Logset 20 ENG by Bock's Office

LOGSET 1992–2012 NEVER GIVE UP

ISBN 978-952-93-1038-8 Publisher: Oy Logset Ab Photos: Logset’s and private persons’ archives Graphic design: Advertising agency Bock’s Office English translation: Advertising agency Bock’s Office Print: Korsholms Tryckeri/Ykkösoffset Copyright: Writers

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DEAR READER,

This is what happened. All the events and episodes described in this book truly happened. Simple, so far. What is to be included? What can be left unsaid? How are these events to be interpreted? How have different things affected what happened afterwards? How can this be assessed on a scale from “good” to “bad”? Good for whom? Bad for whom? Who is this book written for? And why? There are no simple or unambiguous answers. It is with gratitude that I have accepted the task to write down the story of Logset’s first 20 years. The client, Oy Logset Ab, has dictated no demands or conditions in advance, and fully accepts that this will not be a historical account in any traditional sense, with dry facts and figures and long lists of this and that. Instead, there will be plenty of incidents and winged words. I imagine that my readers mainly include those who have been involved in one way or another: personnel, clients, distributors, suppliers, and people who are otherwise interested in the forest machine trade. Certain things may be described in too much detail to those familiar with the subject, while others may not have all the background information to fully understand the context. There is a red thread which partly follows the time axis from 1992 until today, and partly consists of subjectively selected events that had an impact on different parts of Logset’s operations and operating environment. In italics are interspersed thoughts, my own and those of others, on different events and phenomena. These personal reflections are always preceded by the name of the author. Other claims, interpretations, conclusions etc. are entirely my own, written down with the subjective freedom to interpret personal experiences, and further refined with the unerring wisdom of hindsight. Thus I take full responsibility, and potential complaints and expressions of discontent can be aimed at yours truly. Compliments can be paid to Logset, which stands for the contents. Persons are mentioned by name when there is a reason to tip one’s hat to them. In less flattering circumstances, I have chosen not to increase their burden, even if I realise many can easily identify the person in question. Over Logset’s first 20 years, hundreds of people have passed by. Some have only paid short visits, others have been permanently engaged. Most would have deserved to be mentioned by name thanks to their merits and efforts, but unfortunately, there simply isn’t enough space. Please show understanding, this is only a small selection of all the experiences we have shared over the past 20 years. To everyone who has contributed to Logset’s success: Thank you! Without you this book would not have come into existence. Kristian Stén

PROLOGUE It is a sunny Monday morning in mid-July 1992.The whole family is waiting in the Saab in line to cross over from Fjärdskär to Replot with the ferry. We are on our way to pick up our dog Ruff, who has stayed at a boarding house for dogs for two weeks while we have been in France.Together with our distributor O.L.S in Limoges I have travelled the country to meet potential Norcar clients. Kerstin and our boys have whiled away the time in Dordogne while daddy disappeared off to French country roads and motels. At the end of the journey, we spent a few wonderful days together in Provence. Kerstin is reading the Saturday issue of the newspaper Vasabladet to keep us up to date with potentially interesting news during the holiday season.We still have two weeks until it is time to return to Kvevlax and the forest machines. –– Oh my God, no! Kerstin exclaims. It’s gone bankrupt. –– What is? I ask in surprise. –– Well, Norcar of course.

I snatch the paper and on the front page the headline is screaming at me: “Norcar gone bankrupt, 120 lose their jobs”. Suddenly I understand. Earlier in the morning when I phoned my parents to tell them we got home safe and sound they made awkward remarks on their own business, telling me it wasn’t easy for them either.They thought I knew and I had no clue what they were on about. We collect the dog hurriedly and then I drive like a madman to Kvevlax where I am greeted by my colleagues Gustav and Seppo, and receiver Timo Jansson. The insight slowly sinks in. Defeat, melancholy and frustration, and also a certain shame, surrounds the company and its employees. Personally, I am unemployed. I have no status, no job, no pay, no car and no mobile.As in a ritual I hand in my credit card and keys to the receiver, who cuts the card in half. Everything is reset.

Norcar 490, a classic

THE NORCAR LEGACY

As early on as the mid-70’s, Oy Norcar Ab presented a small tracked thinning forwarder.The reception was not exactly overwhelming, but not entirely negative either, as the company soon moved on to the Norcar 440, an 8-wheeled thinning forwarder with fully hydrostatic wheel motor transmission. It was followed by the Norcar 480, and then the Norcar 490, the first forwarder in characteristic Norcar green, of which more than 200 were manufactured. The first harvesters were produced at the end of the 80s, and soon the forest machines stood for half of the company’s sales. Compared to Norcar’s earlier main products, feeding machines and other equipment for the fur farming industry, the forest machine market showed better growth potential and less sensitivity to economic fluctuations. Norcar caught the eyes of others, and in August 1988 Erik Norras sold his life’s work to the Savings Bank Group’s investment company, In-

terpolator Oy. A new, turbulent phase began. Interpolator invested heavily in forest machines, and Finntrac Oy in Kurikka and Ponsse Oy in Vieremä where incorporated in the forest machine group with Norcar as parent company. All that glitters isn’t gold, and Finntrac turned out to be a veritable minefield. The founder of Ponsse, Einari Vidgren, had done a good job together with skilled co-workers, clients and partners, developing a high-quality product well suited for the requirements of the forest.As a full-fledged businessman, he also made sure to get a good price for Ponsse, without letting go entirely of his life’s work.Apart from a considerable sum, he also got 20% of the Norcar shares, and membership in the board.With his great authority and straightforward style he steamrolled the rest of the board, and ensured that he, apart from the 20% share, also had 80% of the votes.

Kristian Stén became the new CEO of Norcar in autumn 1988, handpicked by Interpolator. In the summer of 1990 he was definitively at collision course with Einari, and replaced by Gustav Frantzén, who was left with a rather ungrateful and stressing job, with signs of economic recession on one side and an increasingly choleric and unpredictable Einari on the other.At the same time, Norcar was the least of the principal owner Interpolator’s problems, and thus a clear act of will was missing on their behalf. In Kvevlax, the new management got down to refining the company’s operations, and the fur farming equipment was concentrated to the wholly owned subsidiary Norcar-BSB in Nykarleby. Changes were fast and abundant, but the plans and ambitions outnumbered them. Not everything went smoothly, and for many who were accustomed to a charismatic owner/CEO, the transition to a hired CEO and a diffuse owner in Helsinki wasn’t easy. Interpolator’s CEO Timo Summa, who usually had a somewhat cosmic perspective on things, got this question at a personnel meeting:“Under whose responsibility are we here?” Can confusion be better expressed? The marriage with Ponsse was stormy, but did result in a few positive developments worth mentioning. In record time, a new universal harvester was produced, based on Norcar’s base machine and Ponsse’s harvester head, crane and measuring system. Norcar 600 H was the best selling harvester in Finland in 1989 and 1990. As a result of determined negotiations, in 1990 a strategic alliance was formed with American Blount, an affair which filled the till and also led to a successful introduction of Ponsse’s machines on the American market. Norcar gained vast knowledge on harvester technology and measuring systems from Ponsse, while Ponsse gained access to valuable channels for export. This both Logset and Ponsse profited from after the divorce resulting from Norcar’s bankruptcy in 1992. In both Kvevlax and Vieremä many of the Savings Banks’ millions were invested in data systems and production equipment. Interpolator’s flagship Tampella Oy was not doing well, and in autumn 1991 the house of cards came tumbling down. Norcar fell into the hands of the Industrialisation Fund of Finland Ltd, which really wasn’t interested in anything else than getting rid of it all as soon as possible.The solution was to detach Ponsse from Norcar and try to raise funds by selling Ponsse. Norcar became the official “cost and trouble centre”, and through its bankruptcy was driven into the arms of the all-forgiving credit loss reserve funds of the Finnish state.

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IN THE CAGE OR IN THE FIELD?

Together with Gustav and Seppo we continued to “go to work” as usual. We analysed different solutions on our own and tried to steer the receivership in the right direction. Already during the spring we had sounded out the possibility of an MBO affair (Management Buy Out) with the Industrialisation Fund of Finland, but didn’t get any proper response. This was our chance, but dare we take it? Gustav had a good analogy about rabbits in a cage. Until now, we had all been in the rabbit cage, where everything was relatively safe and someone fed us carrots every day. Now the cage door was open, but the daily carrots where gone. On the other side of a busy highway, there was a carrot field, but there were also wolves lurking about at night. Did we dare to go across the road to the carrot field, or should we find a new cage where someone would feed us regularly? At the beginning, the cage shimmered. We helped the receiver to sound out the few available options, but fairly soon it became clear that this is where we get up, get out and go find our carrots ourselves. On 12 August 1992 we founded Logset, mainly to handle sales of spare parts and service for the population of some 500 Norcar machines, located all over the world. The name Logset has an interesting story. We wanted some distance to Norcar and its bankruptcy.We wanted a name that works internationally in many languages, without causing offense. It shouldn’t be too closely related to a certain line of business, as we didn’t know what we would become once we grew up. One morning Gustav came in and announced that he had it. In his car he had been listening to Roxette and developed the thought into: why not Logset. No need to pay millions to brand consultants. Around this time, we also learned that Einari Vidgren was about to redeem Ponsse from the Industrialisation Fund of Finland. We all agreed strongly that if we had those millions Einari got for Ponsse a few years earlier, we would never have invested them in the manufacture of forest machines. But destiny had something else in store for us, too. K.S.

AGREEMENT WITH

THE BANKRUPTCY ESTATE

The bankruptcy estate of Norcar included 60-something trade-in machines in Kvevlax and at Norcar Svenska Ab in Jönköping, Sweden. When a manufacturer goes bankrupt, the price of all machines of this brand naturally sinks steeply. This applies to both new unsold machines in store as well as tradein machines. The reason for this is concerns for future spare part and service availability for these machines.The smaller the machine population, the more reason for concern. History has witnessed this many times, and Norcar was no exception. A relatively small manufacturer with unusual technology (hydraulic wheel motor transmission), scattered population and a less than unblemished quality reputation. There was an unquestionable demand for functional and reliable spare part and service operations. The next challenge was to keep the distribution network going. Forest machines cannot be sustained without local back-up, but on the other hand it is difficult to survive on serving a limited number of machines.The chain is in need of machine sales in order not to break. Norcar’s bankruptcy was timed to one of the worst recessions on the market. All players were suffering and new machine sales had come to a standstill due to the tight financial situation. The freshly started Logset detected a niche. By quickly restoring trade-in machines and selling them at realistic daily prices, we could beat the larger, established manufacturers at the game.They were stuck with over-priced tradeins and had difficulties reacting fast enough. Receiver Timo Jansson also quickly realised that he was sitting on a store of machines which required knowledge and refinement in order to be traded. After diverse negotiations and refining of agreements, Logset got access to both the spare part and trade-in machine storages on affordable terms of payment. By the end of 1992, operations were running rather well. Logset was able to re-employ the best of Norcar’s personnel. The aftermarket was kept going by means of a comprehensive spare part stock. The distributors could make quick deals with about seventy factory restored machines.The assets of the bankruptcy estate were realised at reasonable prices. Logset was making money. It was time for the next step.

A typical delivery during the first year. Two fully renovated Norcar forwarders, 480 and 490, plus equipment and parts loaded for Armer Salmon, Ireland. Note how well the trailer capacity has been utilised.

In order to take up the manufacture of new forest machines in Kvevlax again, certain conditions had to be met. We needed skilled people, capital, distribution channels and demand.This seemed to be under control. But we also needed product rights, components, subcontractors, production facilities and a reliable future. New negotiations with the bankruptcy estate followed, and it could relatively easily let go of the immaterial rights to Norcar’s forest machines.What other serious alternatives where there? In order to get everything to work and time different steps and phases right, we figuratively speaking worked with graphic watches. If it was only three o’clock, there was plenty of time, but once it struck eleven we were already in a hurry to finish that particular part or agreement. The factory premises turned out to be a real stumbling stone. Logset needed barely half of the facilities Norcar had used, and the price of the real estate was far beyond Logset’s ability and means. It was not possible to play the no options card.The market value of an estate is relatively easy to define and industrial halls will find a buyer sooner or later. In other words, it was as

bright as day that the bankruptcy estate wasn’t going to make any special arrangements for Logset. The municipality of Korsholm and Kvevlax Sparbank became our saviours. The bank’s CEO Sven-Erik Kjellman was willing to back us up and believed in the future of what had once been the largest local employer.The elected municipal officials were harder to convince, and many questioned the municipality’s stepping in and supporting a company in this way. The majority of the representatives, however, supported the investment, and in autumn 1992 the municipality of Korsholm and Kvevlax Sparbank founded the company Korsholms Industrihallar Ab, which bought Norcar’s real estate from the bankruptcy estate. The main part of the facility was rented to Oy Logset Ab, and the remaining part to several small businesses, some with a direct connection to Logset’s operations.The rent income covered the running expenses and the interests, but there was no possibility to make investments in the facilities.A few years Our staff prepared this cake for the first anniversary.

Three fresh entrepreneurs or ”triers” as Seppo used to say. From left: Seppo Koskinen, Gustav Frantzén and Kristian Stén.

later, Logset was back on its feet, the finances where in order and there was a need to ensure continued expansion. Logset bought the entire share capital of Korsholms Industrihallar in November 1999.The municipality of Korsholm and Kvevlax Sparbank could look back on a sound investment, which created the prerequisites for continued manufacturing of machines in Kvevlax. Afterwards many people have implied that we in some way cheated to get our hands on the remains of Norcar, and that, at the very least, the price was far too modest. The fact is that we were in the right place at the right time, and that we alone, Gustav Frantzén, Seppo Koskinen and Kristian Stén, saw the opportunity to get the operations running again. As far as I know, the bankruptcy estate did receive a couple of other offers, including another leading forest machine manufacturer, who was planning to shut down the manufacturing and establish a service facility for its clients in Kvevlax. In fact, what the bankruptcy estate got from Logset and Korsholms Industrihallar was five times more than the next best offer.The municipality of Korsholm eventually got more than 100 workplaces and a trusty taxpayer. 7

IN PURSUIT OF

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DON’T GO BROKE!

The negotiations for founding Korsholms Industrihallar included dramatic and dragged-out disputes, which need not be accounted for here. Two expressions from this time became winged words. The municipality of Korsholm administrated Korsholms Industrihallar and acted as landlord. After long negotiations with municipal manager Jan-Erik Granö and authorised representative for industry and trade Barbro Ruda concerning the rights and obligations of the landlord and the tenant, we came to the question of the cold storage facility, a so-called Best-Hall, which was located on the site. We didn’t want to pay any rent due to its poor condition, but wished to use it as storage. Finally Granö hissed: –– Do what the hell you like with your Best-Hall. Later on, this has been proved a good expression when you are tired of haggling over a detail, and really couldn’t care less about the outcome. Kvevlax Sparbank wasn’t just the patron of a successful solution for the facility problems, but also functioned as our bank from the very start. Here we kept our income and handled our transactions. At an early stage, when we, freshly made entrepreneurs, sat discussing with Sven-Erik Kjellman, he patted us on the shoulder and gave us some advice: –– Remember boys, don’t go broke. A good guideline we have followed both at the company and as individuals.

