KWH Group

Infobox_Company
company_name = KWH Group
company_
company_type = Private
foundation = 1929
location = Vaasa, Finland
key_people = Henrik Höglund, Chairman Peter Höglund, President Ralf Karlström (KWH Mirka) Hannu Uusi-Pohjola (KWH Logistics) Tom J. Kronlöf (KWH Plast) Kjell Antus(KWH Invest)
num_employees = 2,758 (2006)
industry = Conglomerate
products = Plastic Pipe Systems Abrasives Logistics Services Plastic sheeting, films and packing Real estate holdings Plastic plumbing products
revenue = € 169,3 million euro (2006)
operating_income = € 44,7 million euro (2006)
net_income = € 29,5 million euro (2006)
homepage = [http://www.kwhgroup.com/ KWH Group]

KWH Group is one of Finland's leading companies in plastics, abrasives and logistics services. It is headquartered in Vaasa, Finland.

From a modest start in the timber industry, by 1939 it was the biggest timber exporter in Finland, accounting for 26% of the country’s total lumber exports and some 20% of pulpwood exports Fact|date=February 2008. The company was the world's largest fox and mink fur producer in the 1960s and 1970s, producing approximately 10% of all Finnish mink furs, equivalent to 2% of world production Fact|date=February 2008.

After expanding into plastics production in the 1950s, the company was the first in Finland to manufacture expanded polystyrene sheets, and its brand name Styrox became synonymous with all such products in Finland. Establishing a niche expertise in plastic pipe manufacturing, the company was the first in the world to manufacture a 600 mm diameter pipe in 1964, thereby gaining international recognition Fact|date=February 2008.

Today, the KWH Pipe unit is one of few companies in the world with ability to manufacture PEH pipes with a diameter 1600 mm and larger [Wester, Holger: Det moderna Vasa och dess företag] , while the KWH Mirka unit is the fifth largest manufacturer in the world in volume terms in the coated abrasives sector [KWH Group Ltd: Annual Review 2006] .

History

Wiik & Höglund

Prior to the founding of "Wiik & Höglund", Emil Höglund and Edvin Wiik were both in the timber business. Emil Höglund worked as a clerk and Edvin Wiik worked as an independent buyer of timber for the Hellnäs sawmills. As the sawmill was expected to foreclose after defaulting on its payments, both were faced with unemployment. Discussing their options, they decided to establish their own company "Wiik & Höglund", which was founded on August 28, 1929. The company was to engage in trade in round timber, pit props and pulpwood. Wiik acted as a buyer, and Höglund, having studied at a commercial college and spent some time in England in 1928, was responsible for sales and bookkeeping.

Though they had a prosperous first year in business, thanks to their previous experience in the timber sector, the company also faced periodical difficulties, for example during the depression years of 1930-1933. However, in the late 1930s, the company expanded fast, and became one of the major round timber exporters in Finland, with Emil Höglund travelling as a salesman to Germany, Holland, Belgium, France and Britain. By 1939 Wiik & Höglund was the biggest timber exporter in Finland, accounting for 26% of the country’s total lumber exports and some 20% of pulpwood exports.

Their commercial success allowed them to make investments outside their own company operations, and in 1937 they become a major shareholder in the "Jakobstads Cellulosa Ab" pulp company (majority owned by Oy Wilh. Schauman Ab), and in 1939 they took a significant stake in the "Vasa Rederi Ab" shipping company, later buying up the entire stock. Their holding in "Jakobstads Cellulosa Ab" also increased, and in the 1960s Wiik & Höglund and Keppo jointly held 15% of Oy Wilh. Schauman Ab, making them the biggest private shareholder.

During the war years, Wiik & Höglund exports were virtually halted, and other products were produced to compensate for the loss of exports. Firewood and woodchips now became the most important products, and were mainly purchased by the German and Finnish armies, as well as Finnish State authorities.

