2008 Shape, build, grow How Thule won Eastern Europe
Faster to market How Case Logic managed to grow by accelerating product development
Putting the consumer first Improving customer service k at Thule in North America
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Thule in two minutes Thule is the world leader within Sports and Utility Transportation. We deliver transportation solutions for active families, professionals and outdoor enthusiasts wanting to transport their equipment by vehicles safely, easily and in style. We develop, manufacture and market load carriers, accessories for recreational vehicles, trailers, tow bar systems, organization solutions and snow chains for the consumer market and the commercial market alike. And we are a leader within all these product segments.
Global footprint
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The Thule Group has approximately 3,500 employees at over 30 production and sales locations on all major car markets in North America, Europe, Africa and Asia. In 2008 our sales amounted to SEK 6.2 billion (approx. M EUR 620). The Thule Group head office is based in Malmö, Sweden, and our majority owner is Nordic Capital (www.nordiccapital.com).
Our vision is to be “the brand of choice” Our vision is to be the first name that comes into the consumer’s mind when buying vehicle-related transportation solutions for leisure or professional use.
Strong past – strong future Thule was founded in 1942, and our products for sports and utility transportation have been around since 1962. Since then we have built a global reputation as a premium brand, since 1999 with an increased focus on growth and profitability. Today, our brand is captured in three core values that are the basis for everything we do: Smart Solutions, Shared Passions and Active Lifestyle. We put special attention to the high visibility of our products around the world which has made them our foremost brand ambassadors.
Living the brand Ultimately, the continued success of Thule depends on all employees living the brand. After all, our brand is our creation – an extension of ourselves – not merely our products, marketing materials or events.
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Contents First to customers
2 The Thule Year in Brief
32 Speed & Diversification – keys to success 34 Successfully revamping the business model
A word with the CEO
4 On firm financial ground – time to look ahead Change management
10 Being prepared for change 12 Trailers on its way out of deadlock 13 Turning Railings around with an attitude Buying smart
The Group
14 Buying Smart 17 The right supply base as a precondition for growth
42 2008 – a year of transformation Business Areas
Delivery efficiency
20 Delivery – On time, all the time Customer service
24 What you sell is important, but how you do it is even more! Consumers first
28 It all starts with the consumer Testing the limits
30 New test centre hones Thule’s competitiveness
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Portable elect We understand that you car as you do your exercise. You score. Your route as much you covered with innova store your valuable MP3 GPS units. Go run, go
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Eastern Europe
36 Shape, Build, Grow – How Thule won Eastern Europe 39 Active in Eastern Europe on many levels
43 43 44 44 45 45 46 47 48
Vehicle Accessories Vehicle Accessories North America Towing Systems Europe/Asia Towing Systems North America Trailers Organization Solutions Board of Directors Group Management Addresses
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Do you share our passions? Do you also feel a deep sense of freedom when your drive brings you to a snow-covered mountain, or a sunlit recreation area? Being outdoors is, for many people around the world, a lifestyle. Whether they’re looking for freedom in nature or in a more urban environment. With this Yearbook, we at Thule want to tell you what we mean by ‘share our passions’, linked to some of the important events in 2008. The following pages present several people from Thule’s world. Different as individuals, but all with the same burning passion for Sports and Utility Transportation and the great outdoors.
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THE THULE YEAR IN BRIEF
Organization Solutions Company of the Year Thule acquired Case Logic in May 2007 and incorporated it as business area Organization Solutions into Thule. The operations are led out of Boulder, USA, and had a terrific 2008. Over a period of four years the business area has successfully broadened its product offering, honed its product development and improved its supply chain, which has led in 2008 to gained market share, and a double-digit organic growth in combination with maintained profitability. The Award was announced in connection with the annual management conference in February 2009. The Company of the Year Award is given as recognition for outstanding business achievement during the fiscal year.
Thule Vehicle Accessories in North America goes green. The above solar panel installation went live delivering a substantial amount of solar energy for the coming decades.
Solar panels at Thule’s Connecticut facility In September, a 318-kilowatt solar array on the roof of Thule’s Connecticut facility was put into operation. The array consists of over 1,800 solar panels, and will offset about 26% of the energy used at this manufacturing and office facility over the next 25 years.
The new flagship store in Beijing, situated in a mid-market shopping mall close to well-known outdoor brands. The shop was opened mid-year exhibiting Thule and Case Logic branded products side by side.
New Flagship Store During August Thule opened a flagship store in Beijing. This is Thule’s second after the Berlin shop that opened in 2006. The Flagship Store concept brings Thule closer to the end consumer, gives valuable insight into their needs and is also used as a training facility for retail partners. While the Thule store in Berlin has been open for more than two years, the flagship store in Beijing is a splendid opportunity to broaden understanding about racks, boxes and bike carriers new category towards Chinese consumers. The store in Beijing displays not only load carrying systems around the vehicle, but also Case Logic branded organization solutions for mobile usage.
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Thule Excellence – the world’s most exclusive rooftop box In September Thule Excellence was introduced on the market. It is a rooftop box with a stylish design, created to match the design of more exclusive vehicles. Thule Excellence has its own specific design and several special functions. It also has a Power Grip mounting system, which allows you to fasten and remove the entire box in less than 30 seconds. Thule Excellence is positioned as a super premium product targeting a limited but resourceful customer base. The first sales months are exceeding expectations both in Europe and North America.
THE THULE YEAR IN BRIEF
Thule supports Olympic Gold medalist German Fanny Fischer won a Olympic gold medal in Beijing in kayaking. Fanny Fischer is based in Potsdam close by to the first Thule flagship store in Berlin. Thule supports Fanny with the Thule HullaPort kayak carrier enabling the goldmedalist to bring her valuable equipment with her safely, easily and in style.
Partnership with DeWALT During October Thule entered into a partnership with DeWALT, a world leader in power tools and accessories. The agreement covers the North American market and broadens Thule’s distribution network for professional rack solutions substantially. Now we can offer contractors Thule quality and innovation in more than 60 truck boxes and contractor racks, with a brand they already know and trust. The agreement was presented to the public at the SEMA trade show in November and received a great “thumbs up” from trade visitors. The first shipments have taken place in January.
Thule EuroClick – the bike carrier for non-towing cars In September Thule presented a solution to the fact that an increasing number of small cars cannot have towbars fitted – normally essential for rear-mount bike carriers. The solution is called Thule EuroClick. It has an attachment which can simply be fitted directly into the chassis, without the need for pre-mounted fix points. The bike carrier is then clicked on in the same way as a detachable tow bar. The new bike carrier will be available in stores in spring 2009. By launching the Thule EuroClick Thule offers new opportunities, expanding the size of the vehicle without compromising on the environmental footprint.
Sustainable design in focus at international congress The international design congress DesignBoost was held in Malmö in November. The congress has become an international design event of note, and seriously examines the importance of sustainable design to society and people. Thule contributed by showing, for example, how smart, designed solutions can contribute to a rich outdoor lifestyle and reduce impact on the environment by using products such as bike carriers and rooftop boxes adapted for smaller cars. The DesignBoost exhibition will tour the world in 2009 with stops including Stockholm, Barcelona, Amsterdam, London, Hamburg, Vienna, Milan and Copenhagen. 3
A WORD WITH THE CEO
time to
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A WORD WITH THE CEO
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A WORD WITH THE CEO
Thule managed to gain further market share globally in boxes, rack solutions and bike carriers despite the challenging economical climate. The launch of new products, pictured here the new rooftop box Thule Excellence, has helped to drive growth.
It is a relieved Anders Pettersson who arrives for the interview. The toughest period in his career to date has come to an end in the past few days. For six months Thule’s management, along with the owners and banks, have been fighting to secure finance. The situation was finally resolved just before Christmas 2008 and Anders Pettersson, who has been President and CEO of Thule since 2002, is now preparing for new endeavours with Thule. “Thule is in a stronger position now than for a very long time. Remember that in essence this is a tremendous company with good profits. We ended 2008 with an EBITDA of SEK 561 M and sales of SEK 6,188 M. The figures may be lower than we expected, but bearing in mind the global economic
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downturn which has affected us, we have every reason to be happy with the results. After all we’re talking about a moderate decrease on 2007, when EBITDA was SEK 765 M and sales were SEK 6,709 M,” Anders explains. He paints a completely different picture of Thule to the one depicted recently, primarily in the media, where the company has been virtually synonymous with a crisis company. “In actual fact four of our six business areas are performing very well. Several parts of the company are continuing to grow like wildfire and we’re reporting double-digit growth in areas such as Case Logic, which has even enjoyed success in North America where everything else seems to have come to a standstill. It’s the areas
related to the automotive industry that have met resistance. But remember, only one-third of our operation is indirectly linked to automotive. Nowadays we’re so much more than just a rooftop box manufacturer. We’re a lifestyle company with a broad product portfolio directed at lovers of the great outdoors, active families and professionals.” But how could you misjudge the situation so fundamentally that you got into this kind of financial trouble?
