President and chief executive officer, Volvo
Born: August 30, 1951, in Gothenburg, Sweden.
Education: Chalmers University of Technology, MS, 1977.
Family: Son of Lennart (business executive and industrialist) and Inger Hedberg Johansson; married Eva Birgitta Fjellman; children: five.
Career: Centro Morgardshammar, 1977–1979, research and development manager; Husqvarna Motorcyklar, 1979–1982, unit manager; Electrolux, 1983–1988, manager, major appliance division; 1988–1991, executive vice president; 1991–1994, president; 1994–1997, chief executive; Volvo, 1997–; president and chief executive officer.
Address: Volvo AB, S-405 08 Gothenburg, Sweden; http://www.volvo.com.
■ Leif Johansson distinguished himself in the corporate world as a chief executive willing to make the hard, unpopular choices necessary to take a struggling company to the top of its game. As chief executive of Volvo since 1997, Johansson shocked the world by divesting Volvo's car unit, considered Sweden's claim to automotive fame, and selling it to Ford Motor Company in 1999. Before taking the helm at Volvo, Johansson worked among Sweden's corporate royalty, the Wallenbergs, at Electrolux, the world's top maker of household appliances.
Johansson was born in August 1951 and grew up in Gothenburg, in western Sweden. He was the son of Lennart "Erik" Johansson, a corporate maestro who worked for the country's ruling industrial family, the Wallenbergs. The Wallenbergs were legends in Scandinavia, owning majority stakes in numerous companies, such as Electrolux and Scania, and having vast
holdings in other companies through their investment company, Investor. As a teenager Johansson worked on an assemblyline at Volvo, which was headquartered in Gothenburg. Although Johansson did not make his corporate mark in the autoindustry until much later in life, the assembly job was an auspicious start to a long and distinguished corporate career.
At the end of 1960s Johansson studied in the United States and used those years to his advantage, making many valuable business and personal contacts before returning to Sweden. Like his father Johansson studied engineering and in 1977 received a master's degree in science and engineering from Chalmers University of Technology in Gothenburg. Johansson went to work as a research and development manager at Centro Morgardshammar before joining Husqvarna Motorcyklar, which was owned by the Wallenbergs, in 1979. A tinkerer by nature, Johansson enjoyed the internal workings of both motorcycles and cars and frequently worked under the hood of an old Jaguar during his spare time at home.
Johansson went to Stockholm and joined Electrolux as manager of its major appliance division in 1983. He steadily worked his way up the corporate ladder and was promoted to executive vice president in 1988 and president in 1991. He added the title and duties of chief executive in 1994. After only three years of running the home appliance giant, Johansson tendered his resignation in April 1997 to head Volvo, the Swedish auto and truck manufacturer.
Sören Gyll, who had been CEO of Volvo since 1992 and with the company since 1990, had surprised investors and colleagues with his abrupt departure. While some analysts maintained Gyll was forced to retire by Volvo's board, his exit shook up the top management of several of Sweden's top corporations as Johansson left for Volvo and the Wallenberg empire was forced to look for a replacement at Electrolux. Some analysts in Sweden were shocked at Johansson's departure from Electrolux, but others believed the move was part of a Wallenberg master plan to have an insider at one of its largest rivals.
Johansson settled in at Volvo and assessed its manufacturing and marketing problems. His predecessor, Gyll, had sold off all of the company's nonautomotive subsidiaries, but there was still much to be done. As Johansson told the Wall Street Journal , "We're a small player participating in a brutally competitive industry" (April 14, 1998). To compete more effectively Johansson began a series of moves that produced positive results in the long run but much negative commentary in the short term. He slashed Volvo's European workforce 7 percent in as many months and looked to the possibility of a merger to bolster Volvo's sagging bottom line.
Many suitors were eager to merge with Volvo, and Johansson talked with Germany's Volkswagen, but the discussions broke down. Johansson also contended with a friendly takeover offer from the Italian automaker Fiat, which was also declined. Next came the smoothing of strained relations with the Japanese automaker Mitsubishi Motors. Volvo had bought a 20 percent stake in Mitsubishi's heavy truck and construction division, and the two companies had been planning the design and manufacture of a new line of heavy trucks. Production was to take place in a shared manufacturing plant in the Netherlands.