FUNCTIONAL HARVESTER TECHNOLOGY Norcar 600H was a bestselling harvester. Norcar’s agile base machine with low centre of gravity combined with Ponsse’s harvester crane and harvester head, and the measuring system of Kajaani Automatiikka was a success. After we parted our ways with Ponsse, and it was clear that Logset was going to continue manufacturing machines, Ponsse’s response was quick and unrelenting: Under no circumstances whatsoever would they supply harvester technology for Logset. The harvester crane was easily acquired. Loglift Oy happened to have a readily developed product on the shelf.A few years back, a similar slide boom

K.S.

The first Logset head and its proud builders. From left Gustav Frantzén, Esko Aspholm, Rune Käld, Kurt Södergård, Birger Enholm and Pentti Hannuksela.

Logset’s home-made and cosy stand on Elmia Wood 1993.

crane had been made, for which Loglift never found an OEM client.This crane was the beginning of a long and fruitful co-operation between Loglift and Logset, where Logset gradually became Loglift’s biggest customer in forest machine cranes. The measuring systems where the subject of fast development, and the company Mitron Oy in Forssa had a young and ambitious team in search of new clients for their measuring system Motomit.Also in this case the foundation was laid for a long and fruitful co-operation between two expanding businesses. The big problem was the harvester head.There were plenty of manufacturers, but most of them relied on a design with rubber feed wheels.At Logset the benefits of Ponsse’s harvester head design were well known. In addition, it was obvious that the harvester head is the heart of a harvester, the measuring system is the brain and the crane its arm.The rest is just a platform, which drives to the felling site, generates the power necessary and offers the driver a reasonably comfortable working environment.The main part of a harvester’s after sales potential is also in the wearing parts of the head. Insight struck fast. A self-designed and self-manufactured harvester head seemed like the reasonable thing to do. Logsets little team, consisting of Gus-

tav, Rune Käld, Esko Aspholm and Birger Enholm, joined forces and designed their own harvester head, Logset 5-55, with Ponsse H60 as a source of inspiration. The first freshly manufactured Logset 500H harvester was presented in May 1993 at the Elmia Wood fair in Jönköping. The harvester was equipped with Loglift’s L210 slide boom crane, Motomit 4 measuring system and the Logset 5-55 harvester head. The harvester had felled its first tree a mere two weeks earlier. Christian Durchschlag from northern Germany did hesitate, but before the fair was over, we had sold our first harvester.This was not the last Logset harvester Herr Durchschlag purchased. Logset’s new harvester head greatly annoyed Ponsse, and when it also turned out to sell reasonably well, the reaction from Vieremä was instant. Logset received summons to the Market Court, regarding copying and use of Ponsse’s know-how. Our defence entailed countless hours of systematic counter-evidence, and the hiring of qualified immaterial rights expertise. A year later, the Market Court finally reached its verdict in favour of Logset on all ten charges.

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EUCALYPTUS – THE ENERGY SOURCE OF THE FUTURE

Already in the beginning of the 1990s I realised that eucalyptus is the “HF of the Forest”.With 20 years’ experience from Wärtsilä Diesel, I was looking for something that would correspond to the HF, Heavy Fuel, know-how of the diesel business. Eucalyptus is fast growing and only has branches at the top. The trees look like telephone poles. In 7–12 years the eucalyptus tree is 30 m high with a diameter of 30 cm. Most eucalyptus plantations are located on flat ground in neat rows four metres apart. As early as in the 1980s Shell’s Forestry Division invested greatly in this renewable resource, perhaps to produce oil in the long term. During our Norcar era we managed to get involved in their Chile project through Tim Mack from Shell. Later, Logset was involved in Uruguay and Congo. The plantations concerned had thousands of hectares with planted eucalyptus. The challenge with felling eucalyptus is the bark and the corrosive sap. In case there is no processing facility close by, the wood must be transported. As the bark is thick and the wood heavy with liquid, you want to lose the bark. It comes off relatively easily within 24 hours, but once it has dried, it is impossible to remove. The biggest challenge of all was developing a harvester technique which barks the stem at the same time as the harvester head delimbs and cuts. Our first debarking technique was patented in 1993, and was based on shearing, that is causing the stem to twist in relation to the bark. I spent a great deal of time developing the eucalyptus technique further myself, but Kenth Stenfors, Bjarne Sjöblom, Birger Enholm, Esko Aspholm and Rune Käld also contributed with valuable ideas. Jonas Hedström has developed today’s eu-

calyptus head technique even further. Today eucalyptus is mainly used as raw material for pulp, and all larger European and North American forestry companies are well represented among the eucalyptus plantations and pulp factories on the southern hemisphere. Vision: A day will come when eucalyptus with 10 years of accumulated solar energy will be the raw material of future diesel fuels. Gustav Frantzén, founding Logset initiator, technology and production manager

Logset´s most recent debarking eucalyptus head in action in Chile.

RATHER SMALL AND SPRY THAN LARGE AND LIMP The first years people looked at us as Norcar with a new name. Clients, suppliers, the locals and others saw a company that manufactured Norcar’s products in Norcar’s facilities with Norcar’s personnel. Only the name was new. Was it called “Logoset”? Nothing could have been further from the truth. Well, it was true that we did use the products, facilities and personnel of Norcar, but internally we lived in a brave new world. The organisation had been completely flattened. There was no CEO, but three owners sitting in the same room, functioning as both management and errand boys. Decisions were made fast and direct. We used to brag about that a problem reported by a client in the morning would be discussed the same morning over coffee. Those most competent to deal with the issue continued to work on a solution, and at the very latest by noon our service had a functional solution to offer. Production would

Problem solving gathering. From left Christer Forsman, Kirsti Småros, Rune Käld and Henrik Fridlund.

implement the improvement the very same afternoon. Drawings and documentation were produced by and by, but weren’t all that important. What was important was acting immediately and demonstrating that this was a company that cared for its clients and their response. This method of solving acute problems was also adopted in product development. We have named it a process of technological evolution. The clients give feedback on our products, which is quickly developed into improvements and innovations which lead to more feedback.And so it goes on. A large company cannot adapt as quickly and easily. Our first employees were handpicked from the flock of the dismissed employees of Norcar. Soon more than enough people came looking for work. Logset wasn’t exactly growth-oriented to begin with. We were scared of outgrowing ourselves and losing control. For this reason, we had two recruitment guidelines. The first one was never to get so big that the entire personnel could no longer be seated at the same table. The size of the table was easily modified, but eventually we hit the wall. If you visit Café Korsholm in Logset’s estate, you will to this day find a table which stretches along the whole far wall. This is the original “all of Logset at the same table”, which is still populated by many of the same people who were there when it all began. Over the years the tables have increased in number, but our food and coffee breaks still gather nearly the entire personnel for common debates accompanied by Carola’s tasty compilations. What was more important for successful recruitment was only to hire people we knew and appreciated already. If the applicant wasn’t known and accepted, they needed a guarantor, that is someone in the personnel who could vouch for the new employee.The guarantors were also responsible for teaching the newcomer the etiquette of the house.The recruitments made by the management were called “adopted sons”. Norcar had an advanced MPS control system for material, production and incentive wages. This was not needed during the first years of Logset, and when it would have come in handy ten years later, it had become much too clumsy and old-fashioned.The production was entirely managed through client orders. Based on the promised date of delivery the assembly team knew

when the assembly had to commence. Welders and in-house part suppliers knew how far in advance their respective parts would be needed and planned their own work accordingly. Sales assigned the purchase with a specification of all main components required. Our purchaser Kurt Södergård had strict control over all main components, and could quickly decide on a realistic date of delivery together with Kristian. Small parts and consumables were stacked in boxes with partitions and material cards. When the front of the box was empty, the mechanic would take the card to the purchaser who ordered refills. The parts at the back of the box were sufficient until the refill arrived. This sounds a little too good to be true, and of course it was.There was always the risk of trouble along the way, but the entire concept revolved around direct communication man to man.As one of the welders put it: –– Never again will the computers trick us. The entire personnel management embodied in Seppo Koskinen, who acted as personnel manager, wages determiner and clerk, as well as chief shop steward, all rolled into one. In the beginning, not all paragraphs in the collective agreement were heeded. Logset had its own system to keep all employees happy and motivated. There were other things than strictly taxed money to cash in on for your work. The potential small lapses in respect to the collective agreements which occurred during these times of recession in the 90s are long since forgotten and prescribed, but were also a part of our most simplified administration. On the other hand, taxes, payments and other obligations were taken care of with precision in accordance with our “Good Citizen” policy. From 1992 to 2006, the three founders and principal owners of Logset sat in the same room. By and by an internal division of tasks crystallised, so that Gustav Frantzén handled the technology, that is production and product development, Kristian Stén took care of sales and marketing, and Seppo Koskinen counted money and managed the administration. The advantage with being in the same room was that we were all kept up to date with each other’s tasks and could easily cover for each other if someone was travelling or inconvenienced. Big decisions could be made fast and complex issues benefitted from us being three interactive partners. To add to the picture, many guidelines were preceded by lively discussions where one of us would always hit the brakes, be in doubt and present counter-arguments. This way, many ostensibly simple solutions could be further refined.And if it all went to hell the responsibility was mutual.

Logset´s allround man and brownie, Arto Luoma. First to arrive and last one to go home.

Many have wondered that we managed to stay on good terms and stand united over such a long and eventful period. But then again, our collective leadership has surely been one of the greatest factors of success in the history of Logset. Gustav is the pertinacious engineer with the ability to learn to comprehend all details of any construction or function, no matter whether it’s machines or people. In addition, everything said is noted in his notebooks, which Seppo used to call “the diaries”. His handwritten notes have saved us in many tight spots. Seppo is the tough guy, never second in an argument.With his direct and straightforward manners he has kept both the material and human resources of Logset in check. He is, it goes without saying, a guru at figures and economics. Kristian is described by his colleagues as a verbally talented market expert and administrator, skilled in languages and with a stroke of empathy. Together we have formed a winning team. The atmosphere in our common office has been so genial that the room was assigned the epithet “The Laughter Room”.

The whole personnel gathered to celebrate the first anniversary. One third of them are still working for Logset.

One year later there were a further few, who climbed the Stubben lighthouse.

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BONUS AUTOMATICS

Already after the first financial statement, we wanted to share the profit with those who had helped us achieve it. Before the holidays, everyone received one extra monthly salary. The same thing happened the following year, and the year after that. After this, it started to have the ring of a permanent benefit, which could not be altered. We tried to shuffle the cards and find new, creative ways to reward. One year we went for top-quality all weather apparel of the Sasta brand. Everyone received pants and a jacket of the best Gore-Tex quality. Many were pleased, and some perhaps, like myself, still wear these clothes 15 years later on autumnal walks in the forest. Others were cross and thought they could have put the money to better use. Then at the end of the 90’s, the market went down and our result was only vaguely positive. Our personnel was informed that, unfortunately, the sales had not reached the targets and therefore, there was no possibility of an extra holiday bonus. As usual, when the news is drab, you are greeted by an ice-cold silence. The discussions don’t start until the smoking break or in the changing room. But all right, we have a question there. Go ahead, please. –– And what do the sales have to do with my bonus? Curtain! K.S.

Logset had its own team in the local football league. The success can best be described as punching bag. But it was fun as long as it lasted.

Our customer Florestal Oriental in Uruguay had their own football team with an extraordinary stylish player´s shirt.

We made it! 25 proud machine builders and the first Chipset chipharvester.

CHIPS AND GO FISH In the beginning of the 90s, together with Per-Olov Ljungström, the Swedish chip entrepreneur Åke Hornebrant built a chip harvester operating in the stand based on a Norcar 500 forwarder chassis. The duo contacted Logset and wondered whether we were interested in completing the product development process to create a finished product and take responsibility for commercialising the product. In Sweden wood chips were already commonly used as fuel, mainly due to the high energy taxes on fossil fuels. Several Swedish experts saw great potential in this type of machine. Around this time,TEKES, the Finnish Funding Agency for Technology and Innovation, initiated an ambitious long-term development programme, Bioenergy, with its siren’s call of both innovation development funds and investment support for the clients. Logset got on the train fast and we saw an opportunity to strengthen our profile and exploit a new market niche. We signed a co-operation agreement with the Swedish creators, and soon the construction of a new prototype was underway in Kvevlax, partly financed with the TEKES development funds.

In spring 1994, the Chipset chip harvester was born and commenced its career in the service of the renewable energy wave, simultaneously filling countless columns in the trade magazines, and performing as a circus artist at innumerable demonstrations. The idea was not bad at all. A chip harvester which moves in the stand and chips logging residue and slender thinning wood, then drives the chips to a container by the side of the road.This compared to the traditional method, where a forwarder first drives the brushwood to the side of the road, then the chipper comes along and chips right onto a truck bed.The gain consisted of involving fewer machines, with fewer treatments of cheap raw material with a low refining potential. The realisation was demanding.A technically advanced machine built on an eight-wheeled wheel motor driven chassis, with a 300 hp diesel engine and five hydraulic pumps as well as a tipping chip container at the back. Up front there was a hydraulic 180 degree swivelling drum chipper, a feeding knuckle boom crane as well as a chip conveyor belt under the cabin. One

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Our friend and business partner in Sweden, Per-Olov Ljungström, wagered himself and his company in the conviction that Chipset was the future. As already stated, the market wasn’t ready yet, and Per-Olov has been through some hard times. One of the Swedish Chipset clients was particularly demanding, had unrealistic expectations and an unreasonable attitude whenever there was a problem. The young man later married, and took his wife’s family name, which still is fairly unusual even in Sweden. PerOlov’s laconic comment on the whole situation was this: –– Well, see what happens when two bitches marry.

Kristian Stén and Gustav Frantzén praise the supremacy of the Chipset method and machine.

thing was for sure. Nothing like this had ever been seen before, and attention from media was granted. The commercial success was all but immediate.The machine was expensive to acquire and operate, and required a good deal of maintenance in order to work properly. It would be easy to write a whole book on the adventures of Chipset, but in the light of hindsight, the following factors can be specified as having kept the Chipset firmly on the ground. The method in itself is and remains a niche method. In spite of several handling stages, it is cheaper to forward the brushwood and chip it once it has dried. Transporting and emptying the chip container into truck containers takes quite a lot of time. During this time the Chipset is just an expensive chip forwarder.The chipper is the most expensive and significant piece, and it should be running constantly. Without intermediate depots the Chipset method is a so-called hotline, where felling, chipping and transport follow one another directly. In Finland the chip price level is about half of that in Sweden, so in spite of generous investment support, it was difficult to make the whole affair profitable. The machine is in the price range of a clearfelling harvester, consumes significantly more fuel and spare parts, but the profit per hour is considerably lower except in unusually favourable conditions.A tough, experienced chip contractor once remarked that the handling of chips is characterised by a meagre cash flow, so meagre that there isn’t enough for everyone.

K.S.

