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​​​Previously, the company did every­­thing itself, including the engine. Now, the component manu­facturing has been transferred to the subcontractor chain, one piece at a time. Sisu uses Mercedes-Benz truck engines, transmission and cabs.

– The key question is who develops the products, says Timo Korhonen, owner of Sisu Auto.

Finnish wheels will keep on turning

Petja Partanen | 24.5.2017

​Sisu and Valtra are brands that refine Finnish engineering competence into cutting-edge work machinery. In the middle of the digitalisation frenzy, the Finnish transport vehicle industry is doing well, providing employment to more Finns than Nokia ever did even during its golden years in the mobile phone business.  

​The Sisu frame structure comes from a totally different world than that of any of its competitors, Timo Korhonen, Owner and Managing Director of Sisu Auto, points out standing next to a five-axle truck frame. 

The heavier the truck and the more difficult the terrain, the more likely it is that the vehicle chosen for the job is Sisu. Those driving gravel and timber appreciate the driving properties offered by the stiff Sisu ladder frame, whereas entrepreneur-owners value the fact that the factory sells the trucks fully equipped, completely ready for action. 

After seven years of economic depression, the future of the Finnish truck manufacturing industry looks bright again. The Karjaa plant is in the process of hiring ten new employees as soon as possible. The weekly production rate will increase from three to four trucks.

– Last week we received five new orders.

Throughout its history, Sisu, founded in 1931, has been an engineer-driven company, always developing something new. Engineering expertise kept the company afloat even when the production hit rock bottom. The financial crisis that began in 2008 totally froze the truck market in Finland. However, the new owner Timo Korhonen succeeded in getting the company’s consulting business going and keeping the product developers on board over the most difficult times. 

– Currently, the order backlog in consulting exports is EUR 20 million, Korhonen points out.

The biggest customers are Chinese truck manufacturers.

TimoKorhonen_Sisu_E8R8126.jpgMajor share of Sisu vehicles are fully equipped at the factory. The frame is tailored to the customer’s needs at the Sisu factory. 

Spring is the peak season in a tractor factory

In Suolahti, a part of Äänekoski, almost 400 kilometres north from Karjaa, Arto Hietanen, Research & Technology Manager at Valtra, takes a look at the board on the factory wall.

– Today, we will finish 33 tractors.

Germany, the UK, France, Ireland… The destination is marked on the side window of each tractor advancing on the production line. Spring is the busiest season, since many people want their new tractor before the growing season begins. 

Even though the demand for tractors has been low as well, Valtra has succeeded in increasing its market share in several countries. The main reason for that is the introduction of the fourthgeneration Valtra product family. Valtra’s every model series has won the Machine of the Year title. The robust T Series won the title in 2015, the medium-sized N Series in 2016 and the small A Series, to enter the market shortly, in 2017. 

The history of Valtra includes several technical innovations from a safety cab to continuously variable transmission, but in recent times it has become more difficult to stand out from competitors by technology alone. 

– Transmission, hydraulics and the engine simply need to function reliably and well, Arto Hietanen states.

Instead the user interface, or what the machine looks, feels and sounds like, has become an ​increasingly important competition factor. Even though the design of Valtra machinery has won several awards, Hietanen points out that it is not a question of beautiful appearances only.

– The design begins from functionality.

For example, the highly-acclaimed Valtra agility derives from the fact that the radiator, the widest component of the engine, is placed above the front axle.  

In the basic concept of the new machines, everything is in the right place. According to Hietanen, one of the secrets of success is rather mundane. 

– Quite many of our designers are part-time farmers. They understand the customer needs more than well.

Customer is the king

Listening to the customers is the part of doing business that Finnish machinery manufacturers excel at. For quite some time, Valtra has been manufacturing tractors on the basis of customer orders only. Valtra’s Unlimited studio tailors each product according to the specific customer needs, using for example special paints, upholstery and audio systems.  

Sisu, specialising in robust special vehicles, goes even further than that. 

– When our volumes are small, we need to produce even finer machinery. It means that we need to push the limits in product development, Korhonen points out.

A good example is the Sisu maintenance vehicle with all-wheel drive designed for oil fields to speed up well maintenance. The frames of the “standard vehicles” in the Polar series are also designed separately for each customer, all the way to every bolt hole, and fully equipped for the first drive. This is a clear competitive asset compared to competitors selling nothing more than chassis. 

