works is founded.

1649:

Fiskars iron works is founded.

1837:

Fiskars begins forging industrial engineering components.

1914:

Kilsta Smide, originally founded in mid-17th century, begins producing forged automotive components.

1915:

Elektrometallurgiska AB, a producer of pig iron and other metals, is founded.

1921:

Fiskars begins producing springs for the automotive industry, then buys Billnäs works.

1926:

Vuoksenniska Oy, a mechanical wood pulp processor, is founded.

1927:

Kilsta begins producing components for trucks.

1933:

Elektrometallurgiska merges with Vuoksenniska Oy.

1964:

Fiskars establishes Billnäs Spring Works to produce leaf springs.

1969:

Fiskars merges its steel production operations with those of Vuoksenniska, forming the Ovako Steel Group.

1979:

Fiskars sells its steel components operations, including Billnäs, to Ovako.

1986:

Ovako merges with Sweden's SKF steel operations to form Ovako Steel Group joint-venture.

1987:

Ovako sells off its commercial steel operations to focus on low-alloy steel production and components production.

1991:

Metra and SKF agree to split up Ovako; Metra creates Imatra Steel.

1998:

Metra breaks up, spinning off Assa Abloy and Sanitec, while keeping Wärtsilä and Imatra Steel operations.

2000:

Metra changes its name to Wärtsilä, and Imatra Steel becomes a Wärtsilä division.

Company History:

Imatra Steel Oy Ab is a specialist manufacturer of steel and steel components for the automotive and mechanical engineering industries. The company's products include low-alloy engineering-grade steel bars, produced at the main Imatra steel works, as well as forged engine blocks and front axles, crankshafts and camshafts, leaf springs and stabilizer bars, connecting rods, and components for steering columns. While many of these products are destined for the automobile market, more than 40 percent of Imatra's sales are generated through components for the heavy truck industry. Altogether, Imatra's automotive components products accounts for 65 percent of its total revenues of EUR 186 million. In addition to the main Imatra works, the company operates works at Billnäs and Kilsta in Finland, and, since 2002, at Ayr, Scotland. The company also operates sales and marketing subsidiaries in Norway, Germany, France, and the United Kingdom. Nearly all of Imatra Steel's revenues are generated in Europe, with clients including most of the major European automakers. Finland itself accounts for 15 percent of the group's sales, while the other Nordic countries represent 36 percent of revenues. The rest of Europe adds 46 percent of Imatra Steel's revenues. Imatra Steel is itself a subsidiary of Finnish shipping power plant manufacturing group Wärtsilä, a EUR 2 billion company listed on the Finnish stock exchange.

Finnish Ironworks Origins in the 17th Century

Formed in 1991 on the breakup of the Swedish-Finnish Ovako steel group jointly owned by Metra and SKF, the origins of the Imatra Steel group could be traced back to the early years of the Finnish and Swedish iron and steel industries. The core of Imatra stemmed from 1630, with the founding of the Antskog ironworks, one of the earliest in the Swedish kingdom, which included present-day Finland among its territorial holdings at the time.

In the 1640s, the owner of the Antskog works expanded, founding a new ironworks in the town of Fiskars. By 1647, the Fiskars works had come into the possession of Peter Thorwöste, originally from Holland, and in 1649 Thorwöste began casting and forging. This lay the foundation for the Fiskars company, which became better known for its scissors and other utensils at the turn of the 21st century.

Fiskars was to change ownership a number of times over the following century, and along the way had ceased iron production in favor of copper production. In 1822, however, the works was bought by pharmacist John Julin, who reoriented the company to iron production. In the early 1830s, Fiskars initiated fine forging operations, producing the cutlery and other utensils that were to make the company a brand name. Fiskars also became an early player in Finland's Industrial Revolution, inaugurating its own machine and engineering workshop in 1837. By the following year, the workshop had completed its first steamship engine.