–– Someone always has to go without. The forest owner stands at the beginning of the refining chain, then comes the chip and transport contractors, who work for a fuel supplier for a large power plant. The calculation of who gets the rough end of the stick is simple. The Chipset also had various growing pains, which affected both our clients and us as the manufacturer. One example was the cooling system, which was both undersized and sensitive to clogging from the chip dust. Our amateur engineer Seppo gave us the good advice to connect the Chipset’s cooling system directly to the district heating network.This way, you get the highest efficiency and economy, and do not have to fuzz over snowy piles of brushwood in the forest. In total Logset manufactured a few dozen Chipset machines, delivered fifty-fifty to Finland and Sweden until 1998 when the production was moved to Ljungströms in Sweden. The last Chipset machine was delivered to Latvia in 2006. To conclude, the Chipset required a lot of effort and resources from Logset, and financially we just about made ends meet. On the upside of things, you can count that our technical expertise got a definite boost, and many experiences could be put to use in other products. The world got to know Logset as a brave and ambitious player, and we definitely wiped off the mark as capitalisers on Norcar’s bankruptcy estate.

SHOW ME THE MONEY In the first years, Logset’s liquidity was fabulous. The payment terms of the bankruptcy estate were affordable, and we had strict payment terms for our clients.After the banking adventures of Norcar’s final year, we were extra cautious of getting dependent on our banks. All new distributors had to make their payments in advance. Later we moved on to Cash Against Documents, and eventually, those who had been good were granted net 14 days. Our distributor in Switzerland, Aficor, with Dominique Cornu at the wheel, was a master of delay and negotiation. His standard reply to a payment enquiry became a classic: –– Es kommt, aber langsam. (It’s coming, but slowly.) Once we demanded a bank guarantee in order to accept a time of payment. After many ifs and buts we received a document with the stamps and signatures of the Swiss bank, verifying that they would indeed pay our claim, provided that there was money in Aficor’s account, and that Monsieur Cornu gave his assent to the payment being made. So now you know what a Swiss bank guarantee entails. A company has continuous dealings with its distributors, and with time, a functional system is developed for transactions and potential adjournments. Logset has always premiered trusty payers. In other words, if the money arrives on time and without doubt, we will give discounts. Those whose payments are delayed and who keep coming up with new excuses eventually pay a higher price for their machines. But our basic philosophy always was not to act as the bank of others. Everyone must handle their own finances. If you are selling directly to the end-customer, it’s a different ballgame. Many entrepreneurs are up to their ears in debt, and have difficulty negotiating with banks and investors. The deposit is a run-down, second hand machine, the real market value of which is something else entirely than the owner’s estimate. In order to do business, the machine seller has to promise to help out with arranging financing. In the case of Logset, this often meant that our Finnish salesmen had an order and let us know the deal was done. You have agreed on all the details and the client has signed.The salesman has

done his job and waits for his provision. Well, there was a small issue left to deal with, but there had to be a solution. –– It’s up to Seppo! Mostly, however, Logset’s clients have handled their business impeccably, and many small entrepreneurs, who started out with a cheap second hand machine from Logset, today make sure to get the latest we can offer. There is one phenomenon in machine financing worthy of mention. Especially new, growing economies seem to fall into this trap. Let’s say that a Baltic lumberjack in the 90s realised it would make life a lot easier if he were sitting in the cabin of a harvester rather than standing in a snowdrift with his chainsaw. Said and done, he contacts the machine seller and gets an offer on a new machine which costs, say, 300 units. He then goes to the bank, who says that sure, we’ll lend you the money, but you have to have self-financing in the amount of 100 units. He has never even dreamed of such sums, so what to do? The machine salesman is an industrious and inventive man and doesn’t give in so easily. He says we’ll raise the price of the machine to 450. But then the bank will want 150 in personal investments. Of course, but I’ll lend you 150, which I will get back because the price is higher. Everyone is happy until a year has gone by, and the fresh harvester owner works out he cannot earn enough to pay the interests and installments. The bank claims the machine as security for unpaid interests and installments and turns to Logset, telling them they have a machine, as good as new, that Logset can get at an affordable price, only 400. Logset lets them know they sell new machines for 250, why would they pay 400 for a second hand one? Eventually, the bank learns a valuable lesson.These lessons have not only been taught by the forest machine industry. Billions of credit losses that the subsidiaries of foreign banks have accumulated in the former eastern block countries often spring from this kind of innovative financing solutions.

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We got off to a good start, that is my comment on Seppo’s first financial statements, where the profit was bigger than the turnover.

Lars-Erik ”Lalla” Nässlin was our first employee. Together with Kenth Stenfors and Ralf Westlin he also has the longest Norcar background.

I think it was quite fantastic that we made 10–40 machines a year without any actual management in the factory. Everyone knew what to do and took their own responsibilities. The first 10 years we kept our feet on the ground. No unnecessary expenses on entertainment. A few examples: The first annual feast at Nabben in Maxmo was lively.There was difficulty getting the musicians Kari, Elvis and a third guy to play for us as they couldn’t even agree on their compensation with Seppo. Finally they started playing and we had a really good time. The ten-year jubilee in august 2002 at the factory in Kvevlax must have been one of the best company parties. There was music to everyone’s taste played by the KvevlaxGillet with Sten-Allan, Birger and Olav. Their style was folk music. In the backyard Pasi’s hard rock gang played so that half of Kvevlax was kept awake far into the night. The decoration material was cheap but grand, according to Gustav’s wishes. Fine rowans with ripe clusters of berries decorated the entire hall. I had cut them down along the ditches around my farm and driven four tractor loads of them to Logset the night before. One thing we’ll never forget is our downhill skiing trip to Lapua.We brought our entire families this Friday afternoon. Our clients from Ireland, the O’Reilly brothers, tried out skies for the first time. To this day when they phone, they ask if you remember when they learned how to ski. The same day, the ski lift stopped for 10 minutes. Rune had gone up with the lift and was watching the bogie wheels work. Of course he went too far. He didn’t wake up from his engineering dreams until the large cogwheels full of grease greeted him where the lift turns. Gustav’s sense of direction, or the lack of it, has also given us many happy memories over the years. The first forest lot Logset purchased for testing machines in Kvevlax was owned by Indians on the Vancouver Island of Canada. Our loyal client Pentti Ärväs sent his regards to Rune:“Tell that grey-haired inventor we need more irrron!” A sure sign of winter on the Finnish market was when every other call to after sales began with the words “It’s not pulling”.The filters were full of condensation and dirt that had frozen when the first spell of cold weather struck. Lars-Erik Nässlin, Logset’s spare part sales manager since the start in 1992

RUNNING WITH WHEEL MOTORS

The chassis technology Logset bought from Norcar was based on a fully hydrostatic drive system. The diesel engine drives two hydraulic pumps, each of which both supplies four hydraulic wheel motors with oil.The drive circuits are crossed, so that one of the pumps drives the right front and left back bogie, and consequently the other one the left front and right back.The bogie wheels are mechanically connected with a chain, so that when one bogie wheel looses its grip, the other wheel can utilise the power of two wheel motors. Fully hydrostatic wheel motor transmission is technically elegant and has obvious advantages, such as less ground damage, and also enables a much smaller turning radius for the machine, since no driveshaft needs to be installed through the center joint of the machine. Theory and practice are unfortunately two separate things, and an old saying goes that when the map and the terrain differ, usually the terrain is correct. Since the first Norcar machines in the 70s, the market had developed a deep-set suspicion towards the wheel motor concept. The wheel motor as such is quite reliable, but when there are eight of them with a breakdown frequency of about once every five years per motor, this means that the machine may have two wheel motor breakdowns a year, which is way too many. The established and commonly acknowledged hydrostatic-mechanic transmission has a drive pump and a large hydraulic motor, which drives a mechanical driveline with a driveshaft and mechanical bogie shafts. There is also the advantage of being able to combine a strong enough tractive effort with an acceptable driving speed by means of a mechanical gearbox. The wheel motor machine has the quirk of reducing the top speed in correlation with the tractive effort. It became clearer and clearer to Logset that the wheel motor transmission had reached the end of the line.The distributors demanded a technology not entirely different from that of the competitors, and above all our product programme had to be expanded to include larger forwarders and harvesters in the volume classes. On a limited market, the distributor cannot survive on niche products alone. He must have a whole range of products, which covers all the machine needs of the clients.The transmission became a critical issue for the future of Logset.

Fomac F112, the mother of all modern Logset forwarders.

Despite all the know-how and experience in the house, the bar was too high for us to start producing a machine with mechanical bogies on our own. Different alternatives were assessed and we negotiated, among others, with Lars Bruun, the legendary inventor and forest machine master from Filipstad, Sweden, about licence manufacturing his machines, but nothing felt right. At the beginning of September 1996, Logset participated in the Finnish Metko fair as usual. This year the fair was arranged at Himos in Jämsä. The day before the opening of the fair, we set up our booth and made everything ready. In the evening I went for a stroll to see what our competitors and colleagues had brought to the fair. In a small stand there was a blue-painted forwarder in the 12 ton class that I’d never seen before. I stopped and was soon greeted by Kari Mikkilä and Jukka Kivipelto. Kari and Jukka were known to me from Finntrac, a small company in Kurikka, which Interpolator had bought before Norcar. Finntrac was incorporated with Norcar, but turned out not to be viable financially nor concerning their products and went bankrupt in 1989. Now Jukka and Kari had founded their own company, Fomac Interna-

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FOMAC IN KURIKKA BECAME LOGSET’S THINK TANK, PROTOTYPE WORKSHOP AND CABIN FACTORY.

The fathers of all modern Logset machines. Jukka Kivipelto in shorts is the inventor and innovator. Kari Mikkilä is the sounding board who holds the bridles.

tional, and developed a forwarder of their own, which had its premier at the Metko fair. Jukka had long experience as a designer and innovator of forest machines.After Finntrac he designed forest machines for Kindai.They were good machines, but finances were bad and the company did not last long. Jukka and Kari proudly presented their creation Fomac F112, and apart from the somewhat angular design, the machine was wellmade and robust. They had sold their first machine, but apart from that Fomac had no distribution channels, and the plan was mainly to sell directly to contractors and take care of the service themselves. The same evening we invited Jukka and Kari to our sauna, and before we parted it was clear that this was the platform for the new Logset forwarder. Everything clicked. Fomac was a small, recently established company with a high-quality product, owned by two guys with long experience and both feet on the ground. Logset had the capital and business experience, and could offer industrial manufacture and an international distribution network. The walk in the desert with wheel motors in the trunk was over. Logset had found a fiancée who would produce many well-shaped children before the final attachment was made and Fomac and Logset merged six years later.

Logset’s and Fomac’s paths crossed at Metko in 1996 where we presented our new forwarder. In particular we had invested in durability, user-friendliness and ergonomics. The cabin fulfilled the current requirements and was the production standard in Logset’s forwarders until 2007. Our first machine was slightly modified in order to complete Logset’s range, and Heikki Koivurova helped with the design. The first Logset forwarder was assigned the indication 6F and was finished in spring 1997 in Kurikka. During the construction stage, Kristian visited with Kenny Dobson and Jim Wilmer from Scotland. Jim was a large-scale contractor and had twentysomething forwarders, most of them fairly old Kockum machines. Jim put on his overalls and crawled into the chassis, removed grease from the center joint pins and checked the sizing.As he was used to machines that had run more than 20,000 hours, he was particularly interested in how to replace the driveshaft, differential and other heavy components.Apparently he liked what he saw and announced that he wanted this machine. Kristian explained to him that as this was the first machine, it was made for the domestic market and had been reserved to be sold by Henrik Fridlund. To this Wilmer replied that if Kristian won’t sell, he will buy it from Henrik. The deal was closed the same weekend, and after a visit to Lady Pink a chromiumplated exhaust pipe was included in the bargain. The Titan harvester Together with Heikki Koivurova, we started from a clean slate.We wanted to design the best and finest harvester, but no-one really knew what this meant or what it should look like.At an early stage, we decided on a completely new kind of driver’s cabin. The first sketches were very round-about and inflated until Heikki phenomenally managed to bring together straight sides with an arched side profile and a rounded back.After this we were free to concentrate on the whole and on elegant technical solutions. With the Titan harvester, Logset changed colours. The traditional green and yellow stepped aside for titan grey, black and violet, which became Logset’s new colours.

The Titan harvester was the first Logset machine with a CAN-Bus control system. It was also the first forest machine ever in serial production, where the diesel engine was electronically controlled and diagnosed. In winter 2001 our whole gang was in Germany to participate in the inauguration of Otzberger’s new facilities. While Jukka, Gustav and Kristian were in the forest demonstrating machines and entertaining the Germans, Seppo and Kari borrowed a car from Schellhaas and drove along the narrow roads of Odenwald. During this trip, these two truth-tellers who were good with figures came up with the idea of a merger.They didn’t need long to sell the thought to the rest of us over a few pints of beer. One year later the merger of Fomac and Logset was a fact. Jukka Kivipelto and Kari Mikkilä, founders of Fomac and partners in Logset from 2002

Some of the first Titan drawings from Jukka and Heikki as well as one of many colouring proposals.

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WHAT? DO WE HAVE WHEEL MOTORS?

A whole book could be written on the wheel motor, or the juice mixer, as many like to call it. In addition to the wheel motor’s delicate build, it was also available in several models. The same machine had both braked and unbraked wheel motors, single- and two-speed as well as cw- and ccw-operating motors. Imagine the challenges of the spare part handling when all eight wheel motors are different and cannot be interchanged. Furthermore, there were different generations and stages of development.“Lalla” Nässlin, our spare part manager, says there were a total of 64 different types and models.That doesn’t make it easy to keep a slim storage and still stay well-prepared to deliver. Once a new Norcar 600 forwarder was delivered to the heart of the enemy lines in Vieremä. The machine didn’t even feel strong enough to climb onto the client’s low loader. The circumstances were clouded, so we asked if it could be the case that it was so slippery that the wheels were spinning. The answer came fast and ruthlessly: – Nothing is spinning here besides the fan belt! Eventually, it turned out that a couple of motors had been incorrectly installed, and thus were rotating against each other. The headline refers to an incident with Rune Käld, our loyal chief engineer, who would sometimes get so fascinated by a problem that the rest of the world would cease to exist. There are different accounts on how the story goes, and it was probably based on a misunderstanding. Stories are improved and spiced up along the way and soon many cases of ignorance would receive the following reply: – What? Do we have wheel motors? It was an irony of fate that when we had discontinued our use of wheel motors, a new solution, Teflon bearings replacing steel needle bearings, at once lifted the reliability of the wheel motor and the entire machine to a new level. K.S. 21

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DER WALDKÖNIG – THE KING OF THE FOREST

Bjarne Sjöblom is not only a top class welder but also a forest engineer, who handles the silvicultural management of Logset´s forest stand.