“What happened in 2008 is related to the financing of Thule, which was established when the company came under new ownership the year before. Valuations and the economy were at a peak, and this led to over-ambitious goals on our part. However, no one could –
A WORD WITH THE CEO
and virtually no one did – foresee the strength and speed of the economic downturn and the kind of falling global demand we have seen. The developments that began in autumn 2007 in North America affected only one of our business areas, Towing Systems North America. 2008 began well for us and the
against a moving target, the economic decline. Every month, just when we thought we knew where the market was heading, we discovered yet again that the downturn would be even more severe. There were also a lot of parties involved in the talks and large sums were at stake. The original schedule
our current situation, this won’t be happening any time soon.” What are you most pleased with in 2008?
“As I said, some of our areas are doing extremely well. Our traditional range encompassing boxes, ski carriers, roof racks and bike carriers is increasing
“We are entering a phase of consolidation with a focus on profitability, cash flow and winning market share.” first quarter went largely to plan. Only after that did the sudden economic slowdown occur; a slow-down that would last the rest of the year and placed immediate pressure on our earnings and, consequently, our ability to pay interest and reduce our debts. As soon as we felt the effects of the slump we took powerful measures and began talks with our owners and lenders to try to resolve our financial problems.” Why did the process take so long?
“I’ve asked myself the same question. One reason is that we were working
proved unrealistic almost straight away, and the process continued until we could communicate a final solution on 22 December.” What is happening at Thule now?
“We’re entering a phase of consolidation with a focus on profitability, cash flow and winning market share. This is our mantra from now on, and we’re well-positioned both operationally and financially. In the long term the owners are likely to look into listing Thule on the stock exchange, but in the current climate on the stock exchange, and in
strongly. We have double-digit growth in China, Russia and South America. The whole of Eastern Europe is growing by around 20% and we also have good growth in the rest of Europe. Despite the tough economic conditions, we have seen that the combination of new products, broad distribution and a strong brand performs even in difficult times. We launched the world’s most exclusive rooftop box, Thule Excellence, during the autumn to demonstrate our leading position in the category. We also launched the first bike carrier for ‘E-bikes’. Dealers and
Business Area Organization Solutions managed to reinvent itself during the past five years. Faced with a massive market decline in the major category media (CD and DVD cases), Case Logic started to develop a broad portfolio of new products and improved internal processes and supply chain. The media segment today plays only a subordinate role; Photo/Video, Mobile Computing and Portable Electronics (see image) have taken over as the largest product categories.
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A WORD WITH THE CEO
consumers know they can depend on us and our products, which is extremely important in difficult times when loyalty is put to the test. “Our new Organization Solutions business, which we acquired as Case Logic in May 2007, has also had a terrific year. Over a period of four years the business area has successfully broadened its product offering, honed its product development and improved its supply chain, which has led to doubledigit organic growth with maintained profitability.
“I’m also pleased that we have begun to make vigorous efforts during the year to remedy our profitability problems in the areas more closely related to the automotive industry. Our European towing system operation, for example, has taken the right steps to tackle falling demand, including the necessary measure of closing down two factories.” What are you least pleased with?
“In hindsight it’s easy to see that we should have made adjustments earlier. We’re making up for lost time now
though, and we have a good process in place which we will continue. One result is that we have to reduce our workforce considerably, which is very sad, and I am truly sorry about the consequences this will have for the individuals concerned. But if we fail to act now it will be far worse for even more people, so there’s no turning back. During the year we have reduced our workforce by around 900 employees in total, and have closed or are in the process of closing three factories in Denmark, Sweden and the US.”
“Dealers and consumers know they can depend on us and our products, which is extremely important in difficult times when loyalty is put to the test”
The continuous flow of innovation of new Thule products is unmatched in the industry. In connection with the Automechanika trade show in September Thule presented the world’s first bike carrier (Thule EuroPower) for so called e-bikes, the fastest growing bike segment on a global scale. The bike carrier is a nice example of combining function and design: Thule EuroPower doesn’t compromise on classic Thule design features, while being able to carry two heavy e-bikes with a weight of 20–30 kg each.
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A WORD WITH THE CEO
About Anders Pettersson Age: 50 Education: MSc Engineering and MSc Business Administration Family: Wife Nina and three children Hobbies: Golf, spinning, hunting, music, cooking Listens to: Rock Three latest Thule products: Thule Excellence rooftop box, Thule 1205 leisure trailer, Case Logic LLR carry-on bag
During your time as President to date, growth has been top of the agenda and the company has increased from two billion Swedish kronor to a peak of almost seven billion. How will things be now?
“As I mentioned before, profit and cash flow are the focus now. In fact these have always been our focus areas, and I think the proof of that lies in the profitability the company has achieved in spite of everything. Having said that, growth will now be further down the agenda. We are keeping to our long-term growth goal of achieving sales of a billion euro, but it will take longer than we previously estimated. We need to consolidate the company and hard work is the guiding principle for 2009. We have therefore identified nine major projects during the year which have been initiated on a Group-wide basis to help us on the way. The main blocks in the programme, which we call Full Potential, focus on portfolio analysis, manufacturing footprint and adapting our cost base to prevailing market conditions.”
What are your expectations for 2009?
“It will be extremely tough. We will continue to focus on our cost base and adapt our volume to demand. We know that some of our areas will have zero growth while others will have doubledigit growth. What’s important is that we adapt to the various developments in the right way. Once again, I’m convinced that our low direct exposure to the automotive industry will help us. People will continue to travel in future, and there is independent research on former crises which shows that in these situations, consumers cut down on longdistance travel and prioritize travelling by car – and this should work in our favour in several countries. In connection with our refinancing, our operation has been examined very carefully several times by external consultancies, and their conclusions are in line with our future business scenario. We have longterm confidence in our business model. Take the increasing amount of talk about smaller, more fuel-efficient cars
for example. Smaller vehicles mean less room in the car for the active family or individual, something which will have to be offset by transport solutions provided by us to enable them to transport their equipment safely, easily and in style. Another important trend which will have a positive impact on us is a steady rise in outdoor pursuits on new markets in Europe and Asia.” The interview draws to a close. Anders Pettersson quickly gathers his things together and hurries off to face new challenges. The fact there isn’t the slightest doubt that Thule will continue to perform well is underlined by his last words before we go our separate ways. “Thule is an amazing company with a great many employees who are willing to go that little bit farther. We will need that kind of dedication in 2009, but I am sure we can consolidate Thule’s position as a world-leading company in our industry.”
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CHANGE MANAGEMENT
Being prepared for change All companies can misjudge market developments, lose focus or become saturated. Thule is not free of those tendencies either, however it is always on its toes once a problem is identified. Old truths are thrown overboard and immediate focus and resources are allocated to repair the situation. An open-minded approach to change management is Thule’s key to building a stronger company. Modern-day Thule is managed in accordance with the principle of Management by Objectives, a strategy that partly entails highly independent business areas with delegated financial responsibility and far-reaching empowerment. “This strategy has been appropriate and successful for a long time,” says Thule’s Senior VP Human Resources Kajsa von Geijer. “But even old truths benefit from regular reviews. We have done this to ensure we are better positioned for the changes in the world
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around us which, without a doubt, have already affected the entire industry.” The trick for Thule is to carry this out without losing its entrepreneurial spirit.
The measures will result in the company becoming more profitable as a whole, with a considerably stronger cash flow.
Change Management
Re-engineering the business processes
In 2008 Thule has met this development by investing in Change Management. The company has identified two main focus areas: ■ Adapting costs to prevailing market conditions ■ Developing a more flexible operational footprint
Change Management stems from the fact that Thule needs to re-engineer parts of its business processes. “Above all, it’s about being better at monitoring set goals and checking the degree of achievement,” says Kajsa von Geijer. The Group has grown quickly and
CHANGE MANAGEMENT
initially at least the new companies have been allowed to keep both their core business and organization virtually unchanged. In 2008 the Group management have therefore structured, pruned and thinned out the organization. “Management by Objectives has taken on a slightly different meaning in 2008. Today it refers to a higher degree of central coordination than before.”
Seeking economies of scale In concrete terms the change work has resulted in an adaptation of the
“Above all, it’s about being better at monitoring set goals and checking the degree of achievement.”
Kajsa von Geijer is Thule’s Senior Vice President Human Resources. The global HR functions have been a driving force in 2008 in smoothly adapting the organization to changed market conditions.
CEO Anders Pettersson (right) is in continuous dialogue with board member Ulf Rosberg, Nordic Capital, about all ongoing change initiatives within the company.
organization, which has resulted in job cuts. Operating working capital routines have been reviewed, and the procurement organization has been changed in its entirety. “We will continue to nurture our entrepreneurial spirit. But over time the internal processes have become far more important, not least to enable us to achieve the economies of scale our size justifies.” Thule’s Human Resources department has been a driving force in structural issues to ensure the organization to be correctly and smoothly adapted to market conditions and changes. “Nevertheless, we’re not on some kind of ‘mission’,” says von Geijer. “We can offer support and advice, and provide tools. But it is the overall management, in particular at the most senior levels of the business areas, that will spread the message and set examples. They and their function managers alone can spread the message downwards into the organization fast enough. “The behaviours we want to achieve must begin at senior manage-
ment level. Only they can drive the organization and establish the necessary mental change.”