After the war, exports of round timber started up again and the company’s previous customers in West Germany, France and Holland again became the biggest trading partners. Profitability was good and profits were re-invested into fixed assets, mainly forest. The most important investment came in autumn 1951, when the plastics company "Holmsund AB" in Umeå, Sweden, (one of Wiik & Höglund's customers), offered them the sole manufacturing rights in Finland. The production started in Vaasa in 1951, and moved to new premises in 1952, where KWH Group’s plastic pipe plant (KWH Pipe) is still located today.

Wiik & Höglund made major investments and acquisitions to expand their plastics business. In 1954, the Vaasa firm Lars Berts was purchased, and in 1955 the first plastic pipes were produced. Wiik & Höglund was also the first company in Finland to make expanded polystyrene sheets, which were marketed under the brand name "Styrox", a name that is synonymous today in Finland with all products made of this raw material [Wester, Holger and Stjernschantz, Göran: Wiik & Höglund 1929-1979 (ISBN 9519930310)] .

Other companies that were acquired were "Forss & Govenius" and "Nars", both from Jakobstad, which have developed into today's KWH Plast [Wester, Holger and KWH Plast: Från vaxduk till plastfolier - KWH plast 1943-1993 (ISBN 952905114X)] . In 1969, Wiik & Höglund and Oy Finlayson Ab jointly purchased a rival polyethylene pipe company Muovitehdas Oy in Ulvila, becoming a Wiik & Höglund subsidiary in 1986 during a restructuring of the pipe business.

In the 1970s, Wiik & Höglund embarked on several large international projects, later to be formed into the WH Pipe International division. Pipe projects in
Brazil, Iraq, South Korea and Thailand increased the company’s familiarity with these markets. Restructuring and concentration on certain products continued in the 1980s, while the company continued to expand abroad. Factories making polyethylene pipes were set up in Denmark, Thailand, Canada, and in 1990 in Malaysia and Portugal. Industrial piping was added to the production programme when Oy Muotekno Ab, Oy Sul-Mu Ab, Laurolon Oy, Plastilon Oy and the French company Sipap Pipe Systems S.A. joined the Group. As a result of restructuring in the Group, the complete pipe manufacturing was transferred to KWH Pipe, which today accounts for around half of consolidated turnover of the KWH Group [KWH Group Ltd: The history of KWH Group 1929-2004] .

Keppo

The site of the Keppo mansion has been characterized by small-scale industrial activities for several centuries. With the Keppo rapids providing access to water power, and in combination with the close proximity to the shipping port in Nykarleby, alderman Samuel Lithovius recognized a business opportunity for processing timber from the surrounding forests, and setup up a water powered saw mill at the site in about 1740 [Kronlund, Johannes: Kepposläkten Nystrand p.4 (1986)] . Subsequent owners developed the site further with a tobacco plantation, spinning mill, pitch works and a linen-, cotton- and textile-mill until 1829 when Keppo was acquired by Carl Otto von Essen [Uppslagsverket Finland: 2:a verket FIM-KEP (2004) (ISBN 9515013690)] .

During the time of Otto von Essen, the sawmill experienced a boom in business. Peter Malm from Jakobstad, a well-known shipowner and industrialist, became a corporate member at the sawmill in 1840. He financed the sawmill and sold the finished products, while von Essen worked as saw inspector and timber purchaser. In the 1860s, the annual production exceeded ten thousand logs. A fire in 1893 destroyed the sawmill, and no saw mill has been operational at the Keppo rapids since. The von Essen family owned the Keppo mansion until 1899 when Hugo Grönlund acquired it, who then sold it to the Wilhelm Schauman Ab company in Jakobstad in 1906 [Backman, Woldemar: Keppo gård (1944) (OCLC 58083532)] .

Viktor Schauman (the son of Wilhelm Schauman) bought the Keppo Mansion in 1918, and after a renovation, lived at the mansion with his wife until 1930, when the mansion was again sold. The main building then became an evangelical High School, and was owned by the guarantee association during 1930-1942. After a period as army accommodation during WWII, the house was again bought and restored by the Viktor Schauman family, who lived at the mansion until 1954.