Amid the merger and new product talks, Johansson stunned Sweden and the auto industry in 1999 by announcing the sale of Volvo's iconic automotive division to Ford Motor Company for $6.5 billion. While his countrymen were reeling from the loss of jobs and brand recognition caused by the Volvo automotive sale, Johansson had already begun to implement his master plan: to turn Volvo into the world's largest and best producer of commercial trucks. Johansson quietly bought up stock of Scania, the truck manufacturer owned by the Wallenbergs. Volvo owned 13 percent of Scania by early 1999, much to the dismay of Johansson's former employers.
Although many Swedes considered Volvo cars the country's claim to fame, Johansson believed his long-term plans to capitalize on Volvo's trucks and buses would be the firm's salvation. BusinessWeek characterized Volvo and Scania trucks as the "Rolls Royces of heavy trucks in Europe," and Volvo had always earned better profit margins with trucks than with cars. Johansson's aim was to merge Sweden's top two truck makers, Volvo and Scania, which already dominated one-third of the market. Scania's officials rarely commented directly about Johansson's plans. So much of Scania's stock had been purchased, however, that it was feared a merger with Volvo was the only way to escape a hostile takeover by another company.
Many Swedes were not happy about a Scania-Volvo merger, because consolidation would mean the loss of perhaps thousands of jobs. Heedless of the negative reactions, Johansson continued to buy more than 45 percent of Scania. By 2000, however, the plan was falling apart. The European Union Commission halted plans for a merger, calling it an antitrust violation, and ordered Volvo to sell its stake in Scania by early 2004.
After the Scania fiasco Volvo tiptoed around its former suitor Fiat, which had expressed an interest in merging its truck manufacturing operations. Although there was some interest, Fiat trucks were considered of inferior quality, and Johansson looked in another direction. The French auto and truck maker Renault, which had brokered a merger with Volvo in 1993 only to be rebuffed by Swedish shareholders, entered talks with Johansson in 2000. Johansson intended to buy Renault's heavy-duty trucks unit and its United States-based subsidiary, Mack Trucks. The deal was completed in 2001. Renault received a 15 percent stake (worth more than $1.5 billion) in Volvo, and Volvo became Europe's top producer of heavy trucks and was second in the world only to Daimler-Chrysler.
Volvo celebrated its 75th anniversary in 2002 after nearly two years of poor truck sales in North America and Europe. Johansson and Volvo executives were confident the market would turn around and continued to look for opportunities. After nearly four years of discussions Volvo finally signed a deal with Chinese truck makers to share technology and begin manufacturing a line of heavy-duty trucks. Volvo worldwide operations had bounced back by 2003 as trucks began to roll off assembly lines in China and Russia. By early 2004 Johansson had created a subsidiary to distribute Scania stock to shareholders according to the mandate of the European Union Commission, and the drawn-out debacle faded away.
In seven years at the helm of Volvo, Johansson proved his mettle. He had not only astonished Volvo loyalists but also earned their grudging respect. He divested the "crown jewels" of the legendary automaker and in the process turned Volvo into one of the world's leading manufacturers of commercial trucks and buses. Annual sales topped $25 billion, nearly double Volvo's figures of three years earlier (2000 sales had reached $13.8 billion). Volvo, once an automaker without peer for safety and design, had turned its back on this legacy in favor of another: to be the world's top manufacturer of commercial and heavy-duty trucks.
See also entries on Electrolux Group and AB Volvo in International Directory of Company Histories .
"A $6.5 Billion War Chest," BusinessWeek , February 15, 1999, p. 27.
Brown-Hughes, Christopher, "Volvo Sees Truck Upturn," Financial Times , April 6, 2002.
Burt, Tim, "Leif Accused of Selling Country's Crown Jewels," Financial Times , January 29, 1999.
Dahl, Sverker, "Volvo's Gyll Retires: New Chief Named," Automotive News , February 3, 1997, p. 147.
Feast, Richard, "How Volvo Plans to Stay Single," Automotive News , July 1998, p. 55.
Latour, Almar, "Volvo CEO Sets Plan for Firm: A FasterImage," Wall Street Journal , April 14, 1998.
McIvor, Greg, "Electrolux Chief Takes Over as Gyll Retires from Volvo," Financial Times , January 28, 1997.
——, "New Volvo Chief Takes the Wheel," Financial Times , April 23, 1997.
"Set to Roll in Sweden," BusinessWeek , March 8, 2000, p. 74.
Simonian, Haig, "Remodeled Volvo Gets Back in Gear," Financial Times , December 9, 1997.
"Sneak Attack on the Wallenbergs," BusinessWeek , February 8, 1999, p. 28.
"Volvo Poised to Launch Spending Spree," Auto Industry , March 9, 2001, p.1.