This year HANZA celebrates 15 years and Erik Stenfors, CEO and founder, talks about the group’s history and what has been crucial to its success. From the tough start in the midst of the financial crisis to billion sales.
HANZA was founded in early 2008 by Erik Stenfors and the official start date was August 6 when shareholders were informed that the company’s start-up phase was complete – from finding a name to putting together an initial organization and creating a strategy for the future. This was one month before the collapse of the investment bank Lehman Brothers in the largest US bankruptcy in history, creating a free-falling economy in 2008 and 2009.
“We didn’t know how everything would develop” says Erik Stenfors. “The financial crisis made things tough for us, demand fell at lightning speed, and we had no capital buffer. But honesty has always been our watchword and at our first annual general meeting (AGM) in 2009 I informed the shareholders that the situation was serious, and that the management’s goal was just to survive so we can meet at a second AGM.”
“The last page of the presentation at the AGM said ‘There are opportunities in the difficulties. The concept is right” and it turned out to be right. Due to the crisis, many product companies were forced to look for new alternatives and that gave us a couple of new, important customers. Since then, we have seen that each crisis has steered new customers towards HANZA.”
During the financial crisis, two opportunities emerged that led HANZA to make its first acquisitions. One of the larger electronics manufacturers in Sweden, Elektromekan in Årjäng, went into reconstruction after an annual loss of SEK 40 million. And in Estonia, the mechanical engineering company Tarkon had financial challenges and was looking for a new owner.
“Both factories needed a fresh start, which our concept gave them. In addition, there were skilled employees who could be promoted and lead the transformation” says Erik.
Stop in a market turns into success
Regional and complete manufacturing has been the business model since the beginning. The aim is to provide customers with benefits in terms of lower costs, increased flexibility and reduced environmental impact through less freight.
The business model has been implemented using a model with clear milestones. At each achieved milestone, new goals are established. The first build-up phase was completed in 2014, by which time HANZA had achieved sales of SEK 1 billion and the company was listed on Nasdaq First North.
“It has been successful to develop HANZA in defined steps with clear goals, which has helped us to keep the compass course, even when there was a strong crosswind. The financial crisis was followed by the euro crisis, and we were shocked by the news that Elcoteq, one of the world’s ten largest electronics manufacturers, had gone bankrupt in October 2011.”
HANZA’s biggest crisis came in 2014 when the company succeeded in establishing itself in Norway and received the largest enquiry to date for a project in Russia. Then two things happened: the price of oil halved, which led Norway to withdraw its orders, and Putin invaded Crimea, which put an end to the Russia project.
But even this time it was possible to turn the crisis into something positive. It was decided not to continue with Russia as a market, an important decision for the future. And secondly, an aggressive acquisition was made to broaden the business towards heavy mechanics. The acquisition was financed by the successful entrepreneur Gerald Engström, known among other things as the founder of Systemair, and Francesco Franzé, who was vice president of Husqvarna. Both eventually joined the board.
Thus, step two began, focusing on organizing the factories according to HANZA’s so-called cluster model, which means moving entire factories to be close to each other. It also introduced an advisory service for customers on how to optimize their supply chain. The service was named MIG™ (manufacturing solutions for increased growth and earnings).
Significant expansion into Germany
HANZA’s second phase was completed by 2018 and then step three was announced, in which HANZA establishes operations in Germany (Remscheid outside Düsseldorf) and carries out a listing on Nasdaq Stockholm’s main list (March 2019). The financial target was set to reach SEK 2 billion in sales with an operating profit of at least SEK 120 million by 2022, but already in 2019, the HANZA Group reaches sales of SEK 2 billion.
“Germany is an important and good direction for expansion” says Erik. “But even here, the outside world presented a challenge. We had just established ourselves in Germany when the pandemic broke out and there was a standstill until the summer of 2021 when restrictions were lifted.”
Last year, it was decided that it was time for the fourth step called “HANZA 2025”.
“We reached a turnover of SEK 3.5 billion and an operating profit of SEK 212 million for 2022, which was well above the targets from 2018. The decision was made to raise the bar to SEK 5 billion in 2025 with an 8 per cent operating margin.”
Strategically, the work is aimed at growing within existing manufacturing clusters and focusing more on our service part.’
In the summer of 2022, another investment in the service side is made through the acquisition of a development company in Münster, Germany, now called HANZA Tech Solutions.
The future is bright
“There has been no lack of excitement! We have developed HANZA in different ways, by starting our own factories, buying companies in crisis and buying successful companies” explains Erik. “We are proud that all companies in the group today have developed better than they did when we came into the picture – both those that were successful and those that were in crisis.”
There is no doubt that HANZA has a tailwind for its concept of regional and complete manufacturing. The manufacturing landscape is increasingly changing towards so-called back sourcing, i.e. manufacturing closer to the end customer. The pandemic and climate change have also strongly contributed to this trend.
The group currently has 2 100 employees and 18 factories in 7 countries. Turnover is approximately SEK 4 billion per year. The goal is set for the next milestone in 2025, and the journey there is about growth in existing areas. It has already been announced that the next step will be geographical expansion.
“We cannot say where the next establishment will be, only that it will be entirely driven by the demand of our customers.”
“What is unique about HANZA is that the company has managed to maintain high growth for so many years. Since the start, the increase in turnover has been close to 20 per cent per year, something most other contract manufacturers can only dream of.”
So, what explains the success over so many years?
“The fact that we have managed to grow so successfully is partly due to a strong business model and that we have had customer value as our guiding principle. All decisions we make regarding new establishments, acquisitions, investments, etc. are made in close dialogue with our customers and with the aim of becoming an even better manufacturing partner. But above all, the development is due to the fact that we have managed to gather so many committed and competent employees in HANZA. It is they who have done the job!”
Erik Stenfors, CEO and founder of HANZA.