– We are responsible for the entire product, the frame under the vehicle, and every system mounted on it.

The customisation can be done properly only when you know every detail of the product. In Korhonen’s opinion, management of entities is the biggest asset of the Finnish engineering industry. 

– When Finnish designers make products, we have a good picture of what our customers intend to do with them. And, on the other hand, we understand how to work steel and other materials so that they can be transformed into parts and, finally, components.

In China, the situation is totally different, says Korhonen who know the Chinese automotive industry well.

– They may have copied the final product, but they have no idea why the product has the kind of properties it has.

Finnish machinery manufacturers have decades of experience of building up own technology networks. So, no wonder there is demand for the consulting expertise of Finnish Sisu engineers in China. 

Korhonen says that the question he often needs to answer is how a company with only a hundred employees can build such special vehicles, world-class products.

– I explain that we do not actually need to make investment in anything else but product development; in everything else we rely on our supplier network. The component manufacturers do their own R&D, and in Finland technology is developed in collaboration between companies, universities and VTT, Korhonen says.

The Chinese find this story very inspiring.

– There they try to build separately within each company the same kind of competence VTT has.

The owner matters

If the Finnish engineering industry has been able to retain its engineering competence, the same cannot be said about the ownership within the sector. In 1994–2004, Sisu and Valtra were part 
of the same group: first it was owned by the State of Finland, then Partek and finally Kone. 

In 2004, Kone restructured its assets, at which point the Valtra tractors and the diesel engine factory ended up under the ownership of the American Agco, and the Sisu trucks in the hands of a Finnish investor group.  

Jari Rautjärvi, VP and Managing Director of Valtra, does not miss the ownership changes of the past. 

– We were like driftwood. Making tractors was nobody’s core business.

When the American agricultural equipment manufacturer Agco wanted to purchase Valtra’s tractor production, the opposition was hard. It was a general fear that the Suolahti tractor factory and the Sisu Diesel engine factory in Linnavuori would be closed down, but the total opposite happened. 

– They have made good investments in us, both in product development and factories, Rautjärvi points out. 

Now the Linnavuori engine factory supplies engines not only to Valtra, but also to Agco’s other tractor brands: Massey Ferguson, Fendt and Challenger.


jarijaarto_1.jpg
– Once we have introduced the best models in the class into 
the market, it is much easier for us to get distributors interested in our products. This has manifested itself in an increased market share, says Jari Rautjärvi, VP and Managing Director of Valtra. (left). 

TimoKorhonen_Sisu_E8R7986.jpg
– In modern tractors, transmission and hydraulics are largely IT-controlled. We have received good feedback on the usability of our tractors, says Research & Technology Manager Arto Hietanen.

From a consultant to a truck factory owner

Sisu was also acquired by someone who understands the truck business; and he is Finnish to boot. When Timo Korhonen, who had run Sisu’s product development and racing team, returned to the company in 2006, the business was in deep trouble. 

– But we had a bloody good team.

Soon Korhonen owned the truck factory – and quite a substantial bank loan on top of that. If the former owners were seldom seen at the factory, Korhonen is the first one to arrive in the morning. The owner is also a familiar sight at Sisu test drive events. 

– I always attend them if I can. It is important to meet customers. It builds trust. When the customer buys a Sisu and everything does not work as it should, he knows who to blame.

The owner who gives a face to business and the new business model have been successful.  Last year, Sisu already made some profit, 10 per cent of the turnover.

Valtra cannot rest on its laurels either, even though its owners are on the other side of the Atlantic. 

– Everything depends on us. We must remain really good to succeed in the competition within the group, Rautjärvi states.

Now Korhonen already dares to laugh at the talk of former years that mechanical engineering industry is not worth investing in, because it will be moved to China or India anyway.

– Today, the Finnish transport equipment industry, the wheeled machinery, and ships 
and cranes, will make a turnover amounting 
to more than EUR 7 billion, and together with subcontractors it provides direct employment 
to 18,000 Finns, and double the amount when indirect employment is included, Timo Korhonen 
reminds us.  

More than 75 per cent of the production is exported, and the sector’s contribution to the national economy is considerable. Let us compare: in its peak year 2000, the mobile phone giant Nokia employed slightly under 25,000 people in Finland. 

