Continuous operational improvements

After a promising first half year which showed respectable growth in many product sectors, volume sales for the Group’s South European region declined somewhat in the latter part of the year. Bo Dankis, Group Vice President responsible for South Europe, which encompasses France, Spain, Portugal, Italy and Belgium, says growth prospects for 2003, while looking rather more hopeful, remain irregular throughout the region.

“We don’t foresee any dramatic improvements in the economies in our region over the next 12 months. The downturn in the French economy, the biggest in our region, shows no immediate signs of improving. Despite the business climate, however, the French group succeeded in improving volumes at the same rate as last year. The reorganization of our sales approach towards the large French DIY sector has started to bear fruit, and 2002 saw double-digit growth in that sector.

“Italy and Spain, which rely on exports to the Middle East and Latin America respectively, are struggling to maintain last year’s export growth levels. The overall hardware market in Italy slowed in 2002, although sales to professional locksmiths and DIY purchases increased.

“Volumes fell, as a consequence of the increased focus on the domestic markets, for all companies except mab, the door-closer company that we acquired in 2001. In Spain domestic demand remained quite strong. Belgium, which has traditionally depended on sales generated from large eu-financed projects, is also experiencing lower demand than a year ago.”

New initiatives
“In light of these challenging market conditions throughout the region we have initiated measures aimed at reducing costs,” Bo Dankis says. “These include cutting inventories, closing duplicate offices, rationalizing delivery depots in Paris and the south of France and making other personnel reductions.

“Some major efforts to improve operations have proved very successful. At Bezault in France, for example, application of Kaizen methods has achieved productivity increases of up to 30 percent. All companies have continued to reduce inventory while improving delivery time and delivery precision.

“Operational excellence and efficient delivery routines are crucial to customer satisfaction. We are now about to launch new-product initiatives in all markets that we believe will generate higher sales in some of our main product segments. These include new multipoint locks, some new cylinders, new hardware, handles, panic exit devices and electronic locks.”

Developments in all markets
In France JPM is launching its new generation of panic exit device technology targeted toward shopping malls, cinemas and other public spaces, which is likely to be well received throughout the region. Stremler enjoyed good growth from recently launched locks and fittings for glass doors and a new product line for aluminum gates. Late in the year Vachette started to export its latest multipoint locks, based on a technology entirely new to France.

Bezault’s new lines of handles won the design prize at the Batimat trade fair in Paris and valuable orders were taken. Apart from its steps to cut costs and to increase organic growth, ASSA ABLOY France has completed the acquisition of Initial, the French distributor for Abloy of Finland. This acquisition will enhance the Group’s presence in the important electromechanical sector and serve as a platform for the abloy products, including masterkey cylinders, in France.

 
Spain’s largest company, Telefonica, is the leading supplier of telecommunications to Spain, Portugal and Latin America, with a customer base of over 82 million people. TESA, Spain’s leading lock company, is its chosen provider of access control and egress solutions for its offices. “The challenge was to control the access of staff, maintenance personnel and visitors strictly but also conveniently,” says Miguel Garcia Juncos, Manager responsible for Security Installations. “At the same time fast, safe egress had to be posssible.” The solution is based on remote opening of the perimeter doors from an interior desk where access permissions are granted.

In the hospitality sector, the creation during the year of ASSA ABLOY Hospitality France will strengthen the Group’s ability to make complete offers including products other than hotel locks.

In Spain the most notable development was the full integration of TESA into the Group. TESA is the clear market leader on the domestic market and a major supplier of residential locks. The company produces a comprehensive range of multipoint security locks, cylinders, electromechanical locks and knob sets. A large part of its sales volume goes to export.

Domestic sales of mechanical locks by both azbe and TESA remained steady. Increased efforts are in hand to promote sales of higher-end, more intelligent electromechanical products where there is better potential for long-term growth and higher margins. The Group’s marketleading position and dedicated work by the companies have produced a clear trend towards higher security in Spain, manifested by growing sales of highsecurity multipoint locks and masterkey systems The Spanish companies are also exploring cross-selling opportunities that promise to have an impact throughout the South Europe region in 2003.

In Italy the domestic market started the year slowly, accelerated during the summer but fell back later in the year. Export volumes for the Group’s Italian companies fell as a result of depressed markets. The fragmentation of the Italian lock industry and its high dependence on export continue to exert pressure on prices and allow standards to remain low. However, the refocus on the Italian market with the aim to drive the trend towards higher security will achieve results over time.

In Belgium Litto is focusing strongly on masterkey systems to consolidate its position as market leader in this upper market segment. Dupéray is also concentrating on developing sales of electromechanical products. The launch of the CLIQ electronic cylinder will be a major event in 2003. Increasing sales of Abloy’s protec cylinders is another growth objective.

Management development
“In 2002 our region also increased its investments in specification services for end-users and architects,” Bo Dankis says. “New recruitments and new software tools have been especially appreciated at Dupéray in Belgium, Vachette in France and TESA in Spain.

“Most of our companies are now organized into Business Units and Profit Centers. JPM in France is the latest company to undertake a major organizational improvement. The management development programs we initiated some years ago – including our regional Management Training Program – have successfully supplied new managerial talents to the various reorganizations carried out during 2002.”