Fiskars Corporation - Company Profile, Information, Business Description, History, Background Information on Fiskars Corporation

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Company Perspectives:

Fiskars is a company with roots and wings. Its roots have stayed firmly embedded in the soil of its old ironworks community in western Uusimaa Province in Finland, but its wings have shown themselves to be strong enough to support its consumer-driven business throughout the world.

History of Fiskars Corporation

Fiskars Corporation, headquartered in Helsinki, Finland, is one of the oldest companies in the western world, having been established as Fiskars Ironworks in 1649 and in continuous operation since then. Even during its involvement in several wars between Sweden and Russia, Fiskars gained a reputation as one of the finest iron and copperworks in the north. In the 1830s, the company expanded its knifeworks, manufactured forks and scissors, established Finland's first machine shop, and manufactured the first Finnish steam engine. After surviving the ravages of two World Wars, Fiskars gradually became the world's leading manufacturer of scissors and of other cutting products for home, school and office; produced lawn and garden accessories; and made products for craft and outdoor-recreation activities. The company's main focus is on the consumer products business that represents over 90 percent of corporate sales. Fiskars is organized into three business units, based on products: The Consumer Products Group, Inha Works, and The Real Estate Group. The Consumer Products Group is the largest business unit and is responsible for all the Fiskars' consumer products manufactured and sold throughout the world. Fiskars products are manufactured in 11 countries and marketed in 120 countries. Inha Works manufactures aluminum boats, building components, and rail fasteners, primarily for the Nordic markets. The Real Estate Group manages the corporation's properties and related services. Over the years, many of Fiskars' wide range of products have won prizes at international exhibits. Fiskars' consolidated net sales in 1998 amounted to US$ 626 million, of which 94 percent was generated outside Finland.

Industry Background

Finland's experience as an iron producing area dates back to the Iron Age (circa 600-800 BC). In the early Middle Ages, Finland was still a sparsely populated, remote country where the inhabitants farmed and also made pig iron from the ore gathered from their country's lakes and bogs. In the 12th century, Finland, which had remained relatively isolated from Western Europe, was annexed to Sweden and then began to evolve in the trading and the mining industries. During the reign of King Gustavus Vasa of Sweden-Finland, the first iron mine was opened at Ojamo in Lohja, Finland, in 1538-40. About 20 years later, the King set up a simple bar-iron shop which used ore from the Ojamo mine. Sweden had already become an important exporter of iron ore to Europe.

Early in the 17th century, under the reign of King Gustavus II Adolphus, Sweden-Finland became a great power and was a major producer of iron. However, Sweden's participation in the Thirty Years' War--fought on political and religious issues among the Germans, Swedish, French and Spanish, and ending in 1648--delved deeply into the Swedish kingdom's resources. The abundance of Finland's unharnessed water power and, especially, its immense forest resources for charcoal production (charcoal was made by burning wood in kilns) made it feasible to found ironworks in that country. Furthermore, private merchants, as well as the Crown, were allowed to develop the iron trade. Between 1616 and 1649, ironworks were established in Mustio, Antskog, Billnäs, Fagervik, and Fiskars--all located in, or close to, the parish of Pohja, which became the center of the Finnish iron industry. According to the Fiskars' company history Fiskars 1649: 350 Years of Finnish Industrial History, 'the term ironworks referred to industrial establishments that had received official permits for such things as pig-iron works, blast furnaces and other installations which concentrated mainly on refining iron ore and processing iron.'

In 1649 Peter Thorwöste, an immigrant from Holland, acquired Antskog ironworks. He received permission to mine iron ore from the Ojamo mine and to manufacture cast iron and forged products, with the exception of cannons. Thorwöste also gained a permit to set up a blast furnace and bar hammer in Fiskars Village, in Western Finland. Thus, Fiskars IronWorks came into being. Mining ore in Finland soon proved to be unprofitable; therefore iron ore was imported from the Utö mine in the Stockholm archipelago.

Among the items that Fiskars Ironworks produced were nails, wire, knives, hoes, reinforced wheels from pig iron, and cast-iron products--such as pots and frying pans. The finished products were sent via Pohjankuru either to Stockholm or to the southern provinces along the Gulf of Finland. Bar iron was exported to Sweden and sold at Stockholm's Iron Market. In 1656, according to 350 Years, the Fiskars and Antskog ironworks had a workforce of 54, who were paid in cash and in goods. Employees included a master builder, a furnace supervisor, and 16 smiths. The peasants engaged by the ironworks worked 1.5 days a week.