New demands on managers To strengthen its change work, in recent years Thule has recruited managers who are far more process oriented than before, when entrepreneurial spirit was ranked most important. The Vehicle Accessories business area is a fine example of how the strategic processes can be reviewed. “Every manager has been involved in this work,” von Geijer emphasizes, “whether it’s related to sales, procurement or production. Thanks to this people know what we’ve planned and decided, what we need to deliver and how the goals will be monitored. And the changes have really paid for themselves. The strength and loyalty in the units are at a high! Everyone sees and understands their role in the overall process.” And Vehicle Accessories is still growing, despite all the difficulties in the world around.
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CHANGE MANAGEMENT
Thule’s trailer operations had a difficult 2008. Imploding demand on the Nordic core markets has led to a far-reaching review of strategic priorities and adapting the manufacturing footprint to the altered business landscape.
Trailers on its way out of deadlock For a long time Thule’s Trailers business area seemed invincible. Between 2003 and 2007 it reported double digit growth each year and it was the Group’s biggest growth engine. However, in 2008 the market dynamic suddenly changed completely. Demand on important markets such as Denmark and Sweden nose-dived, and the entire business strategy had to be revised to respond to the new situation.
Ulf Berghult. “The aim is to create a joint business area offering with as few national adaptations as possible – a standardization of the range which has been allowed to sprawl during the long period of strong growth.”
Profitability and cash flow
Change into three business units “We have had a thorough analyzing phase during 2008 where to go. We have now created three strong geographically business units where local decision making is key,” says Ulf Berghult, Acting Business Area President. “The business unit managers are fully empowered which will create a higher speed in decision making”, argues Berghult. In terms of markets, the focus is now on Europe, with the Nordic region as the domestic market. USA and South Africa have not been profitable enough, which is why we have closed or decided
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Ulf Berghult is Acting Business Area President Trailers. His prime focus is to refocus the operation on its Nordic core markets, adapt the cost base and improve the overall competitive offer.
“We are focusing on the areas where we can earn money and grow, and are also adapting the organization. In part it must be adapted to the new requirements set by the shrinking market, and it must also support the supply chain which has to deliver on time, with the right lead times, costs and quality. This is a task that is becoming even more crucial as retailers reduce their inven-
“We are focusing on the areas where we can earn money and grow, and are also adapting the organization.” to exit these markets during the year. “The product portfolio has also undergone a thorough review,” says
tory levels – while end consumers still have at least the same demands on delivery time as before.”
CHANGE MANAGEMENT
Turning Railings around with an attitude After a raft of successful years, Thule’s railing operation began to sense a change in car manufacturers’ purchasing behaviour back in 2006. But those early signs were not picked up on early enough. The unit therefore moved to the Towing Systems Europe/Asia business area in 2007, which targets and delivers to the same end customers. As the lead time for landing new business can be up to 18 months, changes only become evident after some time, even though Thule tried to act as quickly as possible. “We discovered very quickly that it wasn’t a question of the right technology or competence,” says Gerrit de Graaf, Business Area President for Towing Systems Europe/Asia and also responsible for Thule’s railing operation. “Instead we needed to be more receptive to what the customer wanted and to sell our core expertise more aggressively. The most important factor in Railings’ reversal of the trend over the past 16 months is the change in attitude among personnel and management.”
An opportunity to do things differently Gerrit De Graaf emphasizes that Rail-
“Neither design nor construction is the crucial factor in operational excellence. It all comes down to the organization’s focus.” to almost lose out on two particularly important orders. “Change management is based on talking to the people concerned, confronting them and giving them an opportunity to do things differently. Including making mistakes. If you work solely for and with each other, mistakes can be put right. If that doesn’t help, there has to be a change of management.”
Two important contracts
Gerrit de Graaf is Business Area President for Thule’s European towing operations. His business is split into two areas, towing and car rails.
ings had not in fact lost its ability to win new contracts. The organization had, however, lost self-confidence and energy, something which partly led it
Thule is a leading European supplier of car rails for the automotive industry. The factory-installed products come from the two manufacturing units in Rotherham, UK and Huta, Poland and are made for a variety of European car makers and models.
Proof that this approach works came in the form of two new OEM agreements for the production of roof rails signed in the autumn: one for BMW 3 Series and one for Ford Focus. “We wouldn’t have thought this was possible a year ago! We were down for the count, but we bounced back just in time. Strengthening news indeed.” And the secret? Doing the basics right: focusing on the customer, keeping and following up on our promises, addressing the issues and proposing solutions. “In short: attitude,” says De Graaf. “Also design and construction are crucial factors in operational excellence. It all comes down to the organization’s focus. Without it we can’t deliver the quality required or offer the right sourcing capabilities. And although the market is now quickly becoming increasingly tough, I’m convinced we’re on the right track. “Thule’s brand is our greatest strength. It proves that we can deliver not only a solution, but a whole palette of solutions. And the customer knows we have a large organization behind us.”
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BUYING SMART
Buying Smart Having aluminium, steel and oil as major raw materials puts tremendous pressure on Thule’s supply chain. Heavy volatility in prices for raw materials make it absolutely necessary to optimize procedures and to “buy smart�. During the year the Thule Group has renewed its focus on purchasing by installing a dedicated purchasing organization led by Chief Procurement Officer Roland Schylit. Saving potentials were identified, purchasing routines optimized and improvements are about to be passed on to the entire supply chain.
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BUYING SMART
“Currently, we spend approximately half of our total net sales on raw materials, so it’s important that we buy these at the right price, in the right quantities and at the right time. Only by doing this can we ensure the best possible flexibility in the production process,” says Roland Schylit.
Lean, mean production Buying Smart also means increasing the status of purchasing professionals throughout the company. Before, Purchasing was organized in most business areas under Operations, which signalled to everyone that it was a support function, not one that focused proactively on driving particular issues. Procurement today is a prioritized function under Roland Schylit, the
Optimizing the use of raw material is crucial. Thule runs a continuous manufacturing optimization process, promoting a leaner way of realizing manufacturing.
“Today, we work in integrated sourcing teams where R&D works closely with sales, and our suppliers, cutting down development time and ensuring leaner production.” company’s deputy CEO and Chief Procurement Officer. All six Thule business areas have or are currently recruiting a Vice President Purchasing, which will result in a more strategic and proactive approach. “Proactive purchasing means constantly looking to add value throughout the organization. For example, if we develop a new bike carrier, previously only R&D would steer what it should contain,” says Roland. “From now on we will work in integrated sourcing teams where R&D works closely with sales and our suppliers, cutting down development time, ensuring the use of the latest materials and enabling leaner production.”
Three steps to better buying Thule has worked with outside experts to change purchasing management. The following steps are considered to be crucial to improving Group-wide routines: 1. The consolidated Procurement Toolbox. The procurement toolbox
Roland Schylit, Deputy CEO, is responsible for the Thule Group’s purchasing initiatives. 2008 has been a year where Thule has added more resources into procurement and stepped up the pace to reap synergies between the six business areas.
helps to consolidate all data, routines and practices worldwide. This includes standardizing all agreements, purchasing routines, RFQs (Requests For Quotation), payment terms, delivery, etc. It naturally brings far better global transparency as to who is spending what on purchasing. 2. Focus on recruitment and training.
By staffing the organization with more expertise and reinforcing training for all
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BUYING SMART
“The audit not only shows us if the supplier meets the production standards we need, it also covers ethical codes of conduct, such as working conditions, and ensures no supplier uses child labour.” purchasing departments, we unify our approach and help promote proactive purchasing strategies. It is crucial that we are able to adapt across different cultures but still uphold our standards. One aspect of our recruitment and training initiative is to make sure people are culturally aware, which includes having a good command of English as the corporate language.
Additionally we source from several factories in the Far East. Wherever the company goes, Thule pursues a standardized code of conduct reviewed in continuous audit procedures. The audit not only shows us if the supplier meets the production standards, it also covers ethical codes of conduct, such as working conditions, and ensures no supplier uses child labour.
3. Revising the code of conduct.
As much of Thule’s manufacturing is labour intensive, Thule has strengthened its manufacturing footprint in lowcost countries. Since 2000, substantial investment has gone into the development of the global manufacturing hub for bike carriers and trailers in Poland.
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A sustainable future Thule is frequently asked about its impact on the environment. The greatest impact the company has lies in the transportation of our products – and the fact that our products are used in transportation. Through efficient co-
ordination of transport routines, and by using trains as far as we can, we ensure our products are transported in the greenest possible way. “We also limit the amount of packaging used for our products. By producing products that weigh as little as possible we help our customers keep fuel consumption down,” adds Roland Schylit. The materials used in the products are recyclable as well as being highly sustainable through efficient, modern design. In the current climate of financial insecurity, where material costs fluctuate wildly, buying smart through proactive purchasing helps us stabilize and drive down costs and increase operating margins.