I first met Georg Schellhaas in 1989, when I was visiting Norcar’s importer in Germany, Firma Lutz in Otzberg. He was an experienced tractor salesman, but was eclipsed by the new owner and CEO, Wolf-Peter Weinandy, who made reasonable sales, but left everything else in ruins in his wake. Schellhaas got out and went on to selling John Deere skidders for Hübinger until 1992, when he purchased the remains of FA Lutz and changed the name to Otzberger Forstmaschinen. In December 1992 he visited Logset and bought a second hand, restored Norcar forwarder. We soon made more deals and started to discuss a distribution agreement. The problem was he also represented Swedish Gremo, a direct competitor of Logset. At the Elmia Wood fair in Jönköping in 1993, Logset and Gremo had neighbouring stands. Schellhaas moved like lightning between

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I remember when Seppo came into the canteen and had something of importance to announce. Then he always began at the top of his voice, in Swedish:“Hearing on, boys!” The same call applied to both the Finnish- and Swedish-speaking staff. In the canteen Anneli, followed by Carola, had white napkins which came in handy when Gustav had a problem to solve together with us welders. The drawings and sketches made on these napkins later became real drawings. This was Auto CAD the Logset way. Once the drawing took up three napkins, but then Gustav took it to Esko Aspholm for him to draw in the CAD system. Often when we were discussing some production technological issue with Gustav, he would become slightly distant, and stroll off in the midst of it all.After a while he would come back with determined strides and declare:“I’ve decided for us!” And then there would be a solution to the problem.

Bjarne Sjöblom, welder and subcontractor welding quality control manager

Gustav holds up the moosehead, which was presented to the king of forest machines.

Kristian and Georg in the same boat. The course is steady when both hold the tiller.

the stands to receive all the Germans visiting the fair. To preserve his credibility, he changed overalls each time. This could not go on. Gustav and I called him in for a serious talk, telling him he had to choose between Logset and Gremo. Having slept on it, he was our man for good. Otzberger Forstmaschinen with Georg Schellhaas as owner, Geschäftsführer and businessman, and Volker Nieratzky as technical salesman and service manager, became Logset’s most important distributor responsible for the German-speaking clients in Europe. We have grown hand in hand and the Germans have always had a significant impact on Logset’s product development. Sometimes you wondered if Logset actually was a Finnish subcontractor, manufacturing machines on behalf of Otzberger. Schellhaas is a skilled businessman, with the ability to create longterm relations with his clients. He takes a lot, but also gives a lot. Payments were punctual, but then Logset had to do its duty down to the last detail. According to Schellhaas it is not good for a salesman to have too good an insight into the technology of the product, as he then realises how much can go wrong and subconsciously restrains his own selling.

He also has an emotional side, and is prone to overreacting both positively and negatively. It has often been my task to calm the sea and weigh down the balloons. We call each other Georg and Kristian, but to the rest of Logset he is Schellhaas, which I think goes well with the Germans’ reserved attitude towards using first names. This is why I write about him as Schellhaas. On Boxing Day in 1999, I went to the cinema with my sons.When I returned Kerstin told me Schellhaas had called, and that I must contact him immediately. Out of breath he told me there had just been a severe storm across Central Europe resulting in a lot of wind-fall trees. There and then he ordered everything Logset could manufacture over the next six months. This was typical of him. He immediately saw the opportunity of disaster and realised that the early bird catches the worm. Not until after New Year did the distributors in other affected countries get in touch. Another time it was the other way around. He called me to report on the situation in Germany. It was black as the night and no-one dared to invest. The banks wouldn’t provide any financing and so he had to cancel his open orders.We had a system with 2% additional discount on fixed orders, which could not be cancelled. I explained to him that all his orders were fixed orders, and thus couldn’t be cancelled. This was why he had the additional discount of 2% on top of his volume discounts which, as he was our biggest client, were entirely in a league of their own. He listened patiently to my speech and then replied: –– Verstehst du nicht was ich sage? (Don’t you understand what I’m saying?) His tone of voice made it clear there was no room for arguments. This later became a favourite expression in the Laughter Room. It functions as a universal force majeure clause, which overrules any other legal clauses or contracts. Schellhaas has a growth-oriented philosophy. If you settle for the clients you already have, you will decline in the long term, no matter how well you handle them and even if new clients often require larger efforts and lower the profits. If you get enough new clients every year, you can also afford to lose the clients you don’t get along with for one reason or another. When Otzberger Forstmaschinen’s new facilities in Brensbach was inaugurated in 2000, our gift was a magnificent, stuffed moose head.The king of the forest hangs on the wall of Otzberger’s sales office to remind them of who is the king of forest machines. K.S. 23

A FEW WORDS ON SERVICE It goes without saying that a functional service organisation is vital in order to succeed in the forest machine trade. Machine development in the Nordic countries often started with innovative and skilled entrepreneurs, many of which were fully capable of handling the main part of their service themselves. The machines are becoming increasingly more sophisticated while the number of owner/operators is growing smaller. With shrinking margins, employed drivers, shift operation and tight wood delivery schedules it is obvious that no contractor will manage without competent backing from the service organisation of the machine supplier. Compared to for instance the car industry, it is fair to say that Logset’s capability of delivering critical spare parts is considerably better. If a machine stands still somewhere in the world, in need of a critical

Lars Nässlin and Stefan Sjöholm in Logset´s first spare parts stock. Logset has always maintained a high service level for both domestic and foreign customers.

spare part, the part will be shipped from Logset by courier the same day, and reach the European client the next day, Russian and American clients the day after that. Without skilled local support it is difficult to keep the machines going. The distributors who realise this are usually successful with a loyal clientele. Others might go for the jackpot when selling the machine, and see what follows as an unnecessary cost.A couple of examples on both sides: Wajax in Canada reasoned that you really don’t need to profit from the sale of a new machine. What counts is creating an after sales population, which employs the service engineers and generates profit from the spare part sales. As a rule of thumb, you could say that over its normal lifecycle of 25,000 operating hours, a forest machine will consume spare parts for a sum corresponding to the price of the new machine. Unfortunately,Wajax is no longer a Logset distributor, since their principal,Tigercat, started to feel threatened by Logset’s success in Canada.

Logset´s first fully equipped service van with typical motif painting. The fresque on the wall was painted by the same artist.

Minitex in Russia invested in large margins, glossy leaflets and well-off oligarchs with vast forest holdings. Service and spare parts were too complicated. Too much work for too little pay. During one of many negotiations on their lack of service-mindedness, the table was turned:“Why can’t you make a machine that doesn’t need service? We’ll pay the price.”Yes, why don’t we? For obvious reasons, the story of Minitex wasn’t long. Often when something has gone wrong, you feel the need to explain yourself, or maybe find a scapegoat. There are far too many examples of the latter in all trades and contexts, even though this rarely contributes constructively either to the solution to the problem or to preventing the same problem from happening again. In Ireland Logset worked with Armer Salmon under the leadership of Owen Fox, an older gentleman with high integrity.To him the most important thing was that things worked, and if they didn’t they had to be fixed immediately. His response to explanations usually was:“Spare me the details, I don’t want to know.” It is what it is, shut your mouth and fix the problem. An enormous technical development has taken place during Logset’s 20 years in the business. When we started out, servo-assisted hydraulics were al-

ready commonplace.A skilled driver managed well on his own, and the work of service engineers mainly consisted of repair and replacement of heavy parts out in the forest. Today all systems are computerised and integrated. A layman cannot comprehend what incredibly advanced technology is used to cut down a tree. Already when the harvester grips the stem, a computer is calculating how the stem is to be bucked in order to achieve the optimal economic yield from the tree. Feeding and cutting can be completely automatic; the driver only needs to approve the bucking computer’s suggestion. Even before the cut-off saw starts, the diesel engine receives an impulse to rev a little extra, and the hydraulic pump folds out to ensure maximum flow and pressure are instantly available. All data is stored and the machine has a continuous wireless connection to the forestry company, who gets real-time information on exactly which volumes and ranges are located where. Reliability and performance have reached new levels, but the requirements on the service personnel’s know-how are also completely different from those 20 years ago. 25

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KULJETUS KARI KOIVULA

It is difficult to write down the memories of Logset’s first 20 years without running into Kari Koivula, who has been Logset’s transport service provider by appointment. Kari worked as a truck driver for Norcar, but then founded his own haulage company and continued to drive for Norcar. From the very beginning he took care of Logset’s machine transport needs. He started out with used Scania trucks, and expanded by and by as Logset’s needs for machine delivery transports to Europe increased. Kari also established himself as an independent paint entrepreneur in the same building as Logset. The first fifteen years, Kari painted nearly all of Logset’s products. Then we ran into demands for improved finish and stricter work safety regulations, and it wasn’t economically motivated to make the investments required to meet these demands. Kari’s legendary reputation mainly stems from his heroic deeds on the road.We use to say that for this man nothing is impossible. If a machine has had a complete breakdown two kilometres from the nearest road, Kari will get it on the low loader one way or another. Borders, customs and the police seem to be able to put a stop to most things, but not to Kari. He insists that willpower and persistency will get you further than language skills. If the barrier is lowered you just have to use sign language to show it should be raised. At last, even the most zealous official falls short on this short Finn, who never gives up. Most of Kari’s transports have been within Finland and to Sweden, Germany and France. However, the Baltic countries, Russia, Spain, Switzerland and the UK have also got acquainted with a ten-year-old Scania, which has covered more than a million kilometres pulling a low loader with a forest machine and a few pallets with spare parts, maybe an extra set of wheels, a couple of tracks, and this and that. The nature of things is that this cortege exceeds the highest allowed total weight, width and height. When the measures are to be checked, Kari makes sure to hold the front end of the measuring tape, so that he can move it a few critical centimetres to get the result desired. I remember when we went on one of Logset’s first Elmia exhibitions. We were economical as usual, and had loaded most of the equipment onto

The conqueror of the roads is ready to go.

Kari’s vehicles. After Jönköping in direction of Borås we arrive at a really long and steep hill, where even the strongest trailer trucks need to use the gearbox diligently. There had long been a climbing lane for heavy traffic which can slow down to walking pace. Back then I was driving a Peugeot 605 and I had Logset’s large Münsterland caravan in tow, loaded with leaflets and other hand-out material as well as a significant collection of beer cases, purchased the night before on the Silja ferry. The Jönköping hill took its toll on the Peugeot, but I still had enough speed to choose the left lane. The right was occupied by a seemingly endless row of trailer trucks. Further ahead we spotted who was holding up all the others. Kari’s threeaxle Scania was loaded with a Logset 500 forwarder, which also carried our fair pavillion. He had a three-axle low loader in tow, loaded with a Logset 500H harvester in addition to various flag poles, large tool boxes and other heavy equipment. Black smoke was billowing from the exhaust pipe, the turbo was roaring and he was already on the lowest gear. The drawbar loop had probably stretched a centimetre or two and the drive wheel tyres were about to start rotating on the rims. It felt like the future of our entire little enterprise

A few years later Kari´s truck deliveres a machine to the Forexpo fair close to Bordeaux.

was depending on Kari’s managing to drag himself to the top of the hill and reaching the fair venue. I could only imagine what would happen if something broke or gave in during these fatal moments. If the entire combination would start to roll backwards down the hill, which was a couple of kilometres long, it would crush everything in its way, or something might overheat and set fire to the entire cortege, or the truck might just give in and remain standing mid-ascent, and we would have to organise a reloading and forwarding at the last minute before the fair was opened. We were already running late, as usual. Fortunately, everything arrived without larger mishaps. Kari does tend to work on things during the fair, but that is only to make sure we can get back home again. There are many tales about our friend Kari, for example that he has driven around the whole of Europe with only the map of his pocket calendar. This may not be entirely true, but he was fantastic at making his way in unfamiliar territory long before the GPS was even a product of imagination. The Germans in particular thought that his vehicles didn’t live up to Logset’s image as a manufacturer of high-tech quality products. This may

have been the case, but our machines always made it there and with better delivery security that it would have with the so-called big, established shipping agents. Since his truck was often empty on returning from Germany, he was slightly more expensive than the most affordable common channels available. The knowledge that he wouldn’t leave until the machine was ready to be delivered and didn’t charge for lay-days, and the certainty that the machine would arrive safely at the smallest of forest villages in Germany, made the choice easy for me. If the client needed some training, this could be arranged at the same time, even if neither of them spoke the other’s language. Kari’s number has been one of the most frequently used ones in my phone book, not because he has caused any trouble, but because I have often served as his operations and transport co-ordination centre. K.S.

THE CLASH OF THE TITANS With Jukka, Kari and Fomac in Kurikka, Logset produced a competitive forwarder programme consisting of five forwarders in the 10 to 16 tonne classes in record time.The concept was simple. Jukka was the innovator and constructor of prototypes. Fomac in Kurikka constructed the first machines and handled any teething problems. Logset in Kvevlax took over when the volumes increased and the subcontractors had been initiated. You could say that the Kvevlax factory was the highway and the prototype workshop in Kurikka the connection ramp. Fomac received licence fees and royalties for each machine. As a whole the range was incomplete, as there were forwarders of all shapes and sizes, but only the old faithful Logset 506H harvester. The wheel motor transmission isn’t as questioned in a harvester as in a forwarder, and our argumentation for the 506 was refined.The fact also remained that it was a genuinely productive and versatile machine. The market, however, wanted something new, and it would have its way.

The first Titan had to be photographed without windows and decor stripes.

Arimo Mitts did a good job which resulted in a successful leaﬂet and press photo.

Early on we started to sketch a new harvester concept. The industrial designer Heikki Koivurova had been called at short notice to work on the looks of Fomac F112, so that it could be introduced as the Logset 6F. Now Heikki and Jukka were given carte blanche to create a harvester that would strike the market with awe. The combination was an exceptional success. Heikki has a good eye, not only for form and design, but also for functionality and production-friendliness. Jukka knows in his sleep what is required from a machine and what the drivers appreciate and expect. What grew out of sketches and screens seemed promising and the introduction was postponed until the Elmia Wood 1999. We came up empty handed. The realisation was difficult and Jukka probably spent many sleepless nights before everything was in place. New schedules and promises came and went, but eventually the Metko fair in September 2000 became the definite and irreversible market introduction. This summer no-one went on holiday at Fomac in Kurikka. The first machine was growing slowly, too slowly. We needed leaflets and press material for the fair. Two weeks before the fair, the machine was finally operable. The cabin was mounted, but lacked its windscreen, which was one of the

most characteristic and dominant elements of the new construction.The first press and leaflet pictures were taken of a machine lacking windows and decor tape. These details were fixed with some advanced Photoshopping. The first picture we sent to a whole bunch of trade magazines wasn’t bad. A couple of years later the same picture would turn up although there were plenty of real pictures to use by then. At the fair we showed a machine which looked finished, although it hardly could have felled any trees yet. No fear.The new modern design and all the technical innovations definitely made the Logset 8H Titan the star attraction of the fair.Today we would have called it the clash of the titans. The clash was indeed so loud and our Titan received so many columns and compliments in the trade magazines that the market’s leading forest machine manufacturer threatened to withdraw their advertising. Metsälehti wrote: “Logset’s new harvester, Logset 8H Titan was the star attraction at the Metko fair.The space harvester of the 21st century made its competitors look like junk from the last millennium – which was the intention entirely”. A small, insignificant manufacturer as Logset had suddenly become a challenger to take into account for real. Seppo had to eat his word in a tasteful way.

