Hard work and commitment can overcome adversity, as the success story of Jarparo Oy in Järvenpää shows. The company's trump cards are integrity, honesty and open communication, which help it to retain skilled labour and attract new customers from Finland and abroad.
Jarparo Oy, based in Järvenpää, stood at a crossroads less than ten years ago. The company, which specialised in the manufacture and development of sophisticated industrial capital goods, had been taken over by a new owner in a takeover, but the conditions were very difficult. The turnover in the first year was less than a quarter of the turnover estimated in the cooperation agreement.
"The contract said that the selling party would buy 100 percent of their production needs from us in the first year, but when they failed to close the deal, the 100 points were zero to zero," says Jarparo CEO Pekka Bollström.
The little money coming in was tied up in acquisitions. The projects under work were such that 60% of the value of the project was procurement, while the value of the work was only 40%. The result was a severe cash shortfall.
"We were in two stages: do we throw in the towel or do we seek the protection of corporate restructuring?"
Bollström and the other members of the management team still decided to do everything they could to save the company. A restructuring was sought in 2015 and was completed a year later in 2016.
Radical organisational change
Bollström calls the restructuring period a "seven-year probationary period". The entire company was reorganised, with all expenses being scrutinised down to office supplies and tools.
One important area for savings was that the previous large owner's organisation did not prove to be cost-effective for a company of Jarparo's size. No employees had to be made redundant, but the number of clerical staff was too high for the size of the business.
"It took a while before we dared to make drastic enough changes. But we had to get our cost structure to make sense in relation to turnover."
When the coffers were at their worst but money was needed for current expenditure, staff were even asked if they were prepared to take a temporary pay cut. Around 95% of staff agreed.
"The money was paid back to the workers when the cash situation improved."
Open communication
The renovation was carried out at Jarparo with the whole company working together. Everyone understood the importance of the measures.
"When I first told people about the renovation, I was worried that people would panic and run away to other jobs. In practice, hardly anyone left. It speaks volumes about the commitment and responsibility of our employees," says Bollström.
Tero Olander, responsible for procurement and production, believes that one of the factors behind good company spirit is honest communication, even in the most difficult times.
"Every couple of months, the team is called together and told where we are going. These things have kept the spirit of doing things alive. Without transparency, the best people would have quickly left for other employers."
The same applies, of course, to relations with customers: things are handled transparently and openly.
Keep the timetables
It is also largely thanks to the staff that the company is able to compete on high quality at a time when many large companies have outsourced their manufacturing to lower-cost countries. Some of these countries receive EU grants for their industries, so the competitive situation is not easy for companies operating in Finland.
"Our strength is our full service portfolio. We can provide a complete process or mining machine in one order. This makes the work of the purchasing organisation easier," says Bollström.
Another of Jarparo's competitive advantages is security of supply. Once a schedule has been agreed, the company will do everything in its power to meet that schedule.
"For example, in the process industry, when a buyer has planned a shutdown for a specific day, the goods have to be there. Whatever the delays in the early stages of the project, we do the final touches to get the equipment ready on time."
According to Olander, employees' commitment to their own work and its objectives is the result, among other things, of the continuity in the organisation of work. As far as possible, the same people manage projects from start to finish. Flexible working hours also improve staff commitment.
"For example, it's really important for families that working hours are flexible to accommodate when children need to be dropped off or picked up," says Olander.
Growth and expansion
Jarparo's turnover has grown steadily since the company's restructuring. Last year it was already up by twenty percent, and this year it is estimated to be up by fifteen percent.
Plans are currently underway to build a new production hall, which will enable production also for customers whose products require dust-free premises.
In terms of customers, the company is targeting a wider range of industries. As the business cycles in different sectors coincide at slightly different times, the more legs you have to stand on, the safer you are. A large proportion of the products supplied by the company already go abroad, but the company is also aiming for a more international range of customers.
"Perseverance and following a sensible plan have paid off. Profitability is improving all the time and we are moving into the future in a controlled way," concludes Bollström.