BUYING SMART
The right supply base as a precondition for growth With the acquisition of Case Logic in 2007, the Thule Group gained access to a purchasing organization with 50 people based in Hong Kong and Shenzhen. Thule Organization Solutions purchases 100% of its products in the Far East and has contracts with some ten major factories in the region. Establishing a purchasing hub in the Far East has been a critical success factor for the business area to survive the rapid decline in its former core category of Media, which started in 2002. Cutting lead times, broadening the product portfolio and changing the supply base have helped Organization Solutions to transform into a rapid growth mode. Over ten years of experience in Hong Kong is proving invaluable to the company. “Our Hong Kong base has given us the ability to branch out into
mainland China, which we did three years ago. Our local presence makes China a crucial part of Thule’s global business. It also gives us several advan-
tages over our competitors. We don’t own manufacturing so we can flex up and down as we need to, giving us a fairly instant response to market needs,”
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BUYING SMART
says Amir Hoda, VP Operations for the business area. Amir Hoda focuses mainly on building a highly responsive supply chain. One of his major roles is to find problems in development, such as material costs, and solve them. “Our Hong Kong branch has three essential functions,” comments Amir. “The first is sourcing, finding new factories and working as a conduit between our design teams and production factories to develop new and innovative products. We continually strive to ensure that we buy the best materials at the best prices. “The second function is dealing with order management and logistics.
shortest delivery time possible. “We have a large warehouse just outside Shenzhen, China. Previously we shipped customer orders up to 60 days after receipt of order. Now that we store goods in the warehouse we have cut delivery times by 30–45 days, optimizing our operating working capital. The warehouse also enables us to plan marketing strategy and promotional campaigns that can be facilitated on a global scale.”
From media to computing, cameras and lifestyle Amir cites the example of the drop in media cases to prove his point. “Three years ago, the majority of our produc-
tion was focused on media with items such as bags for CDs, but this declined very quickly. Thanks to our presence here and our purchasing routines, we were able to change to computer bags, camera bags and lifestyle luggage much faster than our competitors, giving us a greater market share.”
Success through skills training Trade conditions changed dramatically in 2000 when China joined the World Trade Organization enabling quotas to be lifted. China has become a reliable environment for business and production. “While this has been positive for us we have had a problem recruiting
“The team in Hong Kong is able to implement all contractual obligations at the best possible price. We are extremely proud of the fact that our on-time shipping of goods is 99.96%.” We supply a wide variety of internal customers and OEM customers such as Sony. This means that orders are put together in a number of different factories. We make sure that the logistics works throughout the entire production flow. Our third function is to run efficient financing, accounts and administration.
On-time shipping up to 99.96% Thule has developed a full ecosystem in China allowing the company to source to its needs; to know when volumes increase, to find other sources and to identify product cost reductions. “Our team in Hong Kong is able to integrate every element of the supply chain around the world, including all contractual obligations at the best possible price. We are extremely proud of the fact that our ontime shipping of goods is 99.96%.”
Central warehouse reduces delivery times Amir explains that 50% of Thule’s Case Logic products are made to order. The trick is to ensure the best service and
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The sample process consists of several loops of products being sent back and forth between the manufacturing operations in East Asia and the Product Development department based in Colorado, USA.
BUYING SMART
Amir Hoda (right), VP Operations for Thule Organization Solutions, in discussion with Doug Matthews, SVP Sales & Marketing for the business area.
“Thanks to our presence here and our purchasing routines, we were able to change to computer bags, camera bags and lifestyle luggage much faster than our competitors.” skilled middle managers. We combat this through in-house training to equip our staff with the right level of management, technical and language skills,” comments Amir. 2008 has been a turbulent year for business in China due to the restrictions in place because of the Olympic Games, as well as a very hot global economy in the first half of the year. This created a dramatic increase in labour prices, and a strengthening of the Chinese currency against the US dollar led to problems in planning budgets. Since the Olympic Games ended and the global economies have gone into recession, the market is beginning to
stabilize and commodity prices have already been reduced by 30–60%, which is good news for Thule. “We plan to move more operations to northern China and Vietnam through next year as labour rates in this region are considerably lower than in the major cities. We have increased our production to these areas by 50% year on year.”
Dedicated team Amir is very proud of the team he works with. “Here in Hong Kong we have a dedicated team of employees with extensive industry knowledge. This has made relationships between production and development work very well. Many
of our employees have been with us for a long time, which helps the company run smoothly. The biggest hurdle that we have had to overcome is the time difference. Having a great infrastructure and well-developed routines makes business between America and China a lot easier.” “We constantly stay aware of developments in our worldwide business through continuous communications,” Amir explains. “Sharing intelligence is crucial to Thule. Communicating easily and professionally from different sides of the world is what has made this company develop so well.”
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D E L I V E RY E F F I C I E N C Y
Richard Jamsek and Lotta Castell have been leading a cross-functional team in Vehicle Accessories aiming to improve delivery performance on a European scale. Eighteen months into this process substantial progress has been made, and this is one important reason why Thule has been able to take further market share in 2008.
20
D E L I V E RY E F F I C I E N C Y
Delivery – On time, all the time Delivering on time in full (OTIF) is a critical parameter for a company like Thule, which works in an environment steered by rapidly changing customer demands linked to seasonal variations. OTIF gives the customer a planning horizon, creates mutual trust and limits inventory along the supply chain. Improving Thule’s OTIF ratio from below 60% when the measurements were introduced in March 2007 to an above 90% yearly average for 2008 has been key for Thule’s Vehicle Accessory operations in Europe to gain further market share. Even so, it hasn’t been an easy ride. Though a respected brand name, Thule was missing targeted customer service levels due to insufficient forecasting and planning. “Customers couldn’t count on our performance and at times would therefore either choose a competitor’s product or not order at all,” says Magnus Welander, Business Area President. The entire process had to be re-thought, starting with forecasting procedures.
Introducing on-time-in-full deliveries “What was essential was to create a measurement tool so we could know how many customer order lines could be delivered on-time, in-full as promised,” says Richard Jamsek, Vice President Operations. The new operations team with Richard Jamsek and Lotta Castell (Di-
Reaching the customer in time and in full is the most important key performance indicator for Thule in tracking supply chain performance. Since 2007 a central warehouse has been established in Duisburg, Germany, which is run by a third party. Initial running-in problems have been overcome and the supply chain set-up now works according to plan.
rector of Supply Chain Management) at the helm held extensive discussions, weekly meetings and workshops with both the factories and the customer
“By adding more strict process-oriented working methods we managed to improve delivery performance without increasing inventory levels.”
service teams to assess a viable delivery turnaround strategy that included deepening insight and use of customer data flow. In reviewing the company’s operations, the team learned that there were vast variations in customer order sizes. The customer service teams entered orders with inadequate information on what inventory was in stock or when finished products would be available from the factories. This led to an unclear production situation and backlogs.
21
D E L I V E RY E F F I C I E N C Y
“It’s the day-to-day work that matters. Everyone needs to understand their impact on the delivery parameters in the factories.” Deliveries were often late or incomplete, resulting in higher costs, higher inventory levels and unsatisfied customers.
Committing on delivery “By adding more strict process-oriented working methods we managed to improve delivery performance without increasing inventory levels. All involved team members underwent a fast learning curve and became conscious of keeping their commitments,” comments Lotta Castell. By taking historical order data and studying trend changes, Thule was able to produce monthly forecasts per
22
part number more accurately. Safety stock levels were calculated throughout the year in case of dramatic spikes in sales. As a result, the customer service teams can now maintain and guarantee targeted customer service levels because inventory is effectively buffering supply and demand variability.
Performance increased from below 60% to above 90% And it didn’t take long before crucial improvements could be realized. On-time delivery performance increased from an initial figure below 60% to above 90% within a year. Customers are now given
the right information and the right delivery date. With a number of new product launches every year and with highly seasonal sales patterns, the ability to deliver on time is key to gaining market share. One fine example of how dramatically improved OTIF performance has already helped Thule came with the launch of the two-bike version of our new rear-mount bike carrier, the Thule EuroClassic G5 in the spring of 2008. “Thanks to excellent delivery performance early in the season, customers felt comfortable introducing this new topof-the-line carrier at a far quicker pace
D E L I V E RY E F F I C I E N C Y
About On Time In Full basic principles ■
■
■
The parameter is used in several industries for deliveries to dealers and end customers, e.g. computers, cars and garden machinery. On Time In Full measures our performance up to the first confirmation of delivery given to the customer in terms of adherence to the confirmed delivery date and the completeness of the order. All product deliveries from the business unit including spare parts, catalogues and customer displays are included in the calculation. On Time In Full is applied within Thule to drive improvements in our distribution and manufacturing processes.
Definition OTIF = Number of order lines delivered on confirmed date / Number of order lines confirmed to be delivered (for one week/month).
The bi-annual Automechanika trade show in September in Frankfurt/M, Germany, is the most important event for Thule’s European operations in any given year. The talks with customers in connection with the 2008 exhibition confirmed the internal opinion that improved delivery performance has increased customer loyalty.
than in the past, when they were concerned about our capability to deliver new products in time for the season,” adds Frank Feiland (VP Sales).
Central warehouse in Germany Already in 2007 a European central warehouse was established in Duisburg, Germany, subcontracted to a third-party logistics partner. There were teething problems at first, making the change process in the factories more difficult. “However we managed to turn things around by working closely with our warehouse partner and being present most of the time directly on site. We started to improve outbound services, picking/packing and transport routines as well as improving communication between the logistics partner and Thule, which was needed to support our inter-
nal processes in the factories,” says Lotta Castell. “Measurement in itself isn’t important,” says Richard Jamsek, “it’s the day-to-day work that matters. Everyone needs to understand their impact on the delivery parameters in the factories. The same is also true for the people in sales doing the forecasting and the people taking orders in customer service.”
