KWH Group

KWH Group

Type	Private
Industry	Conglomerate
Founded	1929
Headquarters	Vaasa, Finland
Key people	Henrik Höglund, Chairman Peter Höglund, President Ralf Karlström (KWH Mirka) Hannu Uusi-Pohjola (KWH Logistics) Kjell Antus (KWH Invest)
Products	Abrasives Logistics Services Real estate holdings Plastic plumbing products
Revenue	€ 560 million euro (2012)
Operating income	€ 27.6 million euro (2012)
Net income	€ 18.1 million euro (2012)[1]
Number of employees	2,711 (2012)
Website	KWH Group

KWH Group is one of Finland's leading companies in abrasives, logistics and plastics services. It is headquartered in Vaasa, Finland.

From a modest start in the timber industry, by 1939 it was the biggest timber exporter in Finland, accounting for 26% of the country’s total lumber exports and some 20% of pulpwood exports . The company was the world's largest fox and mink fur producer in the 1960s and 1970s, producing approximately 10% of all Finnish mink furs, equivalent to 2% of world production in 1973.^[2]

After expanding into plastics production in the 1950s, the company was the first in Finland to manufacture expanded polystyrene sheets, and its brand name Styrox became synonymous with all polystyrene products in Finland. Establishing a niche expertise in plastic pipe manufacturing, the company was the first in the world to manufacture a 600 mm diameter pipe in 1964, thereby gaining international recognition.^[3]

Today, the KWH Mirka Group is probably the third largest manufacturer in the world in volume terms in the "flexible abrasives materials" industry.^[4]

History

Wiik & Höglund

Emil Höglund and Edvin Wiik were both in the timber business. Emil Höglund worked as a clerk and Edvin Wiik worked as an independent buyer of timber for the Hellnäs sawmills. As the sawmill was expected to foreclose after defaulting on its payments, both were faced with unemployment. Discussing their options, they decided to establish their own company, Wiik & Höglund, which was founded on August 28, 1929. The company was to engage in trade in round timber, pit props and pulpwood. Wiik acted as a buyer, and Höglund, having studied at a commercial college and spent some time in England in 1928, was responsible for sales and bookkeeping.

Though they had a prosperous first year in business, thanks to their previous experience in the timber sector, the company also faced periodic difficulties, for example during the Depression years of 1930-1933. However, in the late 1930s, the company expanded fast, and became one of the major round timber exporters in Finland, with Emil Höglund travelling as a salesman to Germany, the Netherlands, Belgium, France and Britain. By 1939 Wiik & Höglund was the biggest timber exporter in Finland, accounting for 26% of the country’s total lumber exports and some 20% of pulpwood exports.

Their commercial success allowed them to make investments outside their own company operations, and in 1937 they become a major shareholder in the Jakobstads Cellulosa Ab pulp company (majority owned by Oy Wilh. Schauman Ab), and in 1939 they took a significant stake in the Vasa Rederi Ab shipping company, later buying up the entire stock. Their holding in Jakobstads Cellulosa Ab also increased, and in the 1960s Wiik & Höglund and Keppo jointly held 15% of Oy Wilh. Schauman Ab, making them the biggest private shareholder.

During the war years, Wiik & Höglund exports were virtually halted, and other products were produced to compensate for the loss of exports. Firewood and woodchips now became the most important products, and were mainly purchased by the German and Finnish armies, as well as Finnish State authorities.

After the war, exports of round timber started up again and the company’s previous customers in West Germany, France and the Netherlands again became the biggest trading partners. Profitability was good and profits were re-invested into fixed assets, mainly forest. The most important investment came in autumn 1951, when the plastics company Holmsund AB in Umeå, Sweden, one of Wiik & Höglund's customers, offered them the sole manufacturing rights in Finland. The production started in Vaasa in 1951, and moved to new premises in 1952, where KWH Group’s and Uponor's joint venture plastic pipe plant, Uponor Infra Ltd, is still located today.

Wiik & Höglund made major investments and acquisitions to expand their plastics business. In 1954, the Vaasa firm Lars Berts was purchased, and in 1955 the first plastic pipes were produced. Wiik & Höglund was also the first company in Finland to make expanded polystyrene sheets, which were marketed under the brand name Styrox, a name that is synonymous today in Finland with all products made of this raw material.^[5]

Other companies that were acquired were Forss & Govenius and Nars, both from Jakobstad, which have developed into today's KWH Plast.^[6] In 1969, Wiik & Höglund and Oy Finlayson Ab jointly purchased a rival polyethylene pipe company Muovitehdas Oy in Ulvila, becoming a Wiik & Höglund subsidiary in 1986 during a restructuring of the pipe business.

In the 1970s, Wiik & Höglund embarked on several large international projects, later to be formed into the WH Pipe International division. Pipe projects in Brazil, Iraq, South Korea and Thailand increased the company’s familiarity with these markets. Restructuring and concentration on certain products continued in the 1980s, while the company continued to expand abroad. Factories making polyethylene pipes were set up in Denmark, Thailand, Canada, and in 1990 in Malaysia and Portugal. Industrial piping was added to the production programme when Oy Muotekno Ab, Oy Sul-Mu Ab, Laurolon Oy, Plastilon Oy and the French company Sipap Pipe Systems S.A. joined the Group. As a result of restructuring in the Group, the complete pipe manufacturing was transferred to KWH Pipe, which today is a part of Uponor Infra Ltd, a joint venture between Uponor’s and KWH Group’s infrastructure solutions businesses.^[7]