““

FOREST MACHINES FOR TEA

At the Metko 2004, Gustav and I started talking about our production rate being 100 machines a year. The truth was it was lower, but from time to time we made two or three machines a week. Seppo laughed scornfully and said that if Logset makes 100 machines in a year, he will eat one. The following year we reached exactly 100 and it was time for Seppo to stand up to the challenge. The man who had never been wrong in his entire life! Well, it’s rumoured he once replied incorrectly when asked for the time. Gustav saved him from his predicament and gave him 100 forest machine shaped gingerbreads, which we all helped him to finish. Our industrial designer Heikki Koivurova discusses with Kari and Kristian.

K.S.

““

THE GYPSY CAMP GOES TO HEAVEN

Wasn’t there a Soviet film that went by this name? I can’t recall the plot, but both Seppo and I remembered the title, which was most fitting whenever Logset was preparing for a forest fair. The most important fairs always take place in the forest and at best where the machines can be demonstrated in real conditions. In the big world, the distributors have to take responsibility for their fairs themselves. Our efforts have usually been limited to extra fair discounts on the machines displayed at the fair, smaller props and competent people as sales back up on site. The Finnish fairs and the world’s largest forest fair, Elmia Wood in the vicinity of Jönköping, we have always handled ourselves. The planning begins far in advance in order to decide on which machines and personnel to bring, and which distributors will come and visit. Trips, transport and accommodation were always a tricky puzzle. Our first time at Elmia Wood there weren’t that many of us, so we rented a humble forest cabin in Harphult from a certain Bengt Rosén. The cabin was of typical 60s design, made from simple materials and looked like a house that had been shrunk. Inside you could barely stand, but there was a surprising number of beds squeezed into the tiny room. Here we almost lived like scouts, far away from the sinful temptations of the city of Jönköping.Yes, there are other things than churches and houses of prayer in Jönköping too, the big boys have told us. As the years went by, the gypsy camp also expanded, and I never dared tell Bengt Rosén how many of us there would be when he called as usual, and ensured that we would rent his cabin. Lucky for us, his family also grew as his children married and there were grandchildren. For this reason, there would always be a new addition to his private collection of tiny cabins, and somehow we all managed to make room. One evening per every fair we would have a barbeque for invited regular clients, something that developed into a prestigious tradition high in demand. The thought of Gustav’s grilled beef fillet steaks still makes my mouth water. Once the Germans had announced their arrival with an entire busload of German clients.We also invited some of our personnel who normally didn’t participate in the fairs. They were accommodated at an old boarding house, which for some time had served as some sort of nurturing centre for misled youth. Now we had the whole facility to ourselves.

Tom in a typical exhibition preparation appearance.

An unusual situation. Normally Kenth Stenfors did the driving and everybody was looking at him. Here someone else is driving.

Kari and Kenth are fighting with the ”grill”.

The Metko 2004 visitors follow Logset´s harvesting demo with great interest.

Early in the morning we left for the fair, and most of our tourists tagged along. According to Finnish tradition, the consumption of alcoholic beverages is a given when travelling abroad. The fair personnel was sober throughout the days of the fair, of course, but some of our tourist workers had downed a fair share, and were fairly exhausted in the evening. At this point, the Germans had barely got out of bed and bustled off eagerly to get acquainted with the night-life in Jönköping.Their loud homecoming was timed to dawn, when the Finns were just about to greet a new day of adventures, and so it went on in double shifts. Another characteristic of our participation in fairs was that we did everything ourselves. The larger competitors relied on external suppliers, who built log cabins, stages and dance floors many weeks in advance, so that their salesmen could be seated at the table as soon as they arrived. Logset’s gypsy caravan would arrive the day before the fair opened, and hammers would ring and iron bars thud long into the night while we were setting up our simple dismountable pavillions and furniture. Kenth Stenfors would clear away some trees and make sure to trim the machines to their best demo shape. Chipset gathered chips for ground cover, and Tom

Knipström would climb like a squirrel between the stems to hang banners and flags. We would be the last ones to leave the fair venue at night, and the first to arrive the morning of the fair opening in order to make the last adjustments. It was the same thing when the fair was over. Our competitors went home to their families and had someone else clear up the mess. Logset packed everything themselves, loaded Koivula’s trucks and trailers and was the last one to leave. Allow me to round up with some fair statistics. An Elmia Wood fair attracts some 50,000 people over four days. I estimate that 5,000 of these visitors note Logset’s showcase. 500 people speak to one of us, which might give a result or which at least confirmes our position. 50 clients will receive a call or an answer to a call for bids, and 5 machines will be sold as a direct result from the fair. It’s an art to catch 500, do a decent follow-up on at least 50, and finally close at least five good deals. I can guarantee it isn’t as easy as it may sound. 31

K.S.

An impressive line-up for the KWF 2004 fair in Gross-Umstadt. Five Titan harvesters and three forwarders. All of them sold in advance.

TOWARDS NEW MARKETS WITH NEW PRODUCTS

Logset’s new forwarder F-series was positively received on the market, and the new Titan harvester increased the interest for our products further. As usual, our competitors spoke in derogatory tones about the little newcomer:“Just wait until they are traded in, then we will see how useless they really are”. As a matter of fact, the opposite was true.The Logset machines maintained their value and turned out to be popular on the used machine market. If anything, this is the real proof of productivity and correct sizing. Still, good machines are not enough. You also need a competent after sales organisation that the client can turn to. A local, service oriented player, backed by the machine manufacturer when needed. Logset’s growth has always been organic, and new markets have emerged in part as a result of an active, strategic will on Logset’s side, in part thanks to enquiries from diligent distributors.

The principle of one exclusive importer/distributor on one particular market usually benefits both the principal and the local seller. It safeguards the continuity and working peace, and is based on the agreement to stick together for better and for worse. The drawback is that a distributor can dominate a market without making as great investments as the principal had hoped for. Also, the exclusiveness shuts out new, more highly motivated players. Logset’s principle on new markets has been always to begin with the most promising candidate, and to give a trial period of six months during which Logset desists from competitive activity on this market. If business is good, a binding agreement is signed on both parts. In the beginning we managed well with simple, written agreements, or even gentleman’s agreements. Gentlemen are, however, an exhaustible resource in today’s world, and their places are taken by mean creatures who guarantee that a fair number of lawyers and consultants remain fully employed.

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A NEAT AFFAIR

In the summer of 1994, we participated in the Interforst fair in Munich together with Otzberger Forstmaschinen. I recall demonstrating our Logset 500 forwarder to a delegation of what was then Czechoslovakia. The gentlemen represented some sort of nature reserve administration, and I didn’t give their visit much thought. One morning the next autumn, our fax rattled. At the top of the paper was a formal letterhead with the logotype: Krkonose National Park. The actual message was written by hand and read: We have decided.You are the best.We want to buy.What is the price? Best regards Jan Hrebacka A quick reply and a few faxes later, we had agreed on the specification and price (list price). The order confirmation was sent the same day. The machine was delivered and spent a peaceful life picking branches and some fallen trees in a scenic environment in the mountains near the Polish border. K.S.

Almost without exception, we have employed independent importers/ distributors who buy and pay for the machine in their own name, and then sell it for a reasonable profit.We have done a few export deals directly with the end-customer, so that an intermediary has received a sort of finder’s fee. In one case we had to start our own subsidiary abroad, Logset Ltd in Great Britain.The experiences from this adventure only confirmed that the local talents should take their own responsibility and have their own money at stake. In the following I will briefly describe the development of Logset’s sales network during 20 years. In the beginning it seemed natural to continue with Norcar’s old contacts. Both parties knew one another and in spite of Norcar’s bankruptcy, the old distributors had faith in the new company Logset. This was mainly because they simply had to supply their Norcar clients with parts and service.And vice versa on our behalf.

Logset and Kenny Dobson have just bought Armer Machinery’s stock of well used machinery. Neither the price nor the condition was especially high. From left Gustav, Kenny and Seppo.

THE BRITISH ISLES Armer Salmon in Ireland early on started to buy second hand, fully restored forwarders from Logset’s generous storage. They did buy one or two new ones as well, but the Irish market is and was limited. Armer had a subsidiary in England, Armer Machinery, that sold Armer Salmon’s sugar beet harvesters, but they had no in-house experience in forest machines. We agreed with Owen Fox on trying to sell Logset in Great Britain too. Then Kenny Dobson shows up. Kenny had some contacts with Norcar and now he had liaised with diligent freelancing technicians Brian McMorran and Bob Stirling. The main idea was to sell Logset’s harvester heads to be mounted on excavators. Kenny was employed by Armer Machinery and the operations were off to a flying start. At some point, a young, shy mechanic called John Fukes

comes to train at Logset. John had a small workshop in Wales and performed service on both agricultural and forest machines. John became the service representative for Armer Machinery. In Great Britain things go up and down, much due to the great fluctuations in the pound compared to other western currencies.When the pound is up, Nordic machines come cheap to the British customers, but wood product exports from Great Britain are unprofitable. When the pound is down, the opposite applies.The machines become too expensive, but the British forest industry is at its peak. In this turbulent environment, all forest machine manufacturers battle with each other. Dozens of Swedish wheeler dealers selling good and worse value second hand machines according to the currency rates and economic fluctuations spice it up even more. The salesmen in the field are notorious for their inclination to switch brands when given the opportunity, but the clients seem to be more loyal towards their seller than towards a particular brand. Every time a seller changes employers, and thus brands, a majority of the clients follow suit and swap their two-year-old machine for a new one of the brand their own seller is dealing with today. This goes on and machines switch owners and owners machines, the sellers buy and the sellers sell. No-one is making any money, but everyone is employed and no-one is bored in the pub. Oh well, Armer Machinery in England is owned by Armer Salmon in Ireland, which is owned by Greencore (formerly Irish Sugar), which has got more than it bargained for when purchasing a large food chain in Great Britain.The group management panics and tries to divest operations. Agricultural and forest machines are far from essential. Liam O’Flaherty, who is Owen Fox’s boss, is sent to Finland to let Logset know they should get down to business and buy Armer’s forest machine operations. The deal includes an oversized storage of second hand machines, which Kenny Dobson has seen as his life insurance. As long as the second hand storage is large enough, Armer can’t afford to lay off the forest machine sales, nor Kenny himself. We try to make Kenny, Brian, Bob, John and Ian Murray buy the operations.We offer to help and after many entanglements and negotiations, a year or so later we are associated in Logset Ltd with Kenny Dobson and Stephen Wills as principal owners. Logset Ltd handles sales and service in Northern England, Scotland and Ireland, while John Fukes takes care of Southern England and Wales. During a few years’ time, everything went relatively well. John Fukes made money and fortified his position as Logset’s rock in Great Britain.

Happy in Wales. From left Sue and John Fukes, Kenny Dobson. Mick the dog keeps a close watch on things.

Kenny Dobson continued with his loyal clients, but Logset Ltd was never a financial success, although there were no big losses either. The British have always been keen on visiting Logset and Vaasa. For some, Pink Lady has been the most important thing, while others have been more into snowmobile safaris on the ice.Those in doubt of whether or not to buy a new Logset have usually been convinced during their visit to Finland.Apart from offering entertainment, we have tied our client relations tighter. As one of our biggest clients, John Fish, said: –– I have the phone number to the Viking in my mobile. By this he meant that he will phone Gustav or Kristian if all else fails. Then there were new Logset owners with brooms. They wanted to sweep out all the old stuff and new investments were to show how the big boys do real business. Kenny and Stephen were let go at a high price for the parent company in Finland. John Fukes nearly went with them, but somewhere someone realised he was the only reliable link and the key to what Logset used to be in Great Britain. New people were hired, mainly with a past in Ponsse, and the costs went sky-high. In order to cover the losses the volumes had to go up.To do this you had to invest more, which resulted in even greater losses. A couple of years later, Logset Ltd was phased out and John Fukes was the last man standing. If anyone has the ability to create a sound, long-term Logset business in Great Britain, it is John and his team. Good luck, John!

Otzberger Forstmaschinen have modern and dedicated facilities in Brensbach, Hessen.

German Logset parade with raised bogies.

GERMANY, AUSTRIA Our German experiences from the Norcar era were not the best. Demanding, unreliable and combative was the best summary of German distributors and endcustomers. It’s a question of picking the right ones. Demanding, yes, but reliable and able to stand their ground is Logset’s experience in short.A lot is personified by Georg Schellhaas, who in 15 years made Otzberger Forstmaschinen from a one-man show to an absolute top dealer with professional employees, successful clients and its own sales and service facility in a league of its own. Over this time, Logset’s active machine population in Germany increased from a few dozen Norcar machines to more than three hundred Logset machines. From being entirely unknown, Logset soared into a position of acknowledgement. Logset’s market share in Germany at best grew to nearly 10%.This doesn’t sound like much, but then you have to take into consideration that more than ten brands are represented, of which the three largest rule far more than half the market. A few years after Logset changed ownership, it was time for Herr Schellhaas to retire. Erwin Machleid who dealt in machine sales to wine growers bought the operations in 2007 and rents the facilities from Schellhaas’s real estate company. Due to the following financial crisis, the start was difficult and financially encumbered, but with the help of good personnel and a strong market position, Machleid has come out on top.

Otzberger was awarded the first Logset Dealer Award at Elmia 2005. From left Kristian Stén, Gustav Frantzén, Georg Schellhaas, Volker Nieratzky and Michael Jungblut. 35

Logset and FMS form a strong team in France. FMS is owned by Regis Wallerich (third left) and Dominique Cumet (fourth right). Second right is Florence Wallerich who takes care of administration. In the cabin the son Maxime and far front Princesse, the guard.

FRANCE Â&#x201E;Â&#x201E;

In the beginning, France was handled by Aficor and Dominique Cornu in Switzerland. Together we participated in the largest French fairs, and a machine or two also found its way to the Hexagon. As our importer for the French market was situated outside the EU, it became clear that the language benefits of Cornu did not make up for the additional bureaucratic turns this arrangement entailed. Logset acted professionally and assigned the Finnish Foreign Trade Association (Finpro) to first conduct a market survey, which was followed by a survey of potential distributors. The aim was to find a player who could cover all of France, but the survey and interviews with the most promising distribution candidates showed that this would not be possible.The country was divided into four sectors, which were managed by their own distributors. Everyone thought the arrangement splendid and the mutual willingness to co-operate and motivation to help one another was excellent. A couple of years later, only two distributors had sold any machines. Besides, one of these went bankrupt with a credit loss amounting to EUR 40,000 for Logset (basically the only bang the sales had made).The only one

left was FMS in the far north-east of France, nearly in Belgium and Luxemburg, not the best location from which to cover one of the largest forest countries in Europe. FMS and Regis Wallerich were known to us from the Norcar era. He used to work for a company which sold both Timberjack skidders and Norcar forwarders. When Rauma-Repola (FMG) bought Timberjack, Norcar was left out in the cold. Regis later took over the firm and continued as a Timberjack service provider, but also handled old Norcar clients in the quiet, as well as some Logset machines Aficor had managed to sell in France. Timberjack wanted to focus on its own service operations and FMS was dropped out.This turned out to be a good thing for both FMS and Logset. By working on his old Timberjack clients, Regis found Logset a new clientele. At the same time, Philippe Wion came to work for Logset, based in Kvevlax. We now had a phenomenal factory support in French, and the people at both ends were highly motivated. The result was instant and France soon developed into one of Logsets greatest markets. Since Pascal Rety replaced Philippe Wion, the success has rolled on and today France is Logsetâ&#x20AC;&#x2122;s largest market to which we deliver a machine nearly every week.Thanks to independent service providers, FMS has built a service network covering this vast country, which has its most important forestry areas in the north-east and the south-west.