1700-1900: Famine, Wars, Autonomy Under Russia, New Ideas

The last years of the 17th century brought famine to Sweden-Finland; the country was reduced to poverty and no longer enjoyed the unity brought about by King Gustavus Vasa. The famine claimed the lives of one-third of Finland's 500,000 inhabitants. The Russians began to ravage the Finnish coast in 1700, at the beginning of the Great Northern War that did not end until 1721. By that time, many Fiskars' workers were dead, and Sweden-Finland was no longer a powerful country. The new great power was in Russia and at St. Petersburg, the capital city. After the war, while the Finns could not finance the revival of their ironworks, wealthy men from Stockholm invested money in Finnish ironworks and recruited workers from abroad. In 1740, there were only 115 inhabitants in Fiskars Village.

As economic and cultural activity slowly revived, merchant shipping increased on the Baltic Sea and elsewhere. James Watts' invention of the steam engine offered new hope for industry, and coke could be used to replace the labor-intensive making of charcoal. Copper ore was discovered in the Orijärvi area, and Fiskars began to refine copper as well as iron. In 1783 Bengt Magnus Björkman acquired both the Fiskars and the Antskog ironworks. Fiskars' coppersmiths continued to forge artistically crafted utensils well into the 19th century.

In 1808 war broke out again between Russia and Sweden with the result that Finland was ceded to Russia and became an autonomous Grand Duchy with the status of a distinct nation. Bengt Ludvig Björkman, son of Bengt Magnus, moved to Finland and took over the management of the Fiskars, Antskog, and Doski ironworks. Problems with the availability of iron ore and with former trading relations, combined with Bengt Ludvig's option for a life of luxury, led to Fiskars being sold to Finnish Johan Jacob Julin. Fiskars had closed down its blast furnace in 1802, so what Johan Julin took over was really a copperworks rather than an ironworks.

Johan Julin sought knowledge not only for himself but for others. He had a school built so that all children, even those who were working, could be educated. He participated in founding the first savings bank in Finland and created a model farm in Fiskars Village, where crop rotation was practiced. Intending to shift the emphasis from refining of iron ore to the refining of iron, he travelled extensively in Sweden and Britain to gather information on fine iron forging, among other things. A forge was completed on the upper Fiskars River rapids in 1836. Although the ironworks used most of the forge's products, household utensils were also made at the forge. Furthermore, the Fiskars forge became famous for what was considered an extraordinary achievement at that time: 90 cast-iron columns and a large water-wheel were built for the Finlayson cotton mill in Tampere in 1837. The water-wheel's diameter measured more than six feet and did not have a match in all of Europe.

In 1837 Johan began construction of Finland's first machine workshop. The following year, the workshop produced the first steamship engine for the SS Helsingfors, the first Finnish steamship. In 1849 Johan was elevated to the rank of nobleman.

During the winter of 1851, the SS Majava ('the Beaver') was built on the ice in Pohjankuru harbor from finished components transported by horse and sleigh from the Fiskars machine shop. The ship was 'automatically launched,' so to speak, when the ice melted in the spring. Other products of the machine workshop included the iron gate and bridge structure for the Saimaa Canal; blowers; warm air generators; and agricultural equipment (such as ploughs, chaff rakes and sowing machinery).

The Industrial Revolution accelerated industrial and economic development in Europe; Fiskars' skilled workmen established the ironworks' reputation of being the finest iron and copperworks in the north. The ironworks not only expanded its manufacture of knives, forks, and scissors but also contributed to the development of Finnish agriculture. Various ploughs were imported for experiments, and then a plough especially suitable for Finnish soil was created. According to 350 Years, 'Ploughs became the ironworks' most important line of products. At the 1860 St. Petersburg exhibition, Fiskars' wooden plough won an award. By 1891 the ironworks was producing 11 different ploughs, and by the end of the century the range had been extended to 40 models. In all, over a million horse-drawn ploughs were made.'

Johan Jacob von Julin died in 1853, and a guardianship administration, known as the 'Ironworks Company John von Julin,' was established to manage Fiskars Ironworks. However, power gradually became consolidated in the hands of Emil Lindsay von Julin. Furthermore, the company began experiencing financial problems, lacking adequate operating capital. As part of its recovery plan, Fiskars became a limited liability company, known as Fiskars Aktiebolag-osakeyhtiö, with a share capital of one million Finnish marks.

A railway line built between Helsinki and St. Petersburg offered additional opportunities for trade between Finland and Russia. In fact, Fiskars' continuing profitability was partly due to the fact that about half of the exports went to Russia. At the St. Petersburg's Exhibit in 1860, Fiskars received its first recorded recognition of a product: an award for a new horse-drawn plow. During the last decades of the 1800s the company invested in additional equipment for the ironworks. For example, Fiskars acquired the √Öminnefors works and began to use a Siemens-Martin furnace built in 1887, the third of its kind in Finland. In a bankruptcy sale, Fiskars bought the √Öminnefors rolling mill, which had four puddling furnaces, two welding furnaces, and a brick-built outdoor kiln for drying wood. In 1894 there were 250 employees working at the ironworks; the entire community consisted of about 1,050 inhabitants.