Lower costs, higher reliability With a consolidated position handling racks, roof-mount accessories, rear-mount bike carriers and boxes, new challenges are ahead. Other business units such as Snow Chains and Recreational Vehicle Accessories will also be working in line with the same principles, thus helping to reap more efficiency gains. The customers’ positive feedback is
evident partly through changes in their ordering patterns. “Customers are now increasingly having us hold a larger share of their inventory, which is a sign that they trust our ability to deliver. The result is smaller, more frequent orders,” comments Frank Feiland. “Being proactive rather than reactive, and challenging each other are the keys to success. That way we can keep our competitors at bay”, says Jamsek. And the quest for better OTIF continues. “We set ambitious goals and metrics at the start of the initiative. The initial target ratio was set at 90%. We beat that in 2008 and our goal is to improve further in 2009. The higher you reach, the thinner the air gets and you have to fight harder for each percentage,” Richard Jamsek concludes.
23
CUSTOMER SERVICE
Understanding end consumer needs is the most important need for Thule’s North American customer service. Here Annie Scopel, Director Customer Service (right) and Marie-Pier Normandin examine the instructions for a hitch mounted Thule bike carrier. Knowing the documentation makes it easier to anticipate what questions end consumers might come up with.
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CUSTOMER SERVICE
What you sell is important, but how you do it is even more so! When people say they would rather clean out the cat litter than talk to Thule Vehicle Accessories in North America, you know things aren’t right with customer service. But thanks to a concerted programme of training, key account management and refining customer service routines, call waiting time has dropped from six minutes to 30 seconds, and less than 5% of calls to Thule are abandoned before they are answered. Feedback is almost always positive, and customer service representatives now contribute with add-on sales. Tripp Wyckoff, Vice President Sales & Marketing and Annie Scopel, Director of the Group’s North American Customer Service Centers, have been instrumental in overhauling Thule’s customer service to boost customer satisfaction and leveraging it for profit and growth. An evaluation of the Group’s American and Canadian service centres showed back-office sales agents were deluged with incoming calls and e-mails covering dealer stock requests, consumer product inquiries and installation assistance. Responding to these needs was proving to be a challenge to service agents who were ill-prepared and not properly trained to handle the volume
Dealer Mondays
Tripp Wyckoff, VP Sales & Marketing for Thule Vehicle Accessories in North America since 2005.
“Your company and its employees have made a dramatic change. Congratulations on making Thule a pleasure to work with!” of inbound inquiries, especially those from dealers which generally occurred on Mondays. “Customers hated our service level and were frustrated by the lack of attention and being put on hold,” says Tripp Wyckoff. Thule’s customer services help two
distinct customer groups, namely re-sellers and end consumers. Scopel and her team looked at simplifying responses, including working with key groups at certain times, automated web responses, introducing Key Account Managers to service dealers, and integrating the North American service centres.
The company set aside Mondays as “Dealer Mondays”, as the bulk of calls from dealers came after the weekend when they needed to replenish stocks. Thule closed its customer service to consumers who were prioritized for the rest of the week. “Up to 40% of dealers called our customer service line on Mondays. We weren’t equipped to support this high volume of incoming calls,” says Annie Scopel. By focusing on dealers on one day, and training all staff to be able to answer calls from both dealers and consumers, response time is down from six minutes to 30 seconds within six months. The service team is now more flexible and efficient and workload is shared between the American and Canadian centres. When one country is observing a national holiday, the other country can now offer customer service, which is now available in three languages: French, Spanish and English.
Greatly improved dealer satisfaction July is the busiest month for Thule, where customer service is inundated with calls. “Call volume was up 5% on last year, yet only 5% of calls were aban-
25
CUSTOMER SERVICE
doned, compared with 20% last year. That’s well within our goal of 10%,” comments Annie. “We have simplified and streamlined customer service. Everyone answers in the same way and everyone is motivated to do well. People feel important and they’re in the business of breaking records every day. This last month we’re down to an average maximum wait time of 19 seconds, and only 2% abandoned calls. Now it’s really easy for customers to call us.” The ratio of positive to negative feedback has improved to reach three-toone. That is to say three times as many people call to thank the centre for their help than to complain.
Quicker service, RightNow An important feature of the Group’s integrated service solution is the Right-
The Thule ProRide 591 bike carrier on the table is one of the most sold Thule products. Volumes are exceeding 100,000 pieces annually and consumers can be assured that North American customer services know all the ins and outs of the product.
“Thule customer service is really the most exceptional customer service I have ever had the pleasure of dealing with. You need to share your expertise with other companies.” Now web, a customer relations management tool that combines self-service, e-mail management and customer feedback solutions. This automated technology helps Thule’s customers find the information they need quicker, lessening the load on customer service agents. Incoming e-mails are pushed through a knowledge base that returns possible answers. Customers now get answers to product and installation questions on a Frequently Asked Questions page on the Group’s site. By helping customers to help themselves, the Group has measurably reduced incoming e-mail volume.
Focusing on key accounts Thule introduced Key Account Managers to provide the appropriate service level to all of its dealers. Each account manager now has a close relationship with up to 40 accounts. This means that a dealer only has to use one point of contact in the company. One of the major clients commented that when it’s easy to do business, this
26
becomes a big competitive advantage. Customers can either call the competition or Thule. But if it’s easy to call Thule, then business grows naturally. What you sell is very important, but how you sell is even more important.
Add-on sales through excellent customer service The improved, more efficient customer experience has transformed once wary
Improvements in short ■
■
■
■
Call response down from six minutes to 30 seconds in six months Only 5% of calls abandoned. 20% improvement on last year. Customer service available in English, French and Spanish By splitting customer service in Canada and the USA, holidays can be covered
customers into strong and committed brand followers. Sales agents now have the opportunity to generate additional sales from all inbound calls. “Before we were always putting out fires and had no time to concentrate on add-on sales,” says Tripp Wyckoff. “Now it is becoming more sales-based. Agents have a list of items for suggested add-on selling to customers.” This is seen as a really helpful service for dealers who may have forgotten to order certain stock items. Thule knows exceptional customer service is important to sustainable growth and profits. The Group has implemented incentives to sustain staff performance. These include contests such as “Customer Service Representative of the Month”, and “Customer Service Representative of the Year” awards which allows a rep to collect a monthly and yearly bonus. “Our focus is now on growing the business together. We’ve gone from being at the bottom of industry to ahead of industry standards, and it feels just great,” comments a rightly proud Annie Scopel.
CUSTOMER SERVICE
Making it easy for outdoor enthusiasts, active families and professionals to bring their equipment with them safely, easily and in style is Thule’s mission. 2008 has seen a further increase in market shares for bike carriers, rooftop boxes and load bars on a global scale.
27
CONSUMERS FIRST
Thule has to stay on top of the way consumers’ expectations are changing to remain the global leader in Sports and Utility Transportation. This has implications and input for product development, as well as sales and marketing strategies. During 2008 we have streamlined our product development processes and completely overhauled the brand manual. In the last few years, Thule has progressed from being a two-product company to a complete provider of solutions for active families and professionals around the world. Having a multiple portfolio and developing a premium brand means consumers need to see and feel that all Thule products, from bike racks to snow chains, deliver the same brand essentials. This is how Thule will maintain and develop our position in the marketplace. In 2008 the company developed a comprehensive product design manual covering all the ingredients for further developing the brand equity – the first time this has been done: “Previously, we
28
knew from experience what was right and what was wrong as we had a more limited portfolio which was developed in one place,” says Peter Kjellberg, VP Marketing for business area Vehicle Accessories, one of the Thule operations that has been working with the Thule brand for the longest. “New categories like tow bars and recreational vehicle accessories don’t share the same history. To complicate matters further, we are developing different brands and new products around the globe. It was important to protect our brand equity by documenting all the steps to a successful product development process, and enable a seamless brand transfer which
will happen over the years to come,” Kjellberg continues.
Core influencers – being a beacon for all consumers A second crucial step was the creation of the core influencer model deriving from successful examples of global consumer brands: It’s not only important to know who is buying our products. It’s far more important to define an inspirational persona that attracts a broad consumer base in every aspect. For example, take consumers buying a sports car: they are often in their mid-fifties but the positioning and marketing of the product is targeted at a much younger core influencer
CONSUMERS FIRST
the consumer or audience. “Those core influencers are an artificial target persona, which act like a guiding star both towards younger and older consumers interested in our products,” comments Megan Link, Marketing Director for Vehicle Accessories in North America, and part of the working group that developed the Thule Core Influencer. “In the Thule case we were looking for individuals who have a passion for adventure and a drive to get away,” Link continues. “And we defined Stephen as our prime ambassador, being able to attract both older and younger consumers to our company,” Link adds.