One of our best and most loyal French customers, Jesus Mateos together with Romain Boussion, sub-dealer for Western France.

Swedish customers enjoying a Logset party.

SWEDEN Sweden is the world’s largest market for cut-to-length forest machines of the so-called Scandinavian kind.The USA might actually have surpassed them the last few years, but considering that Sweden isn’t much bigger than an American federal state, it seems fair to declare Sweden the winner.The Swedes have strong traditions and manufacturers to fall back on, and have consistently favoured Swedish brands (even if they have been manufactured in Finland).The only one who has managed to make inroads in the Swedish market is Ponsse. When Logset was established in 1992, there was a significant Norcar population in Sweden. Old Norcar Svenska became Åkes Skog och Maskin, which made its living from spare parts and service for these machines. Sometimes Åke Fagerlund managed to hawk a new Logset to an old Norcar client, but overall the results were rather meagre. The co-operation around the Chipset with Ljungströms Svets och Smide in Lidköping also led to Ljungström’s taking over Åkes Skog och Maskin when Åke wished to retire. Per-Olov was also fonder of mechanics than sales, so the sales of new machines were limited to the already converted who would turn to his workshop. We got some loyal and industrious clients this way, but no market share worth mentioning. One day Gregor Tovek marches into Logset’s life. Gregor is a successful distributor of Volkswagen-Audi, and also holds large forests with an interest in forestry. He has decided to invest in the sales of forest machines, and quickly

The first Logset 5H Titan harvester delivered to Sweden on SkogsNolia 2006. From left Filip Stén, end-customer Andreas Lunnefjord and Mats Åhfeldt from Toveks Skogsmaskiner.

employs a team consisting of two experienced salesmen and one serviceman. Logset is marketed in Sweden as never before.The salesmen Mats Åhfeldt and Leif Rosell court their old Gremo clients and Gregor ensures that Logset’s discounts are at the correct level.We actually get results in this market known for being difficult. The Swedes are extremely demanding concerning service and backing, which Logset’s factory service has lived to witness. The payments, however, were handled with precision and to everyone’s satisfaction.

CANADA

North America has always fascinated the Nordic forest machine manufacturers. Nowhere else are such amounts felled and nowhere are so many machines sold.The domestic offering is aimed at the tree-length method, that is, the trees aren’t cut into the right assortment in the forest, but the delimbed stem is transported to the buyer, who handles the bucking as he sees fit.The Nordic cut-to-length method, which is considered more economic and environmentally friendly, is slowly but surely winning ground in North America, but will probably never be the leading method. Besides, thinning is rare “over there”. A clearfelled stand is self-rejuvenated or planted, but after that nothing happens until the next clearfelling 40–60 years later. In any case, Nordic manufacturers have been represented in the USA and Canada with varying results since the 80s. Early on, Logset received enquiries on thinning machines and we also had a certain history to fall back on. Via the agreement with Blount, Norcar sold a few thinning machines to Alabama and Florida. When the new 6F forwarder was presented and a new heavy-duty head had been developed for tracked machines, we thought we now had something to offer the Canadians. We chose not to go for the USA, as it was considered more conservative, bureaucratic and risky. An old acquaintance, Bruce McGallum, was assigned to chart the potential and contact interesting dealer candidates. Mainly, we were aiming at the Maritimes provinces Nova Scotia, Newfoundland, New Brunswick and Prince Edward Island. We made some trips and fair visits, but the problem was that those who were interested in us didn’t live up to our demands and expectations, while those who were of interest to us considered Logset too marginal and with a limited product range. We reached the year 2000 before the concept was ready, and it was still far from complete. We began with Paul Equipement in New Brunswick and the Gaspé section of Quebec. Wajax Hydrofor handled the area around LacSt-Jean in East Quebec, and Equipement Element the Abitibi area around Val d’Or in Northeast Quebec and the French-speaking part of Ontario. It was characteristic that all three companies operated and aimed at French-speaking clients.The territories may seem small, but they nevertheless covered the main part of the commercial forestry in French-speaking Canada, an area as big as Europe with 8 million inhabitants. Distances are long in Canada, and it

The Logset 10F forwarder with 18 ton load capacity is close to what the Canadians regard as a grown-up forwarder.

took 19 hours by car to go from Paul Equipement in Balmoral to Equipement Element in Val d’Or.Wajax Lac-St-Jean was 8 hours from Val d’Or. By means of professional customer support and French documentation, Logset soon became someone to take seriously. We mainly sold 8F forwarders and 7X harvester heads. Wajax is a billion-scale machine distributor and mainly living off heavy equipment for the mining industry, JCB construction machinery and a fleet of many thousand rental forklifts. In the 80’s Wajax had purchased the distribution network of Timberjack in East Canada, that is Maritimes, Quebec and Ontario. When John Deere later bought Timberjack, the future was uncertain, and therefore they wanted to bring in Logset as an alternative.After a few good years’ experience, Logset became accepted in the entire Wajax chain, and the agreement with Timberjack/John Deere came to a close. Logset had hit the jackpot!

Widespread forest fires form a considerable challenge for professional forestry in Canada.

Unfortunately, the Canadian market took a plunge around this time, and a year or so later Volvo bought Direct,Wajax’s Canadian flagship for tracked felling machines.Volvo’s network had sold the Tigercat felling machines, forwarders and skeeters, so Tigercat was looking for a new network and of course Wajax caught their eye. Logset’s management was sleeping at the time, and Logset was out before anyone knew what hit them. Endurance was the name of the game. Canada is a market most sensitive to economic fluctuations.When times are good and the stars of the currency rates are in the right position, there is no stopping the demand and the margins are lined with gold. But then the market comes to a halt, prices plunge and nothing is left but costs and problems.Time and again the Nordic manufacturers have let the market alone during a recession and had great problems picking up the pieces and regaining trust. Unfortunately Logset fell into the same trap during the “dark ages” in 2008–09.Thanks to Pascal we can now believe in a brighter future for Logset in Canada.

Ready to roll! Kristian is there to assist Wajax during the Logfor show in Quebec.

Julien Lavoie at the right receives his new Logset 10F forwarder from Donat Massie at Wajax Hydrofor in Quebec.

““

THE TIGER HUNT

Tigercat in Ontario had developed from McDonald Steel, a large subcontractor of welded steel constructions for Timberjack. During the recession in the beginning of the 90s, the new owner of Timberjack, Rauma-Repola, let quite a few people and subcontractors in Canada go, including MacDonald Steel. The company’s dynamic owner Ken McDonald reacts fast and gathers a team of former Timberjack employers and his own specialists, and starts to design a competing product to Timberjack’s tracked felling machines.Tigercat was born. 10 years later, Tigercat had surpassed the previous market leader Timberjack. One of the first times I visited Canada on behalf of Logset, Tigercat was one of the stops. Tigercat were possibly interested in broadening their range of Logset forwarders in order to offer Logset’s harvester heads for their standard machines. We had a productive meeting with Ken McDonald and Tony Iarocci, his right wing man and CEO, responsible for the market. A few weeks later Tony phoned saying that, indeed Logset is of interest, but Tigercat would like to buy the whole company. Oops! Over the following months, Gustav and I revisited Tigercat, and we held some preliminary negotiations in connection with a fair in Canada. In autumn 1999, MacDonald and Iarocci visited Vaasa, accompanied by their wives. They received a warm welcome with a night out at Kalle’s Inn. Two days of intense negotiations followed, during which we pussyfooted on the price tag. The Titan harvester was not yet finished, it was only a sketch, and so a great deal of our pricing was based on future income. The pressure rose, they wanted the price right away, and no more excuses please.We finally let them have the sum with the margin for bargaining us three owners have previously decided on. It takes a few seconds for the information to sink in, and maybe there is a request to specify which currency we are deal40

ing with, but the result is clear. The negotiations are over, the gentlemen rise and are gone for good within minutes. On their way back to Canada they swing by Hemek in Hede, which has gone bankrupt, and out of pure desperation buy Hemek’s operations from the bankruptcy estate. The price tag probably was quite modest, but I still believe that Logset would have been a better deal for Tigercat. This reminds me of a similar incident that took place much earlier. Interpolator tries to rid themselves of Norcar at the end of 1991. The partner in the USA, Blount, seems to be a promising candidate. Norcar’s chairman of the board Seppo Jaatinen, Gustav and I go over for a meeting with Red Blount, the sole owner of a conglomerate worth billions. We are sitting in Red Blount’s usual suite in a luxury hotel in New York. Red shows little interest in a small Finnish company, burdened with debts, in particular as Blount has already paid a sky-high price for a licence agreement that grants Blount access to all the essential technology know-how Norcar and Ponsse possess. The same question is put: How much is it? Seppo Jaatinen apparently doesn’t have an answer. He covers his mouth with both hands and stares down on the floor. Red Blount is in the opposite chair, leaning forward. Red, well in his seventies, is not a big man, but has conspicuously large ears. Now he further cups his ears and tries to direct them as huge parabolic aerials towards a scarcely audible source of sound. He’s like the space telescope Jodrell Bank, which since the 1950’s has been trying to catch signals from outer space, to no avail. The result is the same: no information of interest is passed on and we go home with our tails between our legs. K.S.

The Russian customer Kardinal in Archangelsk chose Logset 5F Titan and 8H Titan for demanding harvesting operations in severe climate and terrain conditions.

RUSSIA If Canada resulted from a determined attempt to enter the market, our first approaches in Russia were quite the opposite. None of us had any sympathies with Russia, and we did see a certain potential, but also huge risks. Some of our Finnish clients worked as contractors in Russia, and their real-life stories only confirmed our suspicions. Many Russians are of course actively creating contacts with the West. One lady, who publishes a trade magazine for the forest industry phoned several times, and finally paid us a visit.That’s when we gave in.We agreed on an advertisement and an article about Logset, in which, to create credibility, it was said that Logset is looking for representation in Russia. Not many days after the magazine was published, Mrs Elena Mordvinova from the company Minitex phones and wishes to visit. A few weeks later Elena shows up with a salesman and a technical manager. The company is owned by Alexander Bortnikov and specialises in the import and distribution of investment products all over Russia. Among other things, Minitex imports 800 Bobcat machines a year.The concept and the organisation seem reliable. For instance, they have a separate forestry section, Minitex Les, which sells sawmills, timber loaders, trailers etc. Now they are looking to expand with forest machines and after a thorough analysis of the suppliers available, Logset has been selected. We return the visit in St. Petersburg where Lukasz Zysk, our Polish salesman who also speaks Russian, and Kristian have the honour of meeting Mr Minitex himself.We return home with the first machine orders and our future

scenario is breathtaking. In a short while, Minitex became one of our biggest clients who bought both harvesters and forwarders.We employed a guy, Pekka Hoisko, who had great practical experience from Russia, and would work as commissioning trainer on machine delivery and technical support for the service technicians of Minitex. Service was the Achilles’ heel of Minitex. They bought a spare part storage through gritted teeth, but on controlling a few months later, it was all there, still packed in a shed in Minitex’s yard and no-one at the company had a clue what was in there. It was the same thing with their service car. They proudly showed it to us, but it was locked, as the serviceman was out to lunch. When he returned from lunch, we got him to unlock it. It was empty, apart from an oily rag and some empty boxes.The explanation was that it had been used to transport material to a fair the week before. Yet, no-one knew where the service tools were, nor what should really be in the car. Later the same afternoon the manager of Minitex Les, Nikolai Kobzev, brought us a leaflet with a four-wheel driven Mitsubishi pick-up and wanted to know if that was good enough for us. He didn’t seem to understand it wasn’t the looks of the car that were crucial, but what was inside it and if anyone knew what to do with the contents. Minitex later went out of business.Today the Russian market is handled professionally by Ferronordic with Pavel Syunev as technical support, stationed in Kvevlax. 41

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THE LATVIAN MOB?

Our first machine to Latvia was sold to a Latvian company in the wood trade. The company handled the entire chain from felling to manufacturing of wooden parts for the furniture industry.They bought a 5F forwarder and asserted their willingness and ability to sell Logset machines for the Latvian market.The company’s manufacturing was located in the free port of Riga in some sort of old Soviet complex of military past. The chair legs and wooden pegs etc. were manufactured in proper facilities with modern machines and were then exported, mainly to Denmark. The owner drove the largest Range Rover that money can buy, and held court in a renovated part of an old military barracks. The office was the size of a small festival hall and was guarded by a blonde in a miniskirt, whose main responsibilities were related to her own nails. One of the gentlemen’s suggestions was that we reduce the price significantly in order to decrease the import fees and taxes. The difference would be paid to us in a Latvian account without any papers or bureaucracy, only a bank card.We would be able to withdraw the money in cash at any cash machine whenever we visited Riga. We never closed any more deals with this company. Our distributor in Estonia, Simatron, had operations in North Latvia, and soon enough a conflict arose between our Latvian and Estonian friends. The Range Rover man also had his own bodyguard/hitman, who took me aside and whispered confidently in my ear that if I’m having any trouble with the Estonians, he can take care of it. –– Just one word from you Kristian, will fix this problem. One word... K.S.

THE DOMESTIC MARKET The reader can easily get the impression that Logset neglected its domestic market. Not so. It is true that our exports have always been big, between 80 and 90%.This means that the domestic market has accounted for 10–20% of the sales, which in some years has landed Finland a medal, and always meant a place in the top five. It is claimed that no company can be successful abroad without doing well at home.This is not the whole truth. In the case of Logset, we had on the one hand realised that exports generate less fuss and had owners and management who already knew how to become a successful exporter on the other. Our domestic sellers have often criticised our export orientation, claiming that it harms reliability and raises suspicions that we really don’t bother about our domestic clients. This is an incorrect conclusion, as Logset has always taken care to see to all clients, domestic and international. On the other hand, over the first ten years we haven’t invested much in Finnish growth. The competition on the market has always been strong, and the total market share of the three large players (according to themselves) has always been far above 100%.The competitors have not always been that pleased with the Finnish market either. Thanks to the language, Swedish-speaking Finland has been Logset’s true domestic market. Henrik Fridlund is known in every cottage in the area which is in some way related to mechanised forestry. In addition, Henrik always managed to find the odd entrepreneur in the most remote corners of Finland, who for some reason or other hadn’t got caught in the net of the big ones. When Erno Mäntynen was employed, the systematic task of making Logset known and acknowledged among the forestry companies and their key contractors began. Our service network has developed to better live up to the clients’ expectations. During Logset’s dark ages, the costs for the domestic market ran amok, and a reality check was necessary.Today the domestic market stands for a significant share of Logset’s sales and profit, not to forget the direct customer feedback.

Logsetâ&#x20AC;&#x2122;s new service center in Vaasa was inaugurated in 2008. The center serves both domestic contractors and export dealers.