In parallel with his activities within the "Wiik & Höglund" company ("see section above"), Emil Höglund had been active in mink farming already since 1937, first together with Karl Johan Stuns from Vörå until 1944, and later with Karl-Johan Tidström. Their farming activities expanded rapidly over the following decades and in 1953, the systematic breeding programmes had resulted in a unique mutation, the "Finlandia Topaz", which gained world-wide recognition. In 1954, Emil Höglund and Karl-Johan Tidström bought the Keppo mansion with the accompanying 37 hectares of cultivated land and 418 hectares of forest, establishing the company "Keppo Ltd". All their mink farming activities were now owned by "Keppo Ltd", and a new mink farm was established next to the old mansion. This farm also experienced rapid growth and became the biggest mink farm in the world by 1962. Peak production was reached in the 1970s, when approximately 130,000 skins were produced at the Keppo farm, while the production of all of the Keppo owned farms together were approximately 480,000 mink- and 150,000 fox-skins [Wester, Holger: Keppo – Gården och dess folk (ISBN 9525496023)] .

Keppo Ltd (since 1985 KWH Group Ltd) divested its farming activities in 1992, and the mink farm standing close to the Keppo mansion is now leased and is run by an outside proprietor. The Keppo mansion is still used for KWH Group board meetings. Due to its runaway success in mink farming, Keppo also had available cash flow for making investments outside the farming business. Almost by chance, Keppo found itself as a shareholder in Mirka (now KWH Mirka), which is now one of the mainstays inside the KWH Group [Wester, Holger and KWH Mirka: Mirka under fem decennier (ISBN 9529051379)] . Kimo Bruk (founded in 1703), was taken over by Keppo in 1962, and in 1965, Keppo invested in a refrigeration ship to safeguard its supply of animal feed.

In 1966, Oravais Klädesfabrik Ab (founded in 1885) was offered to Emil Höglund. Though the textile business was in decline, the deal went through, owing to the attraction of its assets of some 700 hectares of forest (in an area in which Keppo and Kimo already owned some 2,000 hectares). In 1979 Keppo acquired a majority holding in the Vaasa printing company "Oy Litoset Ab".

By the 1970s Keppo had become a company which relied on industry for about half its turnover. The company had appreciable assets in forest,as well as a large holding in Oy Wilh. Schauman Ab. Emil Höglund died in 1973, and when Karl-Johan Tidström died in 1975, the company had lost both its founders. The second generation assumed the mantle of management, and Henrik Höglund was appointed as Managing Director of the Keppo Group in 1975.

KWH Group

The Group proper was formed in 1984, when Oy Keppo Ab purchased the remaining half of Oy Wiik & Höglund Ab’s shares that it did not already own, from the Wiikfamily. Oy Keppo Ab had already purchased half of the company from the Höglund family in 1981. A key driver was the need to shape a new corporate culture for the KWH Group, and to formulate coherent strategies, goals, operating principles and ‘rules of play’.

The conglomerate was restructured in the late 1980s and early 1990s, and several divestitures were made, most notable the selling of approximately 13,000 hectares of forest and the share holdings in Oy Wilh. Schauman Ab, as well as the gradual selling of all activities related to the mink and fox farming business.

According to the new strategy, the Group’s resources were to be focused on developing its core operations, which were defined as KWH Pipe, KWH Plast and KWH Mirka. All other aspects of the operations were gathered together within KWH Invest. In the beginning, KWH Pipe received the lions share of new investments. A new production facility was opened in 1990 in Portugal [ [http://www.researchandmarkets.com/reportinfo.asp?report_id=338299&t=t&cat_id= Research and Market] Plastics - Global Outlook 2006] , output in Canada was doubled and new and expanded production facilities were opened in Malaysia and Thailand, while operations in India began in 1992 in the form of a joint venture. Additional investents were made in Sweden, Poland and Germany. However, due to changing market conditions, the operations in China, Germany, the US and India have since closed.