Keppo

The site of the Keppo mansion has been characterized by small-scale industrial activities for several centuries. With the Keppo rapids providing access to water power, and in combination with the close proximity to the shipping port in Nykarleby, alderman Samuel Lithovius recognized a business opportunity for processing timber from the surrounding forests, and setup up a water-powered sawmill at the site in about 1740.^[8] Subsequent owners developed the site further with a tobacco plantation, spinning mill, pitch works and a linen-, cotton- and textile-mill until 1829 when Keppo was acquired by Carl Otto von Essen.^[9]

During the time of Otto von Essen, the sawmill experienced a boom in business. Peter Malm from Jakobstad, a well-known shipowner and industrialist, became a corporate member at the sawmill in 1840. He financed the sawmill and sold the finished products, while von Essen worked as saw inspector and timber purchaser. In the 1860s, the annual production exceeded ten thousand logs. A fire in 1893 destroyed the sawmill, and no saw mill has been operational at the Keppo rapids since. The von Essen family owned the Keppo mansion until 1899 when Hugo Grönlund acquired it, who then sold it to the Wilhelm Schauman Ab company in Jakobstad in 1906.^[10]

Viktor Schauman, the son of Wilhelm Schauman, bought the Keppo Mansion in 1918, and after a renovation, lived at the mansion with his wife until 1930, when the mansion was again sold. The main building then became an evangelical High School, and was owned by the guarantee association during 1930-1942. After a period as army accommodation during World War II, the house was again bought and restored by the Viktor Schauman family, who lived at the mansion until 1954.

In parallel with his activities within the Wiik & Höglund company, Emil Höglund had been active in mink farming already since 1937, first together with Karl Johan Stuns from Vörå until 1944, and later with Karl-Johan Tidström. Their farming activities expanded rapidly over the following decades and in 1953, the systematic breeding programmes had resulted in a unique mutation, the Finlandia Topaz, which gained world-wide recognition. In 1954, Emil Höglund and Karl-Johan Tidström bought the Keppo mansion with the accompanying 37 hectares of cultivated land and 418 hectares of forest, establishing the company Keppo Ltd. All their mink farming activities were now owned by Keppo Ltd, and a new mink farm was established next to the old mansion. This farm also experienced rapid growth and became the biggest mink farm in the world by 1962. Peak production was reached in the 1970s, when approximately 130,000 skins were produced at the Keppo farm, while the production of all of the Keppo owned farms together were approximately 480,000 mink- and 150,000 fox-skins.^[11]

KWH Group

KWH Group proper was formed in 1984, when Oy Keppo Ab purchased the remaining half of Oy Wiik & Höglund Ab’s shares that it did not already own, from the Wiik family. Oy Keppo Ab had already purchased half of the company from the Höglund family in 1981. A key driver was the need to shape a new corporate culture for the KWH Group, and to formulate coherent strategies, goals, operating principles and ‘rules of play’.

The conglomerate was restructured in the late 1980s and early 1990s, and several divestitures were made, most notable the selling of approximately 13,000 hectares of forest and the share holdings in Oy Wilh. Schauman Ab, as well as the gradual selling of all activities related to the mink and fox farming business.

According to the new strategy, the Group’s resources were to be focused on developing its core operations, which were defined as KWH Pipe, KWH Plast and KWH Mirka. All other aspects of the operations were gathered together within KWH Invest. In the beginning, KWH Pipe received the lion's share of new investments. A new production facility was opened in 1990 in Portugal,^[12] output in Canada was doubled and new and expanded production facilities were opened in Malaysia and Thailand, while operations in India began in 1992 in the form of a joint venture. Additional investments were made in Sweden, Poland and Germany. However, due to changing market conditions, the operations in China, Germany, the US and India have since closed.

A second area of investment was KWH Mirka, which from modest beginnings now have achieved a leading position,^[13] especially in automotive refinishing (ART). In volume terms, KWH Mirka is one of the five biggest operators globally in the coated abrasives sector.

In 1999, Prevex became a subsidiary of the KWH Group following the purchase of additional shares, and in 2003, Prevex became a fully owned subsidiary. In 2003, Oy Prevex Ab was the most important part of the KWH Invest division.

Divisions

KWH Mirka

KWH Mirka manufactures coated and non-woven abrasives and electric sanding machines in its locations in Jeppo, Oravais, Jakobstad and Karis, all in Finland. The core business segments are automotive refinishing and industrial finishing. KWH Mirka exports about 95% of the production mainly to Europe, the USA and Far East.

The product range includes abrasive materials, polishing compounds and sanding machines for different types of abrasive processes in automotive refinishing and production (OEM), the manufacture of composite parts, furniture production, metal processing and for sales via the hardware, paint and machinery trades. Sales are increasingly in the form of systems sales, for which reason the product programme has been augmented by products such as sanding discs, backing pads, sanding and polishing machines, vacuum cleaners and other accessories.

KWH Mirka is one of the global market leaders in its largest business segment, Surface Finishing (including automotive refinish (ART)), automobile manufacturing (OEM) including subcontractors), marine and composite. In the Wood market segment, focus had been on small and medium-sized users. The Power Tools business unit is formed for the manufacture and developing of sanding machines and accessories. The development unit Engineered Surface Finishing develops microproducts for the OEM sector and searches for new attractive market areas.

KWH Logistics

KWH Logistics consists of four business units: KWH Freeze (Cold Storage): cold storages in Vantaa and Inkoo, Finland; Port & Sea, Freight Forwarding and Industrial Services: port operations, freight forwarding and international transport; complete logistics solutions. Present in 10 ports in Western Finland and in Hamina.

KWH Invest

Prevex: siphon systems for kitchen and bathrooms, and customer specified products. The market leader in Scandinavia for kitchen sinks. Factory in Uusikaarlepyy, Finland. Exports 80%.

Strategic holdings - Uponor Infra Ltd, 44.7%: different plastic pipe systems.

References and footnotes