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Our domestic clients are a professional fellowship it is a pleasure to serve. Logset has always had skilled sales support people. Often our clients and interest groups have wondered over our high export rate. This has been easy to comment on, as Finland is and always was one of Logset’s most important markets. A comparison between Finland and the rest of the world is completely irrelevant. Thanks to our high export rate we have also always been able to offer an allinclusive and functional spare part service in Finland. Some years Finland has also been the largest single market of Logset. Today there are Logset machines all over the country, and Logset’s products and brand are well-known among the Finnish forest machine contractors. Our own measuring system has been developed in close co-operation with our domestic clients.We are investing more and more in domestic sales and after sales, and Logset’s market share will grow considerably over the next few years. There are many good memories, and most vividly I remember the very first sale.The first machine I sold was a second hand Pika forwarder. I went to Porvoo to demonstrate the machine. Once the deal was closed, I was so exhilarated that I drove all night back to Vaasa to give the good news at the factory. During 24 hours the trip meter counted almost 1,500 km. Erno Mäntynen, regional manager

Erno in good company on the Metko 2010 fair.

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THE GOSPEL OF MULTILINGUALISM

Logset has made the most of the asset of having its roots in a bilingual environment. The language situation Finnish/Swedish was long about fifty/fifty. Most employees were as good as bilingual, but there were also monolinguals in Finnish and Swedish. For this reason, it was taken for granted that all information to the personnel, written or spoken, always was given in both languages. Our Monday meetings where we would go over the market and production situation as well as discuss technical matters, were also always held in both languages, but without repetition and translation. Everyone used the language they felt more comfortable with. Later the language palette expanded to include English. Functional multilingualism at its best. Language has also been of great significance for us to be able to communicate directly with distributors and end-customers in their own languages. Finnish, Swedish and English aren’t exactly rare at other companies either. At Logset we have also had Tom and Kristian in German, Philippe, Pascal, Hanna and Baptiste in French, Lukasz in Polish, and Lukasz, Pekka, Yury and Pavel in Russian. In addition, less complicated matters have been discussed in French by Kristian, in Spanish by Gustav and in Estonian by Henrik. I believe this to be quite extraordinary for an export company with less than 50 employees. Abroad it is definitely even more extraordinary that a company of Logset’s size masters six or seven languages. The benefits of this have been obvious. During the countless visits from schools I have hosted, I have always emphasised the importance of language skills. It is an investment on which you will always get a return. I’m sorry to see bad English spread as a lingua franca. It raises my hackles when I hear the turns in today’s envious language debate on how Swedish is pointless as it isn’t enough within the Nordic countries. For 40 years I have travelled and been in contact with Swedes, Danes and Norwegians. I have never had to resort to English and would never even dream of using English in a Nordic context. End of my turn in the language debate. K.S.

Also our German dealer Otzberger Forstmaschinen understands the importance of language skills.

Kurt Södergård, far left, discusses with Pasi Hangasmäki, Seppo Koskinen and Kari Mikkilä.

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The following is written in the honour of Logset’s long standing purchasing manager, Kurt Södergård. Kurt passed away 2008 after a long period of illness. Kurt was one of Norcar’s key persons, who was involved in Logset’s operations from the very start. He handled Logset’s purchases alone until I entered the picture in 2003. It is hard to find another person who has protected the employer’s interests as dutifully as Kurre. He was a master of price negotiation and certain component suppliers would remember his strict tactics long afterwards. Of course this could also lead to conflicts and tense relations with the suppliers. Some connections were broken off entirely, and neither party wanted to see the other again. In one case we nearly got into a fight. However, these incidents were rare and didn’t interrupt Logset’s operations. Kurre handled the entire chain of acquisition, from call for bids and agreement negotiations to order and delivery control.This was a huge field of work for one person. Many a mechanic feared Kurre’s sometimes curt reactions to lacking components and acquisition requirements.

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It must be there, go and look harder! A forest machine consists of hundreds of parts, all of which are needed in order to complete the machine. To begin with Logset had no ADP system for material handling. Kurre had a number of tables in A3 format, both hand-written ones and some in Excel. Certain parts had to be ordered months in advance.This was very demanding as a whole, and Kurre would often be at work long after the rest of us had gone home. When Kurt was taken ill and was on sick leave, we had a huge task in trying to work out his system.We finally managed well and developed a data system for the needs of the production and the material administration. Kurt returned to work although he was still on sick leave. He continued as usual, but was off sick again, and returned again. After the third sick leave, he no longer returned to work. The legend lives on. Kari Mikkilä, one of the founders of Fomac, later partner in Logset and Logset’s material administration manager

NEW OWNERS Logset grew on all fronts during the 2000’s. New markets were conquered, new products developed, new people employed, and new facilities arranged. The volumes increased and suddenly Logset was a company making 100 machines a year instead of 30–40. Everyone knows that growth requires capital. Until now, Logset had managed without external bank financing.The owners withdrew dividends as far as it was exempt from taxes, but reinvested the money in the form of working capital.This solution didn’t last any longer, and soon it was necessary to discuss external financing. Apart from the monetary situation, it also became increasingly difficult to steer the ship. Our hands-on management concept no longer worked when we had new employees coming in almost weekly, about whom we didn’t really know who they were or what they were doing. We needed organisation, target management and follow-up. All this was familiar to us from our time in the rabbit cage, but as we now were in the wild this was only moderately interesting.We were too old dogs to learn new tricks. Different suitors had long been in the picture, but after Tigercat we hadn’t had any serious discussions. Curt Lindbom worked at CapMan for a while, and we had given a company presentation for him. The plan at that time was to roll several smaller manufacturers into a big one, but we didn’t see any benefit for Logset in this arrangement. In winter 2005 Logset was in the spotlight in many ways. We were nominated as one of Finland’s 25 most innovative growth companies. The distribution agreement with Wajax was signed and our product range was finally finished, including 5 forwarders of 10–18 tonnes and 5 harvesters from the first thinning to the heaviest of clearfelling.Then Curre Lindbom got in touch again. He was now part of Primaca Partners that invested private equity in promising businesses. We negotiated all of spring and summer 2005, and the buyers did their due diligence. Eventually, we agreed on a price and an arrangement that would benefit both sides. We, the old owners, retained 40% and the promise to run the company for at least another two years. The enticement was an extra earn-out bonus on the selling price, which was based on the result of the following two years. It was also decided that the personnel would be given the opportunity to invest in a personnel emission. When the news spread that Primaca had

Satisfied sellers and buyers. From left Kristian Stén, Curt Lindbom, Gustav Frantzén, Seppo Koskinen, Veli-Matti Mynttinen, Kari Mikkilä, Ilkka Brotherus, Jukka Kivipelto and Jussi Länsiö.

bought the majority holding in Logset, it turned out that many had already sensed something was going on. All in all the news was well received. Probably most people realised that Logset was now playing in a higher league, and then new training skills and team managers were required. The personnel emission was three times oversubscribed, even though the minimum stake was EUR 6,000 of your own, taxed money. Could their faith in the future of their own workplace have been any stronger? We were now working twice as hard at Logset. Business was good and with new, fresh money in the register we could be more offensive. New key persons were recruited and the CEO issue was reviewed. Our collective leadership wasn’t quite acceptable in the financial circuits in Helsinki. We had to appoint a CEO. None of us felt summoned, so the solution was making Tommi Lindbom, CEO of Junttan Oy in Kuopio, CEO of Logset as well. Primaca had also bought the majority of Junttan and we Five Titans (the old owners of Logset) had invested a little in Junttan, a manufacturer of pile-driving machines. Esa Rantala was appointed branch manager of Logset, and we old owners saw ourselves as a kind of council of elders, who would delicately steer the new forces of Logset.

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A CLEAN SLATE

Our happiness didn’t last long. The new brooms wanted a clean sweep to force the old management to exit. In October 2006 (just a year after the sale) Gustav, Seppo and I were formally given notice and evicted from our common office. The Primaca guard used all their might and authority to prove how important it was that the new management could work in peace. We were disturbing the entire renewal process with our mere presence. Nobody wanted to hear anything about our earn-out anymore. The motto was a clean slate. Well, it was certainly clean. Usually there are ongoing project plans that you inform your successor about and leave lying on the desk. In Logset’s case, a big cardboard box was placed at the end of the table, and an elbow strategically placed at the opposite end so that all of it could be efficiently swiped right into the trash. The die is cast. Logset challenges the domestic competition in a grand way.

K.S.

Great get-together in Kuopio. The Logset and Junttan staff are now united under the Pilomac umbrella.

THE DARK AGES The new management had no real feel for Logset’s true strengths and came bustling in to change the company down to its very foundations. New strategies were formed and new control systems implemented. Without doubt there was also a need to change and improve.This was one of the reasons we were mature enough to let the responsibility pass into new hands. When new powers are about to implement new systems and routines, there are often problems as everything doesn’t work as intended straight away, and many shortcomings and bottlenecks are discovered too late, or simply neglected. A cardinal error was first tearing down, then building the roof and tabernacle without ever noticing the foundation was missing entirely. A lot was done formally correct. Corporate governance was a byword to the board and the group management. In large listed companies it is probably important to carefully define the roles and responsibilities of the shareholders, the board and the senior management. Nevertheless, we have seen and continually experience how the senior management and board of listed companies seize power and excessive benefits at the expense of the shareholders. In our case, corporate governance was used as a tool to efficiently turn out an important part of the shareholders (= the old owners) so that there was no transparency and no means of influence left to us. The strategy work was very thorough and a big part of the organisation was involved. Unfortunately, the result was a highflying zeppelin with nonexistent communication with the ground personnel. As the implementation was only conducted as far as seen fit, the result was accordingly incomplete. A group management entirely consisting of Junttan employees took over the practical management in Kvevlax. Some did have a certain experience in the business, but no practical experience in Logset’s products, personnel or clients.When the management team spends at least ten hours a week in a car between Kuopio and Kvevlax, and shares the remaining four days between two completely different companies with few things in common apart from the owners, what can you expect? The biggest errors occurred in the distributor contacts. When the distributors stand for 85% of the sales, it is indeed strange to treat them as unnecessary go-betweens, who only complain and seize a part of the profits. It even went so far that the then after sales director was denied access at our largest distributor.

The atmosphere in the field and in the company grew worse by the minute, which soon showed in the financial result. After a meagre result in 2007, a “Turn Around” programme was pushed through, the most visible result of which was letting several of the company’s most experienced key persons go without praise.The drastic actions caused even more key persons to resign in protest.A cautious estimation suggests that Logset bled some 200 years of experience during 2007 and 2008. Turn Around turned out to be Bottom Up. We relinquished a company with the highest credit rating, AAA. Three years later Logset was on the verge of bankruptcy, pleading for debt restructuring. Might this be the Finnish record of business failure? We give all credit to those who remained and fought bravely to turn the ship around again.

Heikki Ojala was Logset’s managing director during two stormy years. Despite his Savo background he was genuinely accepted and liked by the Ostrobothnians. At his 50th anniversary he was awarded all the traditional Ostrobothnian attributes.

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ALMOST EPILOGUE

On 14 February 2008 I’m sitting in my car in the car wash at Neste on Raastuvankatu in Vaasa when the phone rings. It’s my son, Filip, who is Logset’s market communication manager and also sales manager for Sweden. –– Kuikka wants me fired. It turns out his new boss, who is also the marketing manager of Junttan, has fired him, without notice. The justification is he is no longer needed. The marketing communication is now to be handled from Kuopio and there will be no more efforts on the Swedish market. I’m speechless and ask him to wait while I phone Seppo, who has been at the board meeting in Kuopio the day before. Seppo tells me that our colleagues Jukka Kivipelto and Kari Mikkilä have also been fired. Kari and Jukka were also partners in Logset, but remained as employees after the company was sold. Jukka was the product development manager and Kari the material administration manager. What is more, the entire Kurikka unit is going out of business. Logset’s first salesman Henrik Fridlund has also been sacked. Clearly this is a cleansing of everything to do with the old owners, which also is supposed to scare those remaining into being loyal to the new management. There isn’t much we can do. The board refers to the management. The CEO of the Pilomac group calls the shots on this one. The CEO refers to the board, which nevertheless hasn’t made any decisions to lay people off. They have only approved of a reorganisation programme called Turn Around. At Pilomac’s annual general meeting a few weeks later, the issue is discussed anew, but nothing happens.When I ask that someone might at least express their gratitude and acknowledge these devoted Logset employees who have been let go under dubious circumstances the only reaction I get

is an awkward silence. After the meeting the board tells me off for showing the CEO in an unfavourable light. Later on the CEO and I meet up with Seppo and Logset’s branch manager Heikki Ojala as mediator. The CEO admits that my son being dismissed was an act in haste and that he understands my feelings and reactions. We finally shake hands and he promises to phone my son and offer his apology.We are still waiting for that apology four years later… The day after the big cleansing, I’m travelling to Germany. Georg Schellhaas has sold his company to Erwin Machleid and there will be a big handover party with many invited guests. I have also received an invitation, but I am well in advance ordered by the highest power to stay away. I let them know that I have been invited personally, not as a representative of Logset and that I can pay for the trip myself. A few days before the party, I find out no-one from Logset is going. I strongly reprimand the CEO and the sales manager for being so rude and uncivilised, but let them know I will speak for Logset to ensure that at least the company doesn’t lose face. After having been deliberately stabbed in the back in a way which also afflicts my innocent family, I am no longer able to go. I phone Schellhaas and refer to personal reasons without further explanations. At the last minute, Logset comes to its senses and sends Tom Knipström, who honourably appears on behalf of Logset at the party in Brensbach. On Sunday my friend Georg Schellhaas rings. –– Kristian, ich weiß alles, du musst dich von diese Leute trennen, sonst wirst du immer unglücklich bleiben. (Kristian, I know everything. You have to distance yourself from these people, otherwise you will always be unhappy). This was exactly the only thing on my mind these days. I felt humiliated. I felt great personal guilt over my son’s situation, which I had no

AT THE VERGE OF RUIN power to prevent even though I alone was the reason he was afflicted. To this day, four years later, I still find myself asking whether I did the right thing. Should I have bid Logset farewell and tried to put it all behind me? The Five Titans, that is Gustav, Seppo, Jukka, Kari and I, had long conversations at the time. Jukka and Kari had also been unjustly and insolently struck. Gustav and Seppo, who were members of the board, felt the suspicion swelling against them. Was it the case that they had seen it all coming, but given their silent assent to the massacre? Today I know they had no part in it. The CEO made the decision himself, but had received a silent go-ahead from a majority of the board. Money talks. The Five Titans hold just above 30% of the Pilomac shares, which owns Logset 100%. With these 30% you make no decisions if the other 70% pull in another direction.Yet, this 30% represents a significant financial investment and risk for each one of us. Back then we would have been forced to sell at a considerable loss. Maybe there was a reason for this, an intent to split the Five Titans and force a sale on the buyer’s market. Who knows? We decide to stay put and ensure that we at least get our piece of the pie. It was decisive for my own decision that Kari and Jukka also supported the idea to remain. This time it was just a snag from my and Logset’s common history ending right there and then. Today I’m glad I swallowed my vexation and rose again, just like the other casualties who also moved on, in their own way. History has proved them right. K.S.

