HANZA TURNS 10 – FROM FINANCIAL CRISIS TO BILLION SEK COMPANY
HANZA was founded just a month before the 2008 financial crisis hit the global economy like a tsunami – but it managed to weather the storm. The company currently has a turnover of SEK 1.8 billion, with 1,600 employees in six countries.
“The timing has been against us more than once. But that has only made us better equipped for the future,” says CEO Erik Stenfors.
The idea was as simple as it was obvious: Making life easier for those who want to manufacture products – all while saving money, saving on transport and protecting the environment. Founder and CEO Erik Stenfors' vision was to build a one-stop shop for customers who want to develop and manufacture products, to help them avoid having to contract with a number of different suppliers scattered all over the world.
“It would be insane if there was only one shop that sold just milk, one shop that only sold eggs and one shop that only sold flour. It would be even more insane if those shops were scattered all over the world. If that were the case, you would have your hands full assembling the ingredients for a simple pancake. But that's exactly how things work in the manufacturing industry,” says Erik Stenfors.
Which is why HANZA came to be. The idea was a company where stand-alone factories with different manufacturing technologies could be gathered into clusters, which would allow them to manufacture locally, close to both clients and end customers. The focus was on customer benefit: Offering a complete solution that was simpler, more efficient, more affordable and with less environmental impact.
“When you want to develop products, having proximity between manufacturing and development is key – not just geographically, but even culturally and linguistically. Being able to drive out to a factory and try out ideas can be crucial in terms of whether they succeed or not. At the same time, fully developed, stable products need to be manufactured close to the end market.”
Erik Stenfors had plenty of first-hand experience of how difficult, complex and expensive it was for product owners to get the production process to work. He has been involved in product development many times, including a PDA for Svensk Bilprovning and a number of products for the parents of small children, such as a unique thermometer and an award-winning baby monitor. During that time, he founded the PCB manufacturer NOTE in 1999, which grew into a publicly listed billion-SEK company in the period of five years. But only being able to offer manufacturing solutions felt too restrictive. In order to increase customer value, Erik Stenfors also wanted to offer advice on how to efficiently organize production processes and material procurement. That is, he wanted to create a company comprising both consultants and manufacturers.
HANZA launched its complete manufacturing model in August 2008, after having made a couple of acquisitions in the electronic and mechanical manufacturing space. But then, on the night of September 15, Lehman Brothers suspended its payments and filed for bankruptcy, sparking one of the worst financial crises of the century.
“We started HANZA just before the Lehman Brothers crash. A couple of years after that came the Greek crisis. We also faced a challenge in 2014 when some of our customers' volumes were impacted by two totally different events that occurred at the same time. Russia annexed Crimea, resulting in sanctions, and oil prices dropped by half, which cut down on oil exploration activity, among other things. So, the timing has been against us more than once. On the other hand, that may have contributed to our success. The crises have made us more resilient to unexpected events. Group management is analytical and is ever prepared for changes in the business environment. Having successfully overcome various challenges during the company's ramping-up phase makes us better equipped for the future.
An important part of the strategy has been to assemble competent employees by acquiring companies going through financial difficulties. By linking these factories together, existing customers were able to continue relying on the same factory – while also benefitting from a much better and broader product spectrum. A good example of this is the acquisition of the electronics manufacturer Elektromekan in Årjäng in 2010.
“When we bought Elektromekan the company was undergoing Chapter 11. They were losing SEK 40 million a year and were just a few days from going bankrupt. The employees were desperate and there were tears in the management team's eyes when I met them for the first time. It has now become a highly profitable unit – a factory from the 1970s that would have been shuttered unless we had taken over.
Another major piece of the company’s strategy has been to invest in rural Sweden, which can be clearly seen in Värmland. “Årjäng is the new China,” claimed HANZA in a widely circulated article in Dagens Industri in 2014, in which the company described the benefits of manufacturing in rural Sweden. Then, in January 2018, HANZA bought the sheet metal manufacturer Wermland Mechanics. HANZA’s cluster was thus rounded out to include two plants in Töcksfors and Svanskog, in addition to the existing factories in Årjäng. Today HANZA employs around 400 people in Värmland.
“We don't go in for manufacturing in large expensive cities. We believe in rural Sweden. An important reason for that is loyal employees, who comprise an important body of expertise. Another reason is the way we are treated by the municipality and the local bank, both of which value keeping jobs in the local area. In rural areas you can also rent facilities at reasonable prices compared to the larger cities. In rural areas our factories can mean a lot to our employees – and our employees mean everything to HANZA.