A second area of investmen was KWH Mirka, which from modest beginnings now have achieved a leading position [Nordman, Kurt: Keihäänkärkiä - Kolmetoista kertomusta suomalaisesta huipputekniikasta (ISBN 9519090304)] , especially in automotive refinishing (ART). In volume terms, KWH Mirka is one of the five biggest operators globally in the coated abrasives sector.

In 1999, Prevex became a subsidiary of the KWH Group following the purchase of additional shares, and in 2003, Prevex became a fully owned subsidiary. In 2003, Oy Prevex Ab was the most important part of the KWH Invest division.

Product Divisions

KWH Pipe

KWH Pipe produces PO and PVC based pipes and pipe systems, prefabricated products as well as pre-insulated pipe systems for district heating distribution. KWH Pipe is an international plastic pipe specialist operating in Europe [ [http://www.researchandmarkets.com/reportinfo.asp?report_id=344064&t=t&cat_id= Research and Market] Plastic Pipes - Global Strategic Business Report ] , Asia and North America, with 11 production units and 5 sales offices.

The division specialises in plastic pipe systems for industrial, municipal and building construction application, such as HPAC, sewage and waste water treatment, gas transportation, district heating distribution and cable conduits, as well as domestic waste water treatment plants.

It also develops and markets production technology and equipment, and designs and supplies production solutions tailored to a specific customer [ [http://www.researchandmarkets.com/reports/c62522 Research and Markets] : Pipes and Pipe/Hose Fittings - Global Strategic Business Report] .

KWH Mirka

KWH Mirka produces coated and non-woven abrasives in its locations in Jeppo, Finland and Oravais, Finland. The core business segments are automotive refinishing and industrial finishing. KWH Mirka exports more than 90% of the production to Europe, the USA and Far East.

The product range includes products used by the automotive refinishing trade, original equipment manufacturers (OEM), composite manufacturers, the furniture industry, metal finishing and products sold in hardware, paint and machinery stores. A range of supplementary products including abrasive wheels, sanding machines and accessories complements the product portfolio. KWH Mirka is one of the global market leaders in its largest business segment, Surface Finishing (including automotive refinishing (ART)), original equipment manufacturers (OEM) including subcontractors, composites and the marine industry. In the business segment Wood, a new product programme has been developed in recent years.

KWH Logistics

KWH Logistics operates international transports (Freight Forwarding, Backman-Trummer), and is also undertaking port operations and shipping services (Port & Sea, Backman-Trummer Group). Part of the division specializes in cold storage (KWH Freeze).

KWH Plast

KWH Plast produces sheeting, packaging films and injection-moulded packaging for the food industry, as well as films for labels and stickers of PVC in its production location in Jakobstad. Approximately 90% of the production goes on export to about 30 countries.

KWH Plast is organized into three business units: Stationery, which focuses on office stationery films; PAC, which handles packaging film and injection moulded packaging, and Label, which handles film for adhesive labels, synthetic paper and compound products.

The Stationery product range comprises plastic sheeting for binders, folders and dividers. The product range is supplemented with various trading products, such as mechanisms and cardboard used to make ring binders.

The biggest customer segment for the PAC business area consists of manufacturers of flexible food industry packaging, while the injection-moulded food containers manufactured by PAC go to end-users in the food industry.

Label develops and markets films for niche segments in the labels and printing industries, chiefly for manufacturers of self-adhesive label laminates and directly to label printers.

KWH Invest

Besides controlling a small number of industrial properties which are leased out to partners on long-term leases, the revenues of KWH Invest come mainly from the Prevex unit, which produces products for the plumbing sector [ [http://www.researchandmarkets.com/reports/362133 Research and Markets] Plastic Packaging Materials and Products - Global Strategic Business Report] .

Prevex develops, manufactures and sells complete ranges of water traps for kitchen sinks, bathroom interiors, and floor gullies under the Jafo brand, and produces the most compact water trap in the world today. Prevex is a market leader in Scandinavia in the product group of traps for sinks.

Prevex also markets plastic audio book covers and collaborates with a variety of partners on customer-specific product solutions, such as the cooperation with IKEA for delivery of water traps to IKEA stores around Europe.

References and footnotes