The development of machinery and equipment, the laying of the Finnish railroad system, as well as the construction of bridges, led Fiskar to continue to expand its production in the middle of the 19th century. In 1890, the company acquired a bankrupt steel mill at Aminnefors, which Fiskars then renovated, installing new furnaces. The development of the internal combustion engine resulted in the creation of new machinery types and new motorized vehicles; it also led to a need for new types of components, including springs. By the end of World War I, the Aminnefors site had begun producing its own spring-grade steel, leading Fiskars to establish a factory dedicated to the production of springs, particularly for the railroad industry, in 1921.

In the 1920s, Fiskars continued to expand its steel production operations, buying up iron and steel works across Finland, including the Billnäs Bruks works, which remained a key part of the later Imatra group. In 1927, the company added its first springs for trucks. By 1964, the Billnäs site added a new plant dedicated to producing leaf springs.

Despite the years of economic and political turmoil, beginning with the Great Depression and extending through the end of World War II, Fiskars remained one of Finland's major corporations. Like many other companies of the era, Fiskars went on a spending spree in the 1960s, developing itself into a diversified conglomerate. By the end of that decade, however, Fiskars' expansion had cut deeply into its profits, and the company was forced to restructure its operations.

Setting up a Finnish Steel Group in the 1970s

In 1969, Fiskars agreed to spin off its steelmaking operations into a new company, Ovako Group, which was formed through the merger of Fiskars' holdings with those of fellow Finnish group Oy Vuoksenniska AB. That company had originated at the beginning of the century, with the establishment of Elektrometallurgiska AB, a producer of pig iron and other metals, in 1915. In 1933, Elektrometallurgiska merged with Vuoksenniska Oy, which had been founded in 1926 and had originally operated as a mechanical wood pulp processor.

Ovako remained a primary supplier of steel for Fiskars, while Fiskars retained a major Ovako (and later Wärtsilä) shareholder. In the late 1970s, as Fiskars continued to narrow its focus onto its core cutlery and utensils, the two company's agreed to transfer more of Fiskars holdings to Ovako, including the Billnäs Spring works. In that same year, Ovako expanded its operations again, adding the Dalsbruk Steel Works of the Finnish Wärtsilä Corporation, an industrial conglomerate with operations including a major ship power supply manufacturing unit.

While Ovako produced a range of steels and steel products--including nails, chains, and wire rods--the company began to emphasize its specialty steel products, especially its automotive and engineering components operations, including front axles for cars and trucks and heavy-duty springs. In 1981, the Billnäs site was overhauled in order to produce new parabolic leaf spring designs. In 1984, Ovako purchased the leaf spring business from another company, Lesjoförs.

In 1986, Ovako merged with Sweden's SKF Group, forming the Ovako Steel Group. Ovako Steel quickly focused on the low-alloy specialty steel market and in 1987 sold off its commercial steel holdings to another Finnish steel producer, Rautaruukki. That year, Ovako's Billnäs unit began developing a new range of tubular stabilizer bars for the automotive industry. Ovako then began an aggressive acquisition campaign designed to transform it into a major steel maker, as well as extending its range into a variety of processed, low-alloy steel products. At the same time, the company began investing heavily in upgrading its steelworks in Imatra, Finland.

One of those acquisitions came in 1988, with the purchase of Sweden's Kilsta Smide, which specialized in die-forged components, including front axle beams and crankshafts. The Kilsta works stemmed from the mid-17th century and had begun producing drop-forged components for the automotive industry in 1914. Kilsta had begun producing die-forged components in the late 1950s and had launched production of heavy crankshafts and front axles in the early 1980s.

Specialized Steel Producer in the 21st Century

At the end of the 1980s, the holding company Metra Corporation was established, taking over such diversified, Finland-based interests as the Wärtsilä power business, Sanitec, a bathroom fixtures producer, locks producer Abloy--subsequently merged with Sweden's Assa to form Assa Abloy--and the 50 percent interest in Ovako not held by SKF.

