A. JOHNSON & COMPANY H.B. (since 1988: AXEL JOHNSON GROUP AB) History
Stockholm
Sweden
Telephone: 08 788 50 00
Founded: 1873
Employees: 3,383
Sales: Skr17.00 billion (US$2.50 billion)
Company History:
The Axel Johnson Group of Stockholm comprises two legally and financially independent companies, Axel Johnson & Co. HAB, also of Stockholm, and Axel Johnson & Co., Inc. of New York. All North American activities of the Group are conducted by the New York company, and interests in the rest of the world (there are subsidiaries and offices in some 30 countries) are controlled from Stockholm. The Group's business is in five distinct areas: raw materials (oil, coal, ore and metals); engineering and industrial products (through Johnson Construction Company, a subsidiary of Nordstjernan AB, the Group is very active within construction); electronics; industrial investments; and global marketing and distribution.
The company's beginnings can be traced back to 1873 when Axel Johnson, then in his 30th year, officially established himself with the Stockholm Board of Commerce as an agent for foreign companies. "In addition to the chemical house in London," he wrote his brother in August 1873, "I have an agency for harvesting machines and one for clothing, also one from Cologne for scrubbing brushes, one from Dresden for textiles, two from Bremen for wool tape and one from Berlin for aniline dyes." Axel Johnson had obtained some of the agencies from W. Ullberg & Co., a leading Stockholm store, for whom he had worked for about three years, latterly as head clerk and silk importer. Before long, he discontinued several of the Ullberg lines but added cheese, wine and cognac. The wine company, Musotte & Girard of Bordeaux, failed soon thereafter but Johnson held the cheese agency for about ten years.
In July 1874, still struggling to make a living from his business, Axel became engaged; ten months later, he was married. By this time, his agency was advertising imports such as Portland cement, coal, coke, chemicals for paper and glassworks, and saltpetre. Many of these products came from Great Britain, and it was to this country, and to Russia and Germany, that Johnson directed much of his attention. An office in London, set up by an associate, Lorentz Tidén, facilitated Johnson's many dealings with British firms. Of notable importance was Johnson's connection with the South Yorkshire Steam Coal Owners Association; both Johnson and Tidén recognized the increasing importance of coal imports to Sweden. The firm's first shipments of the high quality Yorkshire coal were made in the spring of 1875 and within a year Johnson had estalished his firm as a prominent coal importer. Before the end of the decade, A. Johnson & Company was also importing Newcastle coal.
A depression in the late 1870's led to many bankruptcies in Stockholm, but Johnson's diligence kept his company afloat. His major concern was the credit-worthiness of some of the companies he supplied; if several of his clients failed, he would too. The firm's major disappointment was in sales of matches. In his second year of operation, Johnson had purchased an interest in a Swedish match company, but overproduction had outstripped demand.
But while Johnson's match business remained a problem, his representation of Swedish ironworks became a significant and profitable part of his business, largely because of his connection with the Avesta ironworks in southern Dalarna. Johnson had first established contacts with the company in 1875, and four years later he formalized an agreement with the ironworks management. He was granted, with certain restrictions, exclusive agency rights in many Swedish cities for the Avesta plant's thin steel sheets which were in great demand in Sweden's construction industry. At the same time, the Avesta company agreed to fill all of its coal requirements through A. Johnson & Co., provided his prices remained in line with those of other coal suppliers. Soon Johnson was importing other essential items for steel mills--ferromanganese, silicon, pig iron, cement and fire bricks from Great Britain, and coke from Germany.
But despite the ever increasing amount of business, Johnson, who was both enterprising and cautious, kept his office staff to a minimum. He also maintained irreproachable relations with his bankers and was extremely solicitous of his firm's reputation. His careful business practices paid off, and during the 1880's, the firm began to prosper. Johnson finally decided to increase the number of his staff and improved his sometimes unsatisfactory bookkeeping system.
As Johnson accumulated liquid assets, he began to invest in real estate in the Stockholm area and formed the Hornsberg Land Company with three other investors. He was also instrumental in the establishment of the Stockholm Southern Transportation Company, and in 1883, his firm acquired a two-thirds stake in a lumber yard in the southern part of Stockholm where Johnson had lived with his wife and son since 1877. (The son, Axel II, was born in the previous year).
By the autumn of 1882, Johnson and his family (now there were four sons) were installed in a new and fashionable residence befitting Johnson's increasing prominence in the business world. It was a time of greater prosperity and Johnson's enterprises flourished.
There was a modest fall in profits in mid-decade, but as the 1880's drew to a close, results were better than ever. Johnson's holdings by 1890 were ten times what they had been in 1880. Throughout the period, Yorkshire coal accounted for almost half of the firm's purchases, and business connected with Avesta Jernverks AB (the steel company had been reorganized in 1883) remained brisk. By early 1884, Johnson was selling Avesta steel in parts of Britain.
However, by 1890, business between Avesta and A. Johnson & Co. dropped to almost nothing (Johnson's attempts in the 1880's to gain control of the ailing steel company had not been successful) and Johnson turned his attentions to shipping, an area in which he had plenty of experience.