1900-97: Two World Wars, Independence, Strikes, Reorganization

Initially, World War I increased orders from Russia; however, when the Bolsheviks seized power, the upheaval had strong repercussions in Finland. In December 1917 Finland issued its Declaration of Independence, and the ensuing civil war and loss of the Russian market upset its economy. To compensate, Fiskars targeted the newly independent Baltic states and tried to win a larger share of the Western Europe market. After World War I, Fiskars began to expand and to modernize its operation. The rolling mill was renovated; better steel-refining methods were developed; and Fiskars founded Finland's first metal spring factory. The company acquired the Inha ironworks in √Ąht√§ri, Oy Ferraria Ab with its plants in Jokioinen, Loimaa, and Pero on the Karalian Isthmus, and several other companies.

In 1930, worldwide economic depression halted Fiskars' expansion. Though an upward trend soon followed, involvement in World War II made Finland pay dearly in human lives, virtually wiped out trade, and stalled production for the domestic market until 1948. The end of the war and the signing of a peace treaty with the Soviet Union helped Finland on the road to recovery. Specifically, postwar demands by the Soviet Union generated much business for the metal industry. However, in 1956, as Finnish leader Urho Kekkonen began his 26-year presidency, a general strike practically paralyzed every field of industry; inflation and devaluations would continue into the early 1990s, while a strike in 1971 led to the closing of the Fiskars plant for several weeks.

During such challenging economic times, diversification seemed imperative. Fiskars at first had a moderate degree of success with new product exports and new designs. For example, the company was one of the first in Europe to produce the microwave oven in 1965, and the company also began a foray into plastic tableware in 1962.

Also during this time, a product was introduced for which Fiskars would gain its greatest notoriety, at least in the United States. Through experiments with strip stainless steel and injection-molded plastics, Fiskars engineer Olaf Backstrom reportedly designed the world's first light-weight 'classic scissors' with orange plastic handles. The design was as artistic as it was functional. The scissors were later included in the Design Collection of the Museum of Modern Art in New York and in the Philadelphia Museum of Art. A few years after their introduction in the Finnish market, the scissors were spotted by representatives from Normark, a U.S. company that had distribution rights to Rapala lures, also manufactured in Finland. Normark obtained distribution rights to market the scissors in the United States, where they would quickly find an appreciative audience.

In the early 1960s Fiskars had set out to expand by means of takeovers. However, this expansion program, too broad in scope, was eroding the company's profits, and Fiskars soon found itself in need of focus and restructure. Toward that end, Fiskars sold some of its land and, more importantly, divested its original steel-making business, which it sold to Ovako Oy Ab, thereby safeguarding its supplies of raw materials and boosting Fiskars profits.

Under the tenure of G&ouml¬ģan J. Ehrnrooth, chairman of the board, Fiskars completed its restructuring, with a strategy now based on new products, new markets, and acquisitions based on competencies. To assure its success as an international company, Fiskars focused on the United States, as it had the world's strongest economy and, according to 350 Years, could provide 'a foundation for internationalization, as well as a good location for expansion and also for gaining valuable experience.'

1977-2000: Fiskars' Cutting Edge

In 1977 Fiskars established a scissors plant in Wausau, Wisconsin, and then acquired several consumer-oriented companies, such as Wallace Manufacturing Co., Gerber Legendary Blades, and Coltellerie Montana. Gradually, scissors became a profitable product line that appealed to consumers around the world. Over the next 20 years, Fiskars would come to function well as a business corporation structured in three business units--The Consumer Products Group (CPG), Inha Works Ltd., and the Real Estate Group--and made judicious acquisitions of companies that strengthened these units.

The Consumer Products Group (CPG), the largest business unit, was headquartered in Madison, Wisconsin, and managed the consumer business worldwide through offices in North America and most of the European countries, including an office and manufacturing facility in Fiskars Village. In 1996, CPG accounted for the largest share, about 89 percent, of the parent company's $461 million in revenues. This Group concentrated its activities on the manufacture, sale, and distribution of three primary families of products; scissors and other housewares products; outdoor-recreation products; and lawn and garden products. 'We're very decentralized,' CPG Vice-President Roy Prestage told Judy Newman of the Wisconsin Business Journal. 'We keep decision-making close to the marketplace so we can respond quickly to its needs,' Prestage explained. A case in point was Fiskars' Softouch Scissors, with their oversized, cushioned gray handles operated by squeezing the whole hand. The new scissors were developed when market studies showed that people with arthritis found regular scissors too painful to use. Moreover, the company applied the 'whole hand' technology to a line of garden tools. 'Ergonomics is what we're about,' commented James Woodside, another CPG Vice-President.