By then, however, the Ovako Steel joint-venture had run into trouble. Its aggressive spending campaign of the late 1980s had saddled it with a huge debt burden just as the European steel market entered a lasting slump. As Ovako's losses mounted, Metra and SKF decided to call it a day, and at the end of 1991 the two partners agreed to break up Ovako Steel.

Metra took over that company's Finnish interests as well as two of its Swedish holdings, including the Kilsta works. Metra then placed these holdings into a newly established company, Imatra Steel, while SKF retained the remainder of Ovako.

In the early 1990s, Metra moved to focus Imatra's holdings around a core of Imatra Steel and its automotive and engineered components operations. In 1993, Imatra spun off its chain, nail, and cable rod operations in a management buyout. The new company was called OFA Oy.

By the mid-1990s, Imatra had established itself as a major supplier of specialized components to the European automotive industry. This position was reinforced with the launch of the company's Tapertec parabolic spring brand in 1996. In that year, the company also debuted its line of tubular stabilizers under the Benditec brand name. Then, in 1997, Imatra extended its automotive components range with the launch of the group's first steering components.

By then, Metra had succeeded in building up a number of globally competitive companies, including Assa Abloy, Sanitec, and, with the acquisition of the Sulzer diesel engine com- pany, Wärtsilä NSD. In 1998, Metra announced its decision to break itself up, spinning off Assa Abloy and Sanitec as independent companies, although Metra maintained significant shareholding positions in both. By 2000, Metra, now refocused around its ship power supply business, changed its name to Wärtsilä.

If Wärtsilä's power supply business became the company's primary revenue producer, Imatra Steel remained an important part of the company's industrial holdings. As such, Wärtsilä launched a EUR 21 million investment program designed to modernize Imatra Steel's production line, a move designed to step up production levels by some 10 percent by 2003.

Despite the sagging economy at the beginning of the new decade, Imatra Steel continued to look for growth opportunities, particularly for its automotive components operations. At the end of 2001, the company announced its acquisition of Scottish Stampings, based in Ayr, Scotland, which had been part of United Engineering Forgings. Imatra then set up a new subsidiary in Scotland, Imatra Stampings Ltd., for its new purchase. The addition of the Scottish operation, which specialized in front axles, boosted Imatra's position as one of the world's leading producers of forged components for the heavy truck industry. It also added some EUR 22 million to Imatra's revenues, which had neared EUR 195 million in 2000.

By the end of 2002, however, Imatra Steel had faced the consequences of the new economic downturn. With its revenues declining, dropping to EUR 186 million by the end of 2001, Imatra was forced to begin cutting costs, and at the end of 2002 announced its plans to shed some 90 jobs by 2004.

Principal Operating Units: Imatra Kilsta AB (Sweden); Imatra Stampings Ltd. (United Kingdom); Imatra Steel Norway; Imatra Steel Ltd. (United Kingdom); Imatra Stahl GmbH (Germany); Imatra Steel S.a.r.l. (France).

Principal Competitors: Arcelor S.A.; ThyssenKrupp Materials und Services AG; Ilva SpA; Aceralia Corporacion Siderurgica S.A.; Benteler AG; Rautaruukki Oyj; Georg Fischer AG; Imerys; Vallourec S.A.; Gonvarri Industrial S.A.; Babcock and Wilcox Co.; AvestaPolarit ABE AB; Lurgi Lentjes AG; Swiss Steel AG; Kuznetsk Steel Works Joint Stock Co.

Further Reading:

• "Imatra Steel Lays off 90," Nordic Business Report, November 12, 2002.
• "Metra to Split into Three," Financial Times, May 12, 1998, p. 32.
• "Wärtsilä's Imatra Steel Acquires Forge in Scotland," Nordic Business Report, November 6, 2001.
• Wood, Peter, "Imatra Acquires Scottish Forge," Steel Times International, December 2001, p. 5.

Source: International Directory of Company Histories, Vol. 55. St. James Press, 2003.

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