The company's first freighter, purchased in 1885, did not make money and was sold in less than three years. But the Annie Therese, acquired in 1890, became the founding vessel of the Johnson Line. The Annie Therese plied her trade between the Baltic and the North Sea with timber and iron for Britain and coal on the homeward run. By 1905, A. Johnson & Co. owned a North Sea freighter fleet and had become involved in the development of a transatlantic shipping company. At this time, Johnson, now something of a magnate, realized an aim which had eluded him for years; he purchased Avesta Jernverks.
Axel Johnson, who had not enjoyed good health, died in 1910 and his son, Axel II, took over the company reins. One of his first acquisitions was an oil refinery which produced fuel for the firm's ships (the Johnson fleet was the first to be powered entirely by diesel engines). While he had been provided with a solid financial base, Axel II had to contend with the economic upheaval of two world wars and the Great Depression.
At first, A. Johnson & Co., like most Swedish firms, benefitted from World War I. As a neutral power and a major exporter of raw materials, Sweden traded vigorously with both sides; however, as Swedish stocks were rapidly depleted, numerous exports became subject to license and the company grew concerned that both its export/import business, and its shipping interests, would be seriously affected. An agreement with Great Britain in March 1918 provided for limited imports of vital British goods in exchange for the loan of a large part of the Swedish merchant fleet; A. Johnson & Company was kept busy.
After the war, as Sweden recovered economically in step with the rest of the world, the company expanded. It built more ships, acquired a shipyard, and purchased several civil and mechanical engineering firms. The Depression, and grave labor conflicts in Sweden naturally had a profound effect on the company; but the younger Johnson's expansionist policies and the continuation of his father's efforts to diversify, helped the company to weather harshly adverse conditions.
Again neutral in World War II, Sweden tried to protect itself from isolation, and as early as December 1939 it reached a war trade agreement with Great Britain. But the German invasion of Denmark and Norway put Sweden and its industries in a very difficult position. A. Johnson & Company, along with many other Swedish firms, carried on as best as it could and waited anxiously for the end of hostilities.
As an international trader, A. Johnson & Company was particularly concerned by Sweden's isolation during times of European hostilities. Axel Johnson II therefore built on his father's activities in the U.S. market, and sent his son, Axel III (born in 1910, the year his grandfather died), to New York to strengthen the company's ties there. Meanwhile, Axel II tackled the job of rebuilding the company after the devastations of the war. It was no easy task. European recuperation was unexpectedly slow and the temporary elimination of Germany from world trade seriously affected Sweden's recovery program; indeed the country experienced an economic crisis which led to massive cuts in Swedish imports.
By 1951 however, there were signs of major improvements and during the next 15 years, Sweden's total production increased by 66%; in the same period, home consumption rose by 50%. There was good news too for the company in the U.S. Axel III had successfully expanded the American part of the business, and in 1953 he returned to Stockholm to help his father. In 1956 he assumed the presidency of Nordstjernan, a separately administered company which controls, among other things, the important Johnson shipping interests. Upon the death of his father in 1958, Axel III also became president of the parent company.
The third generation Johnson ran the family business for a little over two decades; he retired in 1979 because of failing health and died in February 1988. His period in office was a time of continuing expansion and diversification; while interests in shipping and exports of raw products remained strong, the company reflected the growing importance to Sweden of its manufactured exports. As in the past, A. Johnson & Company invested heavily in the industries it represented as a marketing agent or shipper.
In part, the company's increasing interests in electronics, medical instruments, chemicals and industrial products were developed to offset the problems besetting the petroleum industry. The financial crisis of 1974 and the subsequent economic uncertainties following in the wake of numerous OPEC decisions, as well as the nowentrenched difficulties of heavy industrial operations, were causes for alarm; Johnson suffered some serious setbacks.
In 1986, the Group's raw materials operations reported unsatisfactory earnings; oil business was particularly low since the company decided against trading in a market with sharply declining prices. Activities in stainless steel, chemicals and electronic components also suffered, but the operations of Axel Johnson Instrument AB had a successful year, with increasing sales and favorable profitability.
The present chairman of the newly-named Axel Johnson Group is Antonia Johnson; born in 1943, she is the daughter of Axel Johnson III. Axel Johnson & Co. HAB, Stockholm is presided over by Göran Ennerfelt, and his counterpart at Axel Johnson & Co. Inc., New York is John Priesing. The days when the company was confused with wax floor polish and baby powder are over, and the present administration looks to the future with cautious optimism.
Principal Subsidiaries: Araliace AB; Axel Johnson International AB;
Kratos; Nortex Electronics AB; Nynas AB; Rederi AB; Lexi R. Ribbert AB; KAB Kjellberger AB;
Axel E. Madsen; J.P. Myhre Son Eftr Ab; Nordick Electra AB; Svensk Teknisk Byra AB; Fastighets AB Vildmannen (66%). The company also lists subsidiaries in the following countries: Brazil, Canada, Denmark, Finland, France, Greece, Mexico, Norway, Singapore, South Africa, Spain, Switzerland, United Kingdom, United States, and West Germany.
Source: International Directory of Company Histories, Vol. 1. St. James Press, 1988.