The financial crisis in 2008 hit the forest machine market hard. Furthermore, Logset was in a state of dissolution due to the actions of the group management and a cost development spinning out of control. In autumn 2008 it became clear it was a matter of life and death. Heikki Ojala, who was the manager in Kvevlax, did everything to adapt the operations to the current market situation. Pasi Nieminen was employed in the autumn as the new market manager, and he used plenty of elbow grease to ensure enough orders to at least generate a positive cash flow for the operations. At the same time, the group management was phased out from the operations, and the old owners were given retribution so far that it was legitimate to ask us for advice based on our previous experiences. Tapio Nikkanen who had long experience from the forestry trade was hired by the board to help in getting Logset back on its feet. First he was our consultant and mediator between differing owner interests, and later when Heikki Ojala handed in his notice as the CEO of Logset, it was Tapio who stepped in to reorganise, temporarily dismiss, make savings, negotiate and with his iron fist managed to mend the sinking ship and steer it into clear water. Logset’s owner Pilomac was fighting an unreasonable debt burden, but relied on Junttan’s ability to keep the group standing for far too long. Eventually, they ran into a wall and intense negotiations were initiated with the investors. After eighteen months of constant crisis negotiations, attempts to divest Logset, extortion and threats, a solution was finally achieved: Junttan span off from Pilomac and Logset applied for and was granted debt restructuring in summer 2009. As chairman of the board of Pilomac, Jussi Länsiö made a strong effort, managing to compile a functional solution, where the largest shareholders, with the Five Titans at the helm, invested in form of a conditioned capital loan for Pilomac.

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THE SCHOOL OF LIFE

The world wasn’t so gloomy when a head hunter from Helsinki offered me the position as sales manager at Logset in the summer of 2008. I eagerly and gladly accepted the job, as I had been working for the same employer for almost ten years and wanted a change of job, trade and environment. I was a farmer boy with practical experience in machines, and thought forest machines would suit me just fine. I began my task as Logset’s sales manager 1 October 2008. Between my recruitment and my first day at work, the Lehman Brothers went bankrupt and the world changed.This also had a discouraging effect on forestry. The demand for forest machines had been on the decline since the spring, and came to a complete halt in the autumn of 2008. My first days and weeks at Logset were a shock: the order stock was short, the company’s cash flow and result heavily negative, the production quality was gone, the distributors’ claims had been neglected, the distributors had lost their faith in Logset, and worst of all, the register was empty. My second day at work was one of the most thorough introduction periods of my life, and a day I would never forget. Erwin Machleid and Volker Nieratzky came to visit as representatives for our German distributors. The first hours of the day we sat in our conference room and listened to the Germans’ scolding with red cheeks. They went on about how Logset as a whole was Scheisse, that the quality of the machines was low, that the German end-customers were angry, that no-one at Logset cared for Otzberger and that Otzberger required plenty of unpaid quarantee claims from Logset. To me the meeting was a short introduction to the forest machine business on the verge of recession. After lunch we went to the workshop where we got acquainted with the quality problems with one of our forwarders. The Germans easily came up with twenty quality defects and neglected matters. With hindsight I can agree with the Germans on nearly all accounts. The growth euphoria of the new owners had made Logset forget the three main ingredients: the people in their own organisation, the distributors and the end-customer. At the numerous meetings over the years, fine strategies and growth curves had been drawn into the PowerPoint presentations of Pilomac, and the earlier management had been re52

organised into oblivion. At the same time, the everyday things, the quality of the operations and the clients, had been forgotten. The consequences were dramatic. The personnel were truly exhausted and resigned, the distributors were furious and about to abandon Logset and, as already mentioned, there was no money left. Still, it was not just the owners’ strategies that were killing Logset. Noone could master the stormy global economy. Business with Russia ran into a wall. In a few months the rouble was temporarily devaluated by 30%. Putin issued 50% tax on forwarders and the investment interests were at one point above 20%. Due to all this, the machines were suddenly 50% more expensive to the end-customer. I can honestly say we then ran out of sales pitches. The only country where machines were still sold was Sweden. Once again, the Swedes were lucky with their weak crown. Unfortunately, Logset’s Swedish sales were far from impressive. All other countries of importance to Logset came to a complete standstill: Finland, Russia, Germany, France, Great Britain and Canada. Exports to Canada had already lost momentum at the end of 2006 due to the North American recession. I had moved with my family from Helsinki to Vaasa without really knowing the actual situation of Logset and global forestry. During the first few weeks, I realised that the personnel was truly competent and the products basically brilliant. Moreover, things had settled down on the owner front, and I received excellent support and approval from Logset’s old owners, the Five Titans. Of course the actual situation came as a shock to me, but I decided to go for it anyway. It takes a lot more for me to wet myself. The first years 2008–09 were mostly about managing the daily tasks. Tapsa Nikkanen, who became the CEO in the beginning of 2009, and I felt that our personal chemistry matched straight away. The production was halted and the employees temporarily dismissed in the beginning of 2009, but come April there was a light at the end of the tunnel. We visited the distributors often and tried to win back their confidence in Logset and our products. As a direct result, the German distributor Otzberger Forstmaschinen ordered their first machine in many months in April 2009. The machine was ordered for the Elmia 2009 fair in the beginning of June. The fair was a positive experience and we managed to show the world we were still alive and kicking in spite of all the rumours about Logset’s bankruptcy. By the end of June, we felt new orders were on the way. It then became clear that Logset had applied for debt restructuring. This was a

new shock to me. I thought that the sales were about to get rolling and that the restructuring was just bad timing. I also knew that the news of our restructuring would make it even more difficult to sell. No-one dares to buy a EUR 400,000 harvester from a company with a shaky future.The first week after the news I was frustrated. In spite of my own mixed feelings, I gave all I had motivating our clients and informing them on the consequences of the restructuring. A few days later I regained my faith in our future. Our distributor in the UK, RJ Fukes, ordered a 6F forwarder! This was an unbelievable tribute to Logset even if the company had neglected RJ Fukes badly before. The autumn of 2009 meant closing deals and footwork. Our competitors denigrated Logset to their heart’s content and our clients had their doubts. Yet, orders started to come in from Finland, France and Germany, among others.Our finances were tight, but money kept coming from here and there. Once I collected a Webasto heater from the post office in Kvevlax and paid with my own Visa card. Luckily, I had money in my own account. During winter 2010 the orders gradually picked up and the turning point came in April–May, then I knew we would make it. Our monthly rate was nearing 5–6 machines and nearly reached a break-even result, while the cash flow was clearly positive. I had closed a deal with Raico in Chile in 2008. However, they hadn’t ordered anything yet because the Chilean market was also quiet.The pieces were starting to fall into place and in June 2010 we received the first orders from Chile as a result of serious negotiation: one 10F forwarder and four 8X harvester heads. Logset’s situation had been stabilised and in June 2010, Tapio Nikkanen decided to become chairman of the board half-time. It was a great honour when Tapio suggested that I become the new CEO. I eagerly and confidently accepted the challenge, because I knew exactly what lay in wait for me. In May 2010 Logset found out that Volvo had transferred its sales and distribution of contract machines in Russia to the Swedish-owned company Ferronordic. We also learned that Ferronordic was looking for a partner on the forest machine side, in order to be able to offer every product from stump to factory.After certain detours, Logset was in the picture. In summer 2010 we repeatedly negotiated with Ferronordic’s representatives and they conducted an audit of our factory and operations. The process was heavy going and challenging, but exciting at the same time. Finally in September

2010, we were informed that Logset had been chosen as the new partner from among four different manufacturers. This was a real jackpot which finally enabled us to recover from the depths of the recession. The Ferronordic co-operation was off to a great start, and the first machines were delivered to Russia already in November. The period between October 2010 and March 2011 was amazing as far as the order intake was concerned, and the order stock grew into more than four months while our production rate gradually speeded

Pasi Nieminen together with Tapio Nikkanen did a phenomenal job in turning a hopeless development into sound and profitable business again.

Here on Elmia Wood 2009 the first few visible signs of recovery showed up and the faith in Logset gradually returned.

up. Our best month was October 2010 when we had more incoming orders than ever before. One evening I phoned Jukka Kivipelto, telling him I don’t know what to believe when the orders keep coming in through every door and window. Later, we have often laughed at this. It is really quite extraordinary how fast business can go from one extremity to the other. The beginning of 2009 was completely dead, and in autumn 2010 it was practically raining orders. The situation was actually quite demanding. Increasing capacity in a capital intensive trade is not done by snapping your fingers. What is required is recruitment and training of competent people, reasonable delivery times from the subcontractors, discipline in inventory value, quality control and above all proper cash control. Logset still had no “credit card”, but all purchases and smaller investments had to be financed from profits. The best thing with the upswing was employing new people and calling in those temporarily dismissed. The house yet again breathed happiness at work. In the middle of the hard times, Logset’s core, product development, did a fine job in spite of resources being short. We refined and further developed the TOC-MD measuring system, launched the new 10F Titan forwarder, created the new harvester head series Logset Titan Head, and developed a model series using the new Tier 3B generation motor technology.

In addition to these large projects, we had countless smaller development projects. It is really quite amazing that a company going through debt restructuring in a capital intensive trade and fighting larger manufacturers in a tricky market situation in the midst of it all manages to develop hightech products. During the remaining part of 2011, the positive market development continued. France was our most profitable market, Chile ordered more machines, Russia was going strong and even Canada was showing signs of revival. Logset’s business was also good in Finland.We now knew Logset had survived the crisis and the business was starting to roll on its own inertia. My personal challenges continued when my wife gave birth to premature twin girls in spring 2011, and due to my family situation I had to resign in autumn 2011. All in all you might say that Logset got the better of a really serious crisis thanks to excellent products, fantastic and competent personnel and loyal clients. To me my years at Logset were a fantastic school of life where I learned many lessons not easily obtained sitting in the classroom. Pasi Nieminen, sales manager 2008–10, CEO 2010–11

THE OLDER, THE WISER Tapio Nikkanen and Pasi Nieminen turned out to be a successful and wellmatched duo. They managed to win back the trust and confidence of the personnel, distributors, clients and suppliers.And of the shareholders! The debt restructuring was tough with strict terms of payment and forward planning to get the components on time, assemble and deliver sold machines as well as collect payments from our clients. Esa Rantala, who was the sales, production and supplier contract manager virtually had to teach himself and the company to life from hand to mouth. When Pasi Nieminen had to leave Logset for family reasons at the end of 2011, Esa Rantala was the natural choice as our new CEO. Few know the anatomy and economic conformities to law of Logset as thoroughly as he. Product development had been neglected since Jukka Kivipelto was given notice in winter 2008. Now the lag was getting too long. New

emission requirements demanded new motor installations and the Titan harvesters needed a face-lift after having been in production for ten years. The new management had no aversions or hidden agendas towards those who had built Logset, and for this reason, Jukka Kivipelto was called on to be our technology manager, responsible for production and product development. Jukka’s innovative solutions are showing in the new generation of models presented in summer 2012 at the most important fairs of the trade in Germany, France and Finland. When this is being written, Logset first presented a fine result for 2011, with the second highest turnover in the company’s history and a clearly positive result. A few weeks later the announcement came that the negotiations with the debt restructuring creditors have led to the company restructuring being interrupted in advance, and that Logset could pay off the remaining debts to its suppliers.

Logset 8H Titan GT represents the latest and the best of Logset’s expertise. The harvester is equipped with a rotating, self-levelling cabin, a superior control and measuring system and a fuel efficient diesel engine which meets the most stringent emission demands.

““

WHERE TO, LOGSET?

The 20-year-old Logset has grown up, been through its adolescent crises, and today stands well prepared for the demands and challenges of adulthood. Today, the existence of Logset rests on well prepared, stable markets and on new areas supplying growth as well as breaking new ground. The domestic market is in positive development, the products are wellsuited for the requirements of the Finnish clientele and our customer service is continuously developed. In Europe we rely on skilled and motivated distributors, who develop continuously and are winning a larger market share by the minute. Russia is our most important growth market with its huge forest resources, well-suited for Logset’s reliable products, not to forget the after sales support. Our largest machines are once again in demand in North America, where the market has recovered from a long recession. Our investments in the new TH series harvester heads have been fruitful at the eucalyptus plantations of South America, and more is to come. Our latest addition, Australia, is just getting started. Over the past few years, we have invested heavily in product development. New motors with even lower emissions and fuel consumption while retaining high operational reliability have been introduced. The driver’s environment has advanced enormously with new forwarder cabins, and now the new swivelling harvester cabin with levelling in all directions is making its entrance.The drivers’ working environment, comfort and safety are the guiding star of both the cabins’ ergonomics and our advanced control and measuring systems, which guarantee the best possible productivity. Logset works with a wide network of subcontractors and partners. Together we have achieved long-term quality and a good business for both parties.We will continue along this trail. Logset’s personnel have been through good and hard times. In dark moments, the gang is welded together and brings out their very best. We invest in improving the competence, health, occupational safety and job satisfaction of our personnel. While others do what they can, we accomplish what we want. 56

Esa Rantala, CEO

Esa Rantala assures that Logset forest machines and customer service are at this moment in better condition than ever. Our professional personnel, the even wider machine range and continuing product improvements guarantee the best conditions for logging throughout our whole distribution network. Logset is designed for success – for contractors, operators, forest owners and the wood processing industry.

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

Turnover, MEUR

1993

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

LOGSET’S DEVELOPMENT IN FIGURES Personnel

100

30 80

10 20

FORWARDERS

Logset 500, 504F 1992–99 68

Chipset 536 C, 3C 1994–97, 2004–06

Logset 6F 1997–2008 100

Logset 4F 1998–2008 106

Logset 6E 1998 1

Logset 3F 1999–2003 17

Logset 5F, 5F Premium 1999–2008 166

Logset 8F 1999–2008 68

Logset 10F 2005–11 25

Logset TOC control system 2007–

Logset 4F Titan Logset 5F Titan 2008– 26 2008– 90

Logset 6F Titan 2008– 48

Logset 8F Titan 2008– 32

Logset 10F Titan 2010– 8

Logset Titan GT Series 2012–

HARVESTERS AND HARVESTER HEADS

Logset 500H, 504H 1993–1996

Logset 5-55, 6-55, 6-65, 7-65 1993–2001

Logset 506H 1994–2001

Logset 7L, 7X 2001–

Logset 6H Titan 2001–

Logset 4M 2003–

Logset 4H Titan 2004–05

Logset TH 45, 55 2011–

Logset TH 65, 75 2011–

Logset 5M, 6M, 5L, 6L 2001–

Logset 5H, 5H Premium Titan 2004–

Logset 8H Titan 2000–

137

Logset 8L, 8X 2002–

Logset TOC - MD measuring device 2009–

Logset 10H Titan 2006–

Logset Titan GT Series 2012–

LOGSET’S MANAGEMENT AND CEOs 1992-2012

Gustav Frantzén 08.1992–06.2006

Seppo Koskinen 08.1992–06.2006

Kristian Stén 08.1992–06.2006

Jukka Kivipelto 09.2003–06.2006

Kari Mikkilä 09.2003–06.2006

Tommi Lindbom 07.2006–02.2007

Heikki Ojala 03.2007–01.2009

Tapio Nikkanen 02.2009–05.2010 12.2011–04.2012

Pasi Nieminen 06.2010–11.2011

Esa Rantala 05.2012–