It seems that engineer-driven manufacturing of large machines will continue to be what Finland excels at. 

Valtra

  • 895 employees, 116 product developers
  • Annual production: 7,000 tractors
  • Owner: Agco
  • In R&D, collaborates with VTT, Aalto University, Lappeenranta University of Technology and Tampere University of Technology. VTT inspects the Valtra products in compliance with the EU Tractor Directive.


Sisu Auto​

  • 100 employees, 25 product developers
  • Annual production: 150 vehicles
  • Owner: Timo Korhonen
  • In R&D, collaborates with VTT, Oulu University and Lappeenranta University of Technology.



Jari Rautjärvi

  • Age: 54 yrs
  • Born: 2 January 1963
  • Education: MSc (Econ)
  • Career: AGCO Corporation Vice President & Managing Director, Valtra 2007– (Global Brand Lead Valtra, 2015–); Valtra, operations in Latin America, CFO, 1999–2003; Valtra EAME & AGCO Nordics, Senior Vice President, Information Management, 2004–2007; Valtra EAME, Senior Vice President, Marketing, 2007
  • Family: married, with two children
  • Interests: organisational activities, incidental exercise and travelling
 

Timo Korhonen

  • Age: 58 yrs
  • Born: 1958
  • Education: mechanical engineer
  • Career: Marine Engineer Officer, Finnish Navy 1978–87; Product Development Manager, Oy Sisu Auto Ab, 1988–1996; Product Manager for W46 and W64, Wärtsilä Diesel Technology Inc; own company DRT Diesel Engineering Oy as of 1997; Senior Vice President, Product Development, Oy Sisu Auto Ab 2007; Managing Director as of 2010; entrepreneur, Suomen Autoteollisuus Group as of 2013
  • Family: married, with two children from current marriage, and two children from previous marriage
  • Interests: Chinese language and culture, history of means of transport, old Alfa Romeos


Arto Hietanen

  • Education: mechanical engineer, Technical College of Jyväskylä
  • Career: Researcher-installer at Valtra's product development section 1985; soon after this appointed as Designer in Charge at the Transmission Division; Manager, Transmission and Hydraulics Division 1990; Senior Vice President, Product Development as of 2009​




1917 Finland gains independence.

1926 The State of Finland establishes a rifle factory in Tourula, Jyväskylä.

1931 Suomen Autoteollisuus Oy begins the manufacturing of Sisu trucks in Helsinki.

1942 VTT is established under the name of Technical Research Centre of Finland. 

1951 The first Valmet tractor is completed at the Tourula factory.

1975 State becomes the majority owner of Sisu.

1979 Valmet purchases the tractor production of Swedish Volvo.

1986 A Sisu truck is powered by alcohol, and a Valmet tractor using rapeseed oil. Testing with alternative fuels is performed by VTT.

1991 Jouko Kallio drives Sisu Racing’s SR 340 and takes ten consecutive wins from the pole position on the European Truck Racing Championship tour, driving to overwhelming victory. The racing team led by Timo Korhonen won the European Truck Racing Championship three times in a row.

1994 Sisu and Valmet are merged. The goal is to list the state-owned wheeled vehicle industry on stock exchange. 

1997 Partek purchases Sisu. The Valmet tractor factory becomes Sisu Traktorit Oy, and soon after that Valtra Oy. Sisu and Renault begin cooperation in truck manufacturing.

2002 Kone Oy purchases Partek.

2004 Kone dismantles Partek. Valtra’s tractor operations and Sisu’s diesel engines are sold to the 
American company Agco. A Finnish investor group purchases Oy Sisu Auto Ab.

2010 The ownership of Sisu Auto Group is transferred to Olof Elenius and Timo Korhonen. Sisu Auto begins cooperation with the world’s largest commercial vehicle manufacturer Daimler AG. The new Sisu Polar range is introduced.

2012 Sisu Polar is the Truck of the Year in Finland.

2013 Valtra establishes the Unlimited studio to tailor its tractors. Timo Korhonen purchases all Sisu shares.

2014 Sisu Polar Euro 6 product range to the market.

2016 The fourth-generation Valtra tractors gain several awards. 

2017 Finland 100 years, Sisu 86 years, VTT 75 years, Valtra 66 years.



Photos Miika Kainu


 

 

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