Being strong in three places Thule doesn’t use advertising as the main communication channel to reach consumers, so the company decided to be industry leaders in three spots where important buying decisions are made: “We have known for many years that our products are the main ambassadors in building our brand equity,” says Daniel Oelker, Senior Vice President Corporate Communications. “By introducing the new product design manual we have safeguarded our position as the bench-
The Thule Core Influencer
Stephen Ste Stephe phe en
Age
35 years
– Has studied – On his third job, the first with a bigger pay check
Income
~ 80 000 euro household income
– Both are working, kids on the way or already there – Extensive car travels
Gender
Male
– Likes gadgets – Ipod generation – Listens to partner’s preferences
Family
Yes
– Very conscious consumer, seeks on the internet for the right product
Choice of car 2009
Dares to leave mainstream models, environmentally conscious choice
– Understatement, absolutely! Quality, performance and style are key purchase attributes
Choice of clothing brands 2009
Peak, North Face, Levi’s, Patagonia, Timberland
– Quality brands but not the hippest designers
Geography
Suburban
– Thrives to get away, regardless of where they live.
mark for the industry in the years to come,” Oelker continues. “Secondly we have to be better at meeting consumers in the shops. ‘Seeing is believing’, and if we fail to make an impression through excellent product packaging, displays and customer service we have lost the consumer who is ready to buy from the competition,” Oelker argues. To facilitate this we have made substantial
investments to improve the appearance in the retail environment, which will start to show during 2009. “Finally we have to set the standard in our industry on the Internet. Eighty per cent of all the purchases in our product categories are checked on the Internet before the consumer enters a shop or buys online,” says Peter Kjellberg, VP Marketing for Vehicle Accessories. In a
“In the Thule case we were looking for individuals who have a passion for adventure and a drive to get away.”
The Thule Marketing Committee with (from left) Martin Haak, Andy Youngs, Tripp Wyckoff, Daniel Oelker and Peter Kjellberg. Not in picture: Megan Link.
coordinated global initiative the majority of Group marketing investments have been and will be allocated to completely revamping the Group’s Internet. Thule has incorporated 11 new companies since 2004 and the Internet structure has not kept pace with this development. “Currently we are working on different technical platforms, and we need to make it easier for consumers to find the relevant product near to where they live,” Kjellberg argues. The revamped website will be launched during the summer of 2009 and will reflect the belief of Thule’s marketing and sales professionals: “It all starts with the consumer”.
29
TESTING THE LIMITS
New test centre hones Thule’s competitiveness In just a few days, Thule can now run tests that could previously take months. All thanks to the new test centre which opened during the year. The test centre is in Hillerstorp, Sweden and represents an investment of SEK 20 M. “The investment has given us a centre that’s state of the art in our industry,” comments Peter Kjellberg, Vice President Marketing for the Vehicle Accessories business area. Peter Kjellberg points out that Thule is the only globally active company in the business, which imposes a number of special requirements. One is that the range has to work on many different markets with widely varying conditions. “The test centre is for the entire Group and will serve as a guarantee for the pledge of safety and durability that has already made us so successful. Our promise is to deliver the best and safest products on the market. The new centre gives us brand new opportunities to meet and exceed the demands of customers and authorities alike.”
First on the market Thule’s positioning, First in Sports and Utility Transportation, also entails a promise to be first on the market. This places demands on lead times, and the test centre is one of the keys to success. “In Hillerstorp we can now carry out physical and computer-based simulations in areas such as collision testing, which is invaluable when time to market is a crucial competitive factor.” That’s why the tests can now be carried out far more quickly. Take the vibration rig for instance, which can simulate real rural road tests and subject the products to the same kinds of strain in just a few days that they would undergo in their entire life times. We are currently investing substantially into a new rack foot generation. For an investment like that it’s important to test according to the right parameters, and being able to use the new test centre in Hillerstorp shortened the leadtime and made the entire process more reliable.”
The so called “sleeping policeman” imitates the real life situation where vehicles and their loads have to pass bumpy roads and turns.
“In the test centre we can now carry out physical and computerbased simulations in areas such as collision testing, which is invaluable when time to market is a crucial competitive factor.” 30
TESTING THE LIMITS
About the test centre
Taking control of advanced test set-ups internally speeds up development processes by giving feedback faster to the development teams and ensuring they have more reliable up-to-date data at hand when needed.
Thule’s test centre is in Hillerstorp, southern Sweden, which is also home to production and Thule’s largest development centre. The test centre has capacity for 400–500 test reports and 50–100 calculation reports. The equipment includes ■ vibration rig for rural road simulations ■ climate lab for testing corrosion, UV radiation, heat and air humidity ■ ‘sleeping policeman’ – a rig developed in-house that simulates driving over speed bumps ■ computer lab with advanced calculation programs for virtual collision tests, for example. Some four man-years were devoted to testing at the Hillerstorp facility in 2008.
31
FIRST TO CUSTOMERS
Speed & Diversification
Creating faster security routines was one prime target for the United States Transportation Security Administration (TSA). Their request for quotation went to three companies and Thule, with its Case Logic brand, managed to offer delivery within 90 days after project kick-off.
2008 has been a very successful year for Thule Organization Solutions with double digit organic growth. The success can be attributed to delivering product faster to market and diversifying its overall product assortment. These two strategic initiatives helped the Case Logic brand gain market share over the past 12 months. “We needed to ramp up our new products quickly and move into new categories where we saw a strong market potential,” says Andy Youngs, Vice President of Marketing and Design. “We’ve worked hard at speeding up our time-to-market over the last two years, which is now paying off. Our new Security Friendly™ Laptop Cases and Sleeves are fine examples of how greater focus on speed can lead to a clear competitive advantage. This type of focus can keep us ahead of our competition, while maximizing profits.”
32
Need for speed In the Spring of 2008, The United States Transportation Security Administration (TSA) requested that laptop case manufacturers help them develop solutions to improve the ease and reduce the time it takes TSA agents at US airports to screen laptop cases. The primary objective was to develop criteria that would allow case manufacturers to design bags that isolate the laptop computer, so X-ray screeners have an unobstructed view of the hardware and can inspect it quickly and easily,
without requiring travellers to remove the laptop. The TSA opportunity presented an ideal situation in which TOSI could implement its “fast track” product development process. “We had to quickly develop and introduce laptop cases/sleeves that allow travellers to easily pass through security, without removing their laptop computers,” Dana Blanchard, Director of Category Management, explains. “Pushing things through using the fast track system demands more focused resources, but is
FIRST TO CUSTOMERS
– keys to success
Dana Blanchard, Director of Category Management.
ultimately more profitable,” he adds. The fast track system is a stripped down, more agile product development process that reduces design and manufacturing lead times by roughly 70%. The key to successfully implementing their abridged process is using inventoried materials and emulating existing product designs. “This project was different,” says Andy Youngs. “We didn’t design a case completely from the ground up. By using an existing design platform, we
Andy Youngs, VP Marketing & Design.
built at the business area headquarters in Longmont, Colorado, before sending the specifications to the Asian manufacturing office in Hong Kong. Once design was complete, raw materials were pre-ordered and production was pre-scheduled, which took as much as 30 days off typical lead times. “Normally, it takes nine months to design/develop a product and between 75 and 90 days lead time for procurement of material, production and freight to deliver a project,” says Dana Blanchard. “The Security Friendly laptop case was executed in 90 days total. We anticipated that legislation regarding laptops was on its way, so
“We had to quickly develop and introduce laptop cases/sleeves that allow travellers to easily pass through security, without removing their laptop computers.” could quickly get a solution to market within 90 days, which significantly cut development costs.” The sample cases were designed and
The Case Logic Security Friendly bag was developed in line with the fast track development process. Using inventoried materials and emulating existing product designs helped to cut design and manufacturing lead times by 70%.
we started development in the second quarter. Legislation came in the third quarter and we were ready to launch immediately, making us first to market with TSA-approved laptop cases.” While manufacturing was under way, the sales force was successfully gaining placement at key nationwide department stores. “We worked hard at selling into retail channels, while backing up the launch with public relations and advertising campaigns,” Andy Youngs explains. “It all came together to gain incremental shelf space in a challenging retail environment.” Today, the TSA allows travellers with Case Logic Security Friendly cases to pass through security checkpoints without removing their laptop for individual inspection, helping them get through security lines faster. Ultimately, this saves time and money for all travellers and for the airports.
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FIRST TO CUSTOMERS
Successfully revamping the business model
The Product Development, Design and Marketing teams for Business Area Organization Solutions have been crucial for the progress made during the past five years. Broadening the product range, driving innovations and shortening lead times have been their guiding stars.
34
FIRST TO CUSTOMERS
Years of steady decline in CD/DVD sales has prompted the launch of new categories and products. The legacy of Case Logic’s original cassette cases has evolved into new product lines that meet the ever-changing needs of customers. Today, Case Logic provides consumers with organizational solutions essential to their everyday lives, including: iPod® and MP3 player cases, ultra-portable laptop cases and sleeves, messenger bags, backpacks, luggage, automotive organization and a variety of camera bags and camcorder cases. “When we looked at our business landscape four years ago and 80% of our business was media storage (CD and DVD cases),” says Dana Blanchard, “the media category was experiencing a 25% annual decline and we needed to develop
other new categories to offset the decline.” From being completely focused on media products, the business area now has a more balanced portfolio. Photo/ Video is currently the largest product category, followed by Mobile Comput-
ing and Portable Electronics. Media, the once-dominant category, continues to weaken and now represents less than 20% of annual revenue. Since shifting to a broader portfolio, product concepts became more chal-
“This project has given us far deeper insight into the Thule brand and has brought both organizations closer together.”