Fiskars bolstered CPG operations in the late 1990s with the acquisitions: Aquapore Moisture Systems, Inc., which manufactured garden irrigation products; EnviroWorks, Inc. a manufacturer of portable shade structure and plastic-resin flower pots; Werga-Tools GmbH, a German distribution company in the lawn and garden products market; and Vikingate Ltd, a British company specializing in propagators and plastic flower pots. Research and development remained vital at CPG and in its new subsidiaries; Aquapore, for example, recycled automobile tires to make crushed-rubber mats, which were then used in gardens to prevent weed growth, as decorative garden stepping stones, and in rubber lawn edgings. In 1999 Fiskars acquired three additional companies that manufactured lawn and garden products: Richard Sankey & Sons Ltd., which made plastic pots similar to those made by EnviroWorks; American Designer Pottery L.P., which produced large decorative plastic pots; and Syroco Inc., a leading American manufacturer of resin outdoor furniture. As a result of all these acquisitions, the Lawn and Garden Group became the largest business category in the Fiskars CPG division.

The second product group at Fiskars was represented by Inha Works, Ltd., headquartered in √Ąht√§ri, Finland, founded in 1841, and part of Fiskars since 1917. Inha was the leading manufacturer of aluminum boats for professional and leisure use in Northern Europe. The company also forged products and building components--such as hinges for the door and window industry and special-purpose radiators for humid rooms--distributed mainly to the Nordic market. Inha's principal forged products consisted of rail fasteners that were sold mainly to Finnish, Swedish, and Norwegian railways under long-term supply agreements. According to Fiskars' 1998 Annual Report, Inha's 'customer-driven product development, innovative models, and continuous improvement of production processes strengthened the position of the 'Buster' [brand name] as the leading outboard boat in Scandinavia.'

The Real Estate Group, headquartered in Fiskars, managed the corporation's 15,000 hectares (37,050 acres) of real estate properties and related properties. The land holdings, situated in Southwest Finland, were a valuable corporate asset that included some 100 lakes and 250 kilometers of shoreline. A 1998 agreement with the environmental authorities resulted in the designation of 100 hectares for the protection of the old-growth forest in this area. The major part (11,000 hectares) of the real estate was located in and around Fiskars Village. According to long-term plans, only environment-friendly forestry and farming were allowed; wood had to be harvested in a way that assured a good balance between the requirements of forest regeneration and the needs of the wood-processing industry. In order to preserve the Fiskars village as a lively historical industrial community, revenues from real-estate operations were applied to maintenance of the buildings and surrounding landscape.

Thus Fiskars approached a new millennium as a strong, international company based on providing innovative solutions to the needs of consumers. As its corporate vision statement intimated, the company remained 'embedded in the soil of its old ironworks community' as it opened its strong business wings all over the world.

Principal Subsidiaries: Fiskars Oy Ab; Inha Works Ltd.; Ferraria Oy Ab; Fiskars Consumer Oy Ab; Fiskars Sverige AB (Sweden); Fiskars Norge A/S (Norway); Fiskars Danmark A/S (Denmark); Fiskars Deutschland GmbH (German); Fiskars Europe B.V. (Netherlands); Fiskars France S.A.R.L. (50%); Fiskars Montana S.r.l. (Italy); Fiskars Poland Ltd.; Fiskars Hungary Ltd.; Fiskars UK Ltd. (U.K.); Fiskars Canada Inc.; Fiskars de Mexico S.A. de C.V.; Fiskars Inc. (U.S.); Fiskars Pty Limited (Australia); American Designer Pottery, L.P. (U.S.); EnviroWorks, Inc.; Aquapore Moisture Systems, Inc. (U.S.); Richard Sankey & Sons Ltd. (U.K.); Vikingate Ltd. (U.K.); Werga-Tools GmbH (Germany); AO Baltic Tool (Russia).

Principal Operating Units: Consumer Products Group; Inha Works; The Real Estate Group.


Additional Details

Further Reference

'Fiskars: Finland's Gateway to the World,' Focus (Fiskars Corporation's Information Magazine), January 1999.Fiskars 1649: 350 Years of Finnish Industrial History, Pohja, Finland: Fiskars Oyj Abp, 1999, 84 pp.Newman, Judy, 'Finnish Firm Fiskars Grows with Expanded Product Line, Acquisitions,' Wisconsin State Journal, February 27, 1997.

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