Growth in exports continues to offset flat sales at home

Once again Finland’s leading lock company has managed to grow its business in key markets in North America, western Europe, Russia, the Far East and Australia, which compensated for continued flat sales at home. Substantial investments in more efficient production techniques over the past three years also began to have a positive impact on income in 2002.

It is ironic that one of the world’s leading developers of advanced electromechanical locking technology is based in a country which still takes pride in not always having to lock its doors. Abloy’s headquarters are deep in the forests of eastern Finland where security seems unnecessary.

Expanded Business Unit structure
The company has a long history. The industrial manufacture of abloy disk cylinders began in 1918, based on a technology which is still one of the company’s major products, while the subsidiary Björkboda Lås, which manufactures abloy lock cases, celebrated its 270th anniversary in 2002. Today, the abloy trademark and highsecurity products are well known throughout the world. Matti Virtaala, Group Vice President responsible for Finland, believes that the company’s success is due largely to its aggressive product development and its clear division into Business Units.

“During the year a new Business Unit, Door Automatics, was established, and towards the end of 2002 the Besam operations in Finland were absorbed into it. This means that we now have seven separate organizations, in effect subsidiary companies, for Abloy’s seven product segments. Within each Unit, the ongoing development of new products is an integral part of our corporate culture.”

This diversified structure has proved successful – and vital – because abloy products are technically advanced. Understanding one’s own products is essential for understanding the business. The different Business Units, which now comprise Industrial Locks, Construction Locks, Electromechanical Locks, Door Automatics, Door Closers, Lock Cases and Architectural Hardware, also require different commercial focuses.

“Typical customers for Industrial Locks are large manufacturers, e.g. in the telecom business, who buy large quantities on a regular basis under long-term agreements,” Matti Virtaala explains. “On the other hand, typical customers for Construction Locks are locksmiths – usually family-owned businesses with few employees where daily personal contact is required.”

While sales in Finland continued flat in 2002, there are signs that the domestic market is beginning to gather strength and should return to growth in 2003. In the meantime, Abloy has continued its campaign, started in 2001, to replace out-of-date locks in residential buildings and offices in Finland by offering customers new, more secure mechanical locking solutions. This ambitious retrofit initiative has been successful in replacing falling sales volumes resulting from the continued slump in new construction. In 2003 the launch of the Group’s unique CLIQ electromechanical lock technology is expected to boost sales in Finland.

Exports remain important
“Export is essential for Finnish companies wanting to be profitable,” Matti Virtaala goes on. “There are only five million people in Finland, and even though abloy was recently voted the most valued trademark in Finland – ahead of Nokia! – nearly 50 percent of Abloy’s sales are generated through exports, making Abloy one of the most profitable companies in the Group.”

In 2002 export sales continued to grow in many parts of the world. In the United States and Canada, which form Abloy’s biggest export market, sales of door closers, cylinders, industrial locks and padlocks grew strongly. Abloy also had excellent growth in Russia, the Netherlands, the Far East and, most notably, Australia. Sales in eastern Europe were slow in 2002 and are likely to remain so through 2003.

When Hotel Santa Claus in Rovaniemi, Finland opened its doors to the public in December 2001, it was with a highlevel security solution from Abloy and VingCard flexible enough to meet the needs of their very varied groups of customers: private, business and governmental. “The customer shouldn’t need to think about security,” says the Hotel Manager, Jari Simola. “A good security solution frees you from worry. In fact when it’s working well, you shouldn’t even notice it.”

The new abloy protec rotating-disk cylinder lock, which was launched in selected export markets from late 2001 onwards, has been particularly successful in Australia, with significant orders from universities, museums, power and water utilities, jails, councils and hospitals. Intended primarily for the commercial and institutional markets, the cylinder has nearly two billion different key combinations per keyway, making it possible to create extensive masterkey systems covering thousands of doors and thousands of keyholders. The patented design is virtually pickproof and meets stringent international standards for high security. Increased production capacity will allow further launches during 2003, and the abloy protec promises to be a big seller both at home and abroad.

Group synergies
In general, Abloy has benefited greatly from being a part of the ASSA ABLOY Group. The company is a net supplier to the Group overall, and new crosselling initiatives are constantly being developed across the whole product range and especially in the areas of electromechanical and advanced mechanical lock technology.

Abloy is the third-largest manufacturer of door-closer products in Europe, and some 70 percent of its output is now purchased by sister companies in the Group. Two significant new products launched during the year are the DC250 cam-action door closer – which is light to open but can apply a high closing force – and the FD450-454 fire-door closing system, a slimline design which is easy to install and to integrate with fire alarm systems and external smoke detectors.