and growing Stora Enso
His springy boyish nature identifies a man who knows how to enjoy his work and life. There is absolutely nothing slack or limpid about Stora Enso President and CEO Jukka Härmälä, 54. He is brisk in his movements and speaks in a clear audible voice. A captain in the Defence Forces reserve, he knows how to give orders when it has to be done, but he also has a smile that comes easily. "You have to put your own persona into this job," he says. "One of a manager's most important properties is the ability to get people engaged in working for the goals that we have set." He lets achievements speak for themselves.
In the space of just over a year, a series of events that radically changed the entire pattern in the forest products sector. unfolded at breathtaking pace. Finland's Enso, headed by Jukka Härmälä, merged with Sweden's Stora in late 1998. This produced Stora Enso, which bought Consolidated Papers in the United States in spring 2000 and is now the world's second-biggest paper and paperboard manufacturer. International Paper is still number one, but Stora Enso is hard on its heels now that it has gained such a solid foothold in the USA.
"Growth won't stop here," says Härmälä, as a self-evident fact. "The need for it springs from our clientele's globalisation. Customers want to buy their paper from a big company, but one that operates close to them. In the USA they buy from an American mill, in Europe from a European and in Asia from an Asian one. This ubiquity has to be vigorously developed. But growth must always be profitable. The synergy benefits that mergers and acquisitions have brought us are very substantial. The economy has been one of the driving forces behind the operations that we have carried out."
With the European and American markets beginning to reach maturity, Asia will account for most future growth in paper consumption. "If prosperity in China increases for even only some of the people, it means an enormous number of consumers. You have to be an actor in markets like that. We have had a paper mill in China for three years and we have considered building more there. Acquisitions are not an option, because there are no companies to buy."
The money involved in buying a major forest products manufacturer is anything but peanuts. Stora Enso paid a staggering 29 billion markkas (Euro 4.88 bn) for Consolidated Papers, but immediately after the deal was announced Härmälä said it had been a moderate price for an admission ticket to the US market. However, the initial response on the bourse was different and Stora Enso's share price fell 15 per cent in a single day. Nevertheless, Härmälä's vision appears to be proving right. Foreign investors are beginning to find faith in Stora Enso. Alone in September 2000, foreign ownership of the company's shares traded in Helsinki increased by 5.8 percentage points. The company also has listings in Stockholm and New York, where it is likewise doing well.
Big is beautiful
Finland's Stora Enso and UPM-Kymmene, which ranks third in the world, are new arrivals in the international heavyweight forest products league. The change has been rapid. Fifteen years ago the biggest Finnish companies ranked somewhere between 40 and 50, whereas now two of them are among the top three. There has been no significant change over the same period in the rankings of the American companies that have been big for a long time.
There are many reasons why big is beautiful in the forest products industry. "One of the goals of consolidation among the giants is to lessen cyclicity; in other words, to moderate the huge upswings and falls that we have seen in the past," explains Härmälä. "It remains to be seen whether we shall find real long-term stability this way. It will be the first time that we are ready in this large shape to meet a downswing when it comes. We have not had experience of a slump yet."
Stora Enso's production plants red dots
and sales companies yellow dots
In concentration, i.e. growth, Jukka Härmälä does not - so far at least - see any ceiling for the head to collide with. If it does end in some places, it is the competition authorities that will put the obstacle in place. Stora Enso has heard that where some products are concerned a question that might soon be asked in Central Europe is whether any further concentration can be afforded. "We run into the concept of a dominant position in the market. There is no mathematical scheme to measure it. What is involved is only a conception that the competition authorities have formed. I personally believe that as a paper manufacturer we are in no way capable of achieving a stranglehold like that. Unfortunately. There is so much competition around that it will never disappear.
"Quite another question is: at what point does the big become the slow and clumsy? Does its size cause it to begin crumbling, lose its dynamism and momentum? We have seen no signs of that. We're going at full blast," Härmälä says reassuringly.
Cultural differences there are, but the goal is always the same
Stora Enso has 45,000 employees in more than 40 countries and annual sales of around Euro 12 billion. Total output of paper and paperboard is 15.3 million tonnes a year, along with 5.3 million cubic metres of sawn timber and 1.2 million cubic metres of further - processed wood products. The giant has been and is still being welded into an efficient totality from a truly motley array of components. Every company that has been around for a longer time has a distinct culture and every country in which a facility is located has its own traditions. There are many different ways of achieving a good result.
"In my judgement, the merger between Stora and Enso has succeeded well," says a clearly satisfied Jukka Härmälä. "A typical matter on which work had to begin right away was that of creating a mission, vision and values for the company. It is important for all to have something in common, something. Although we appreciate local culture, everyone must strive for the same goals. When one reads a mission like that, it looks like pretty flowery language. Indeed, I said afterwards that it did not matter so much. The only thing that was important was to get people that were complete strangers to each other to get together around the same table to work together. After people had been motivated in that way to cooperate, many prejudices disappeared. Means like this are needed, because things do not just fall into place on their own. We have had only a little experience of practical cooperation with Consolidated, but we have gotten off to a promising start."
The only time during the whole interview that Jukka Härmälä has to search for words is when I bring up the subject of management principles; perhaps his reason for doing so is to avoid offending anyone. "How should I put it... With all kinds of business consultants proffering this and that 'ism', my attitude to them is relatively . Oho, another new gimmick that they're trying to sell. Of course, I've had role models, too. There's been training and further training. That's how the bits of managerial skill have accumulated, deliberately and by chance."
Motives that are sometimes astonishingly simple can influence a major company's more public decisions. When it was reported in the news that Stora Enso's "head office" would be relocated to London, a huge fuss erupted in Finland. Jukka Härmälä slaps the desk in his office in a palatial marble building, designed by Alvar Aalto, right beside the Presidential Palace in Helsinki. "Our head office is and will remain here. What we have in London is the group's international office, where the top management meets regularly. London is a sensible choice in the geographical sense, but there is more than that involved. Only one in three of our employees is Finnish. There is tough competition to hire young people. We have to be able to be an enticing employer or else the Nokias and Ericssons of this world will skim off all the cream. Helsinki or Stockholm, where odd languages are spoken, do not attract young people from, say, Germany. When London is sort of a central place for the management, it beckons in quite a different way. It makes the company a lot sexier - if I can put it that way."
The whole company reflects the boss's Finnish style
"A question that is often asked is whether an international company can be managed in a Finnish style? It can, and yes the head man's way of doing things does matter. I am very Finnish in character. Nothing will change that, no matter how much I try to think internationally. My basic doctrines come from here."
The head of a large international company is constantly on the go in various parts of the world. At the time of our interview he was in Finland only on the Wednesday of that week, the Thursday of the next and not at all the week after that. There is not a sign of tiredness; his physical condition is superb. He tries to play tennis a couple of times a week and had found time for two hunting trips to the forest as soon as the elk season began. "I obviously inherited good healthy genes. Another natural gift is that I get by with quite little sleep and can fall asleep whenever the opportunity presents itself, even in a plane. You get used to dealing with jetlag, but I have to admit you feel it more as the years accumulate." He is clearly proud of his excellent fitness. "When an plane lands in Helsinki at the end of a transatlantic flight, the flight attendants get three days off to recover. I have a quick shower at our head office and then sit down at my desk."
When Jukka Härmälä says that Stora Enso will look quite different at the end of 2001, it is easy to believe him. Different looking, but will it also be the biggest? "We are constantly looking for extra growth and new opportunities."