Sandvik Materials Technology has been steadily on the up since Göran Björkman took charge in late 2017. A strong economy and a focus on driving improvements in the mix, prices and productivity are some of the reasons, he says.
The Sandvik Materials Technology business area exceeded expectations in 2018, with a growth rate of 13 percent for sales and an operating margin of 9.2 percent for the full year. What’s the secret?
There are no secrets. The point is that everyone knows what’s required if targets are to be met, and how they can contribute. We have a clear follow-up structure for both activities and results, and a strong economy makes it easier to raise prices and make changes to the product mix. We’ve been able to afford to turn down low-profitability deals.
What gives you most satisfaction about 2018?
That we succeeded in increasing our invoicing by 13 percent without having to bring in more resources. We got more out of what we have, and that’s a success. I still believe that there’s room for continuous improvement.
One of your targets is that every factory and unit should improve cost productivity by 1 percent a year. What does that mean?
If inflation is 1.5 percent, we have to improve our cost efficiency by 2.5 percent, excluding costs of materials. We must absorb inflation and at the same time slightly increase competitiveness.
How do you achieve that?
By being careful with costs, and by making sure that everyone is familiar with the targets. When I’m out meeting our employees, I make sure that everyone knows what the targets are, and what each and every individual can do to become a little more efficient every day. You need an efficient structure to create a culture of continuous improvement.
You joined Sandvik 29 years ago as a process developer in a pipe factory. You were appointed as factory manager as a 27-year old and as a production director a few years ago. What has made you loyal to Sandvik?
Sandvik is a fantastic company with so many different businesses, and it offers excellent opportunities to develop into new jobs without changing employers.
What do you enjoy most about your current job?
I find most of it fun, and I get a kick out of change. I like being out where the business is, and would like to do that more.
Energy producers are an important customer segment to Sandvik Materials Technology. How’s that business being affected by the energy transition in society?
This is an existential issue to me, both professionally and personally. As a business owner, I see the energy transition and the ambition of increased sustainability both as a necessity and a major opportunity. The transition brings demands, which is great news for materials technology companies like Sandvik, since we are good at products that improve energy efficiencies for users. Many of the renewable energy sources depend on the ability to store energy, for example, in fuel cells, to which we provide parts. Energy efficiency often means demands for lightweight, high strength, good corrosion resistance and high heat resistance, in which our materials are world class. The transition from gas to electricity, for example, in industrial heating is a good example of an area in which we are well-positioned. We also have several applications in solar energy and hydrogen.
How do you see the outlook for 2019?
It’s difficult to speculate. We’re watching developments closely and have made preparations for any decline, but my feeling is still that the future is relatively bright. The part of our business that is associated with big projects, where customers undertake large investments, comes late in the economic cycle, and it is in this area that I believe an improvement will emerge in 2019. But, if and when there is a decline, we know what we have to do.
Where would you go on the offensive?
There is market share to gain – both geographically and in various segments. Our market shares show a rather uneven pattern; we are much bigger in Europe than in Asia and North America. That means potential to grow. We are big in energy, but not quite as big in the aerospace industry and medical technology. Potential to expand there, too, in other words.
You’re very often first in the office at half past six. Why’s that?
It’s not about “The captain should be first on board”, just that I operate better in the morning than in the evening. Also, I can be at home in time to have dinner with the family.
How important is diversity to you?
It’s very important. In my management group, 40 percent are women. But we need more members with a non-Swedish background.