When Keppo bought up the majority holding in Wiik & Höglund in 1984, the Group’s structure changed dramatically. Earlier, fur farming had been the main sphere of operations, but now over 50% of turnover came from the plastics industry. Turnover rose from FIM 249 million in 1983 to FIM 787 million in 1984, and personnel from 972 to 2,451.
One key activity during the early days was the shaping of a joint corporate culture for the new organization, the KWH Group, based on newly formulated strategies, goals, operating principles and ‘rules of play’.
At the time, the enterprise was organized into nine divisions, despite the fact that some operations had been sold off to finance Group expansion.
1988
In autumn 1988 most of the divisions were demerged, with the aim of creating a clear separate identity for each of them with extensive independence in terms of business strategy and operations. The parent company changed in character, becoming more of an investment company. At the same time a large proportion of its total forest holdings of about 13,000 hectares were sold. Its holding