Making contributions to environmental sustainability has always been a matter of course at HANZA, as doing so is part of the business model itself. By gathering production capacity locally – close to product development and end customers alike – we are able to dramatically cut down on transport. Optimizing our production for environmental aspects is necessary both ethically and in terms of the bottom line – not least in view of the increasing intensity of the climate change debate.
“No one has been left untouched by the record heat and forest fires we've seen this summer. Many people are asking themselves questions about the environment and what they themselves can do, for example by avoiding air travel or eating less meat. Those of us who see the madness in the current product manufacturing landscape – how components are transported back and forth all over the world to be assembled into a product – see other opportunities. This is also where ethics, morality and important social measures can intersect with increased profitability. Companies can increase their profitability by helping the environment, so these are hardly conflicting goals.
During the ten years that HANZA has been in existence, our focus has always been on creating benefit and value for our customers. And despite the fact that traditional contract manufacturers have lost ground during this period, HANZA has bucked the trend by expanding.
“For us, growth has not been the important thing. We try to create profitability for our customers, which will benefit HANZA in the long run. What I am most proud of – something that is not always visible – is how we have continuously managed to create profitability across the various parts of HANZA while building the Group. The new share issues that we have completed have been linked to acquisitions. We have been able to grow without asking our shareholders for working capital, meeting those needs with internally-generated funds instead – even during crises.
In early 2018, HANZA exited the development phase and entered into an expansion phase, where the focus is on new geographical customer areas and larger sales volumes in the existing manufacturing clusters. For HANZA, the road to the future is clearly mapped out:
“The dream is for HANZA to help all product owners globally. I really think this is the way it has to be: You need to be able to go to a manufacturer that is able to offer more than just a small part of a product. One that doesn't just passively produce a product from a drawing but is active and comes up with better solutions that are more affordable, and which result in a reduced environmental impact. We have managed to put together an unbelievable product range that we offer to our customers, all thanks to our employees' many skills. And the goal is to expand that model into more and more parts of the world,” says Erik Stenfors.
HANZA is a leading company in strategy and manufacturing of high-tech products.
Our business idea is to collect different manufacturing technologies in factory clusters. With the help of our manufacturing hubs, we create effective and environmentally strategic manufacturing processes that contribute to increased competitiveness for product-owning companies.
HANZA was founded in 2008 and is growing rapidly. Today we generate around 1.7 billion SEK, with over 1 650 employees across six countries.
Among our customers are companies such as ABB, Atlas Copco, Getinge and SAAB Defence. Together we lead the new rational manufacturing industry
HANZA work towards making sure more innovative products are brought to market, and that the manufacturing processes for these are as efficient, profitable and sustainable as possible. For the long-term sustainability of the manufacturing industry, product owners and manufacturers need to create solutions together, taking into account future environmental, social and economic challenges.
HANZA has an advisory role, which makes possible a collaboration with the customers where solutions are tailor-made and focused on the long-term. The result is a manufacturing process that is strategically designed from an economic, environmental and social perspective.
Facts: Our values
We strive to be a unique value-adding business partner in the field of manufacturing.
We are motivated by delivering world-class strategic manufacturing solutions. Therefore, our business is characterised by the following traits:
Facts: Erik Stenfors
Profession: Founder and CEO of HANZA
Family: Married with three children
Education: M.Sc., KTH, Technical Physics
Career: Technical Manager at Minec Systems from 1992. Lived in Poland 1997-1999, built up an electronics factory (Qcom). Founded the PCB manufacturer NOTE in 1999 and EMS-Alliance 2001.
From 2006-2007 Erik Stenfors lived in London, where he founded Bosieboo, a company that develops baby products. These products include a baby monitor that won the “Mother & Baby award” in London in 2007, where Philips’ baby monitor came in second.
In 2008 Erik Stenfors founded HANZA and has served as CEO ever since.
HANZA is a fast growing industrial business partner within manufacturing. The company offers a unique combination of advisory services and tailormade manufacturing solutions that increases growth and profitability for its customers. HANZA was founded in 2008 and has grown into a billion SEK company. The Company currently operates in Sweden, Finland, Estonia, Poland, Czech Republic and China. Among HANZA’s clients there are leading industrial companies such as Kone, Konecranes, Atlas Copco, ABB and Saab Defense.
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