Since 2006 Thule has offered also soft goods solutions for in-car organization. After the acquisition of Case Logic in 2007, the team in Longmont has taken over sales and product development responsibility. During 2008 the team began completely revamping the product range to gain further market share.
lenging to produce. The business area strengthened the internal design team substantially, and broadened its supplier base. “These steps have helped us improve our speed to market and competitive position within the market,” says Andy Youngs. Being the experts in soft goods and having implemented a revamped business model, it was also natural that the new business area took over development, sourcing and sales for the existing Thule-branded soft goods assortment on the North American market. “Although it is only an add-on accessory to the successful cargo and sports products, this project has given us far deeper insight into the Thule brand and has brought both organizations closer together,” Andy Youngs concludes.
35
EASTERN EUROPE
When the Berlin wall came down in late 1989 and the Cold War ended, new market opportunities arrived for Thule. The company exported its first products into Eastern European markets in 1993, and opened the first sales office in Poland four years later. Since then, consistent double digit growth rates have made the region one of the most important growth areas for the entire Thule Group. The Czech Republic and Poland are now among the top ten markets for Thule Vehicle Accessories in Europe. “Eastern European countries today show similar consumer behaviour to Western Europe,” says Wolfram Dittmer, Thule’s Sales Director for Eastern Europe. “More and more people go biking in summer time and skiing in winter,” he adds. Thule has been early in those markets which has proven to be a successful strategy: “We took cautious steps in the beginning as we had to shape the market first and introduce the concept of rack solutions,” Dittmer
36
recalls. Shaping the market could only happen by finding the right distribution partners for the journey ahead. After several initial changes, Thule’s distribution network has steadily grown and today it comprises 25 partners in the most important markets of the Czech Republic and Poland, and a further 25 partners in other Eastern European countries. “Many of our partners are former sports enthusiasts who came across our products by using them
themselves, investigated the market potential and approached us to agree on a distributor’s agreement,” Dittmer recalls.
Wide distribution drives general market growth Doing business in Eastern Europe nowadays demands the same level of professionalism as in other European countries, but it is even more important to build relationships with custom-
EASTERN EUROPE
“We are often dealing with privately owned companies where trust is a precondition for further growth.”
Wolfram Dittmer is Thule’s Sales Director for Eastern Europe. Together with his dedicated colleagues in Prague and Warsaw, the region has shown double-digit growth in recent years.
ers right from the start. “We are often dealing with privately owned companies where trust is a precondition for
further growth,” Dittmer adds. Payment conditions, delivery reliability and end consumer support are key ingredients to building the markets from scratch. “In markets like the Czech Republic and Slovenia we already have visibly higher sales per capita than in some mature markets. This says a lot about the dedication of our importers but also about the future market potential.”. After starting up in a market you always arrive at a point where you need to expand your distribution footprint. “It is only normal that our first distribution partner will not like that, but we
have to broaden our distribution network in order to build the market further and not be outmanoeuvred by the competition,” Dittmer argues. The broadening of the distribution partner base has led to rapid increases in sales, especially in Poland, where mostly Italian low-cost competition entered the market even earlier than Thule. In the Czech Republic, domestic competition has had a positive effect on Thule as the market segment broadened and more consumers became aware of Thule’s products. As in the rest of Europe the main distribution channels are related to the
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EASTERN EUROPE
Eastern Europe sales development 2002–2008 for Vehicle Accessories Index 500 400 300 200 100 2002
2003
2004
2005
car aftermarket. European giants such as Norauto, ATU and Halfords, with whom Thule already has good relationships, are opening shops on a broad scale in the region. This makes the region an even more interesting market opportunity for Thule. Additionally, Thule is expanding its distribution footprint into other channels. “We can offer more product segments and include other channels such as sport,” says Dittmer, elaborating on opportunities in the years ahead.
The brand as the most important asset “Internally we ask ourselves why we have been able to gain substantial market share in Eastern Europe in recent years,” Dittmer continues. Of course the market has been built through a combination of long-term income growth for the middle class, the changes in leisure behaviour and travel patterns, and the expansion of the dealer network. “However a very important asset for our success has been access to the Thule brand,” Dittmer explains. “Our Scandinavian heritage with the combination of first-class quality, safety, function and design is very appealing to the end consumer base.” One example of how highly the brand is valued is a limited premium priced Thule Spirit rooftop box campaign three years ago: “We produced a few hundred products globally. 60% of them were sold in Poland and the Czech Republic,” he remembers. “People in new markets in
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2006
2007
2008
Eastern Europe are proud to show that they have accomplished something and the quality image of the Thule brand responds to their demands.”
More to come Developments in Eastern Europe have happened at a tremendous speed since the wall came down in 1989. Markets like Poland and the Czech Republic
“People in new markets in Eastern Europe are proud to show that they have accomplished something and the quality image of the Thule brand responds to their demands.” have been at the forefront, and others such as Russia have developed strongly in recent years. There is more to come for Thule in Eastern Europe. And Wolfram Dittmer assures us that Thule’s Eastern European sales team will not rest until one of their markets has made it to the top three European markets for the Thule Group.
Magnus Welander has been President for Business Area Vehicle Accessories since 2006.
The strategic role of Eastern Europe for Vehicle Accessories What are the most important achievements for your business area in Eastern Europe so far? We have been very early in Eastern Europe and managed to build a strong distribution network which has grown stronger over time. We have succeeded in building a market that honours premium products and thus higher prices. Finally we have managed to establish the Thule brand as the clear category leader. Where do you see your markets developing in the coming years? We foresee a continuous double digit growth for us in Eastern Europe in the years to come. Although macroeconomic factors are affecting our category as well, we do not see any major clouds on the horizon. What are your ambitions for the next few years in Eastern Europe? After having established the category in these markets, we have to do a much better job of developing the experience for the consumer when they show an interest in our products. It starts with a consumeroriented web page in all local languages and ends with the true Thule experience in the shops.
EASTERN EUROPE
Active in Eastern Europe on many levels While Thule’s load carrying business has been at the forefront when it comes to exploiting business opportunities in Poland and the Czech Republic, other business areas and other countries like Russia have developed strongly in recent years. The Towing Systems, Trailers and Organization Solutions business areas have established business relationships in Eastern Europe since the mid-90s. Growth has picked up substantially in recent years for all categories, with annual growth rates of roughly 20%. The preferred business model is to work with different types of distribution agreements. Finding the right partner is key and several distributor changes have taken place in order to do this. Russia particularly has been in focus where overall growth started in the mega-cities of Moscow and St Petersburg, and is now spreading all over the country. Thule maintains a dozen concept stores for vehicle accessories in the country along with its distributor, which also sells Thule trailers and towing systems. Establishing a stronger sales footprint in Eastern Europe has strengthened the role of the Group’s most important manufacturing sites.
Sponsorship with products is one important way of helping to spread the word in new markets. The Polish Thule organization supported a spectacular trip to Mongolia, creating a variety of publicity opportunities.
Thule in Eastern Europe Business Area
Main countries
Main products
Towing Systems
Poland, Czech Republic, Russia
Fixed and detachable towing systems
16%
Organization Solutions
Russia, Poland, Czech Republic
Photo and Mobile Computing
18%
Trailers
Poland, Baltic States, Russia
Professional trailers
20%
Split of Thule activities in Eastern Europe Towing Systems 10% Organization Solutions 29% Vehicle Accessories 44% Trailers 17%
Growth 2008
Some 100 km north-west of Poznan in Poland, a city of half a million people, Thule operates three manufacturing entities for bike carriers, roof rails and trailers. The three sites have been developed from scratch over the past eight years and they are the largest global manufacturing hub today. During high season Thule employs more than 1,000 people in the rural area not far from the German border.
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2008
– back on solid financial ground Key developments 2008 ■
First quarter in line with agreed plans, global macroeconomic downturn influenced the rest of the year
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Vehicle Accessories business area managed to gain further share and to grow organically
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Business area Organization Solutions concluded the year with double-digit sales growth
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The macroeconomic downturn affected all business segments more closely related to the car industry
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Thule on solid financial ground after financial restructuring with Nordic Capital as majority owner
Selected key figures Net sales (MSEK) EBITDA (MSEK) Employees and Hired Total
2004
2005
2006
2007*
2008
2,785
3,160
4,217
6,709
6,188
422
461
577
765
561
2,100
2,332
3,905
4,400
3,500
*Pro Forma
Sales by Region
Sales by Business Area
Rest of World 4%
Towing Systems NA 6% Vehicle Accessories NA 13%
Organization Solutions 17%
North America 29% Europe 67%
Towing Systems E/A 19%
Vehicle Accessories 30%
Trailers 15%
“We are entering a phase of consolidation with a focus on profitability, cash flow and winning market share.” Anders Pettersson, President and CEO
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Vehicle Accessories
Vehicle Accessories North America
Key developments 2008: ■
■
■
■
■
Sales growth for bike carriers, boxes and car racks thanks to market share gains Vehicle related categories, RV accessories and OES, affected by weak market conditions Partial recovery of snow chains sales after two weak winters Launch of Thule EuroPower, the world’s first e-bike carrier, and Thule Excellence, the world’s most exclusive rooftop box Significant improvement in delivery performance for Car Accessories
Head office: Malmö, Sweden Net sales 2008 (MSEK): 1,849 Share of Group sales: 30% Production sites: Hillerstorp (SWE), Huta (PL), Neumarkt (DE), Molteno (IT), Menen (BE), Haverhill (GB), Sao Paolo (BRA), Shanghai (CHI) Number of employees: 1,116 Key products: Car Racks, Rooftop Boxes, Accessories such as bike or ski carriers, Snow Chains, RV Accessories (awnings, bike carriers, etc.) Market share: 38%
Magnus Welander Business Area President
Key developments 2008: ■
■
■
■
■
Continuous market share gain in racks, boxes, truck tool boxes and bike carriers Sport and cargo channel withstand downturn in North American economy Reduction in workforce: closing of Texas truck box facility and overhead headcount reduction Improved customer service operation leads to competitive advantage and improved relationship with customers and consumers Licensing agreement with DeWalt and new product development opens heavy duty segment for truck boxes and truck racks
Head office: Seymour, Connecticut Net sales 2008 (MSEK): 804 Share of Group sales: 13% Production sites: Seymour, CT, Chicago, Ill, Perry, FL, and Thomasville, GA Number of employees: 424 Key products: Car Racks, Rooftop Boxes, ski-, boatand bike carriers. Truck Boxes and Truck Racks, RV Accessories and Snow Chains Market share: 53%
Fred Clark Business Area President
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Towing Systems
Towing Systems
Europe/Asia
North America
Key developments 2008:
Key developments 2008:
Increased focus on European aftermarket customers Deliveries to OEM and OES customers are affected by the weaker macroeconomic demand Manufacturing adapted to the weaker demand and improved productivity: Fensmark in Denmark closed, Vänersborg, Sweden, to be closed during 2009 Further brand migration from Brink to Thule and launch of Thule EuroClick, the first rear-mounted bike carrier for non-towing vehicles
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■
■
■
Head office: Staphorst, Netherlands Net sales 2008 (MSEK): 1,203 Share of Group sales: 19% Production sites: Staphorst (NL), Hoogeven (NL), Reims (FR), Vänersborg (SWE), Rotherham (GB), Huta (PL) Number of employees: 738 Key products: Fixed, detachable and retractable Towing Systems including wiring kits and Car Rails Market share: 32%
Gerrit de Graaf Business Area President
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■
■
■
■
■
Heavy decline in market demand as a consequence of weak automotive market Move of manufacturing from Detroit to Lodi finalized. Delay in ramp-up of manufacturing affects delivery performance Continuously adapting staffing to market conditions New sales in place with heavy focus on North American aftermarket customers Continuous flow of innovations to regain market share (brake control, smart trailer towing application)
Head office: Madison Heights, Michigan Net sales 2008 (MSEK): 392 Share of Group sales: 6% Production sites: Lodi, CA, Gymas, Mexico Number of employees: 258 Key products: Towing Systems and Wiring Kits for the North American market Market share: 9%
George Caplea Business Area President
Trailers
Organization Solutions
Key developments 2008:
Key developments 2008:
■
■
■
■
■
Dramatically weaker Nordic core markets lead to drop in sales and earnings Thule Rental in Scandinavia on a continuous steady track New business area management installed with focus on consolidation of operations Withdrawal from markets in North America and South Africa Ongoing restructuring of manufacturing footprint
Head office: Malmö, Sweden Net sales 2008 (MSEK): 920 Share of Group sales: 15% Production sites: N Aaby (DK), Wielen (PL), Jönköping (SWE), Bromölla (SWE), S. Vittoria (IT) Number of employees: 677 Key products: Trailers for five areas of use: leisure, boat, horse, professional, ATV Market share: 12%
Ulf Berghult Acting Business Area President
■
■
■
Successful broadening of the product portfolio and improved speed to market enables double-digit organic sales growth Movement of Production to Northern China, design to manufacture and better freight rates improve supply chain Improved sales execution broadens footprint especially in Europe, South America and for OEM business
Head office: Longmont, Colorado Net sales 2008 (MSEK): 1,058 Share of Group sales: 17% Production sites: No owned production Number of employees: 264 Key products: Organization Solutions for four main categories: Photo/Video, Mobile Computing, Travel & Lifestyle, Portable Electronics Market share: 12%
Tom Sandler Business Area President
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Board of Directors
Åke Skeppner Member of the Board Former CEO Thule Group (1990–2002)
Anders Pettersson Member of the Board President and CEO, Thule Group
Ulf Rosberg Member of the Board Partner Nordic Capital
Born 1951 Board member since 2002
Born 1959 Board member since 2004
Born 1965 Board member since 2007
Also member of the Board of: SACC-USA (The Swedish-American Chambers of Commerce, USA Inc.)
Also member of the Board of: Hempel A/S, Annehem Holding AB
Also Chairman of the Board of: Finnveden Holding
Hans Eckerström Member of the Board Partner Nordic Capital
Roger Holtback Chairman of the Board Holtback Invest AB
Johan Sylvén Member of the Board
Born 1945 Board member since 2009
Born 1948 Board member since 2009
Also Chairman of the Board of: MediaTec Group AB, Bulten AB, Holtback Invest AB, The Swedish Exhibition Center
Also Chairman of the Board of: Stiftelsen Sävstaholm
Born 1972 Board member since 2007 Also member of the Board of: Leaf Holding SA, Aditro Group AB
Also member of the Board of: IHS inc, USA, Finnveden Holding AB, Finnveden MS AB Advisor: Stenas Sfärråd Nordic Capital Network Committee
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Also member of the Board of: Bufab, Nefab
Group Management
From left: Tom Sandler, Anders Pettersson, Daniel Oelker, Kajsa von Geijer, Roland Schylit, Magnus Welander, Ulf Berghult, Gerrit de Graaf, Fred Clark, George Caplea
Decentralized management philosophy Thule’s operations are organized in line with the overriding principle “Management by Objectives”. Far-reaching financial responsibility supports entrepreneurship, cost awareness and open communication, the four pillars of Thule’s steering model. The six business areas are located close to its main markets in Sweden, USA, Netherlands and Denmark. Through four regular business review meetings with each business area, the Group management ensures that financial and organizational performance is in line with the
set plans. If parts of the businesses are off target, special Group resources are allocated to offset the pressure. The Group head office has been based in Malmö, Sweden since 2003. Seventeen employees work here in corporate functions such as Technology, Controlling, Finance, Business Development, Mergers & Acquisitions, Human Resources, Communication and Branding. Their task is to monitor that global Group processes are further developed, implemented and followed up.
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Addresses 37
6 38 39
5
7 44
45 42
1
8
PARENT COMPANY/ HEADQUARTER 1 THULE HOLDING AB
Murmansgatan 126 SE-212 25 Malmรถ Sweden Tel. +46 (0)40 635 90 00 Fax +46 (0)40 635 90 20
BUSINESS AREA VEHICLE ACCESSORIES 2 THULE VEHICLE ACCESSORIES
Murmansgatan 126 SE-212 25 Malmรถ Sweden Tel. +46 (0)40 635 90 00 Fax +46 (0)40 635 90 20
For more addresses please visit www.thule.com
BUSINESS AREA TRAILERS 3 THULE TRAILERS
Murmansgatan 126 SE- 212 25 Malmรถ Sweden Tel. +46 (0)40 635 90 00 Fax +46 (0)40 635 90 20
BUSINESS AREA TOWING SYSTEMS EUROPE/ASIA 4 THULE TOWING SYSTEMS B.V.
Industrieweg 5 7951 CX Staphorst The Netherlands Tel. +31 (0)522 469 999 Fax +31 (0)522 469 209
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25
17
23 1 23
33 35 4
4
28 719 29
49
5
9 46
14
1248 31
20
11
13
3
10 2230
51 50
15 6 16
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21 34
BUSINESS AREA VEHICLE ACCESSORIES NORTH AMERICA 5 THULE INC.
42 Silvermine Road Seymour 06483, Connecticut USA Tel. +1 20 38 81 9600 Fax +1 20 38 88 4252
BUSINESS AREA TOWING SYSTEMS NORTH AMERICA 6 THULE TOWING SYSTEMS LLC
Dequindre Road 32501 Madison Heights 48071 Michigan USA Tel. +1 248 588 69 00 Fax +1 248 588 00 27
BUSINESS AREA ORGANIZATION SOLUTIONS 7 THULE ORGANIZATION
SOLUTIONS INC. 6303 Dry Creek Parkway Longmont, CO 80503 USA Tel. +1 303 652-1000 Fax +1 303 652-1094
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Wherever the road leads. Shooting whitewater. Fishing deepwater. Cycling the back roads. Skiing a mountain pass. Speed boating with your pals. Camping with the kids. Going where it moves you. Doing what you love. At the end of the earth – or just around the corner. Your kayak. Your rod. Your bike. Your skis. Your boat. Your tent. Your gear. Is at your side. Whatever your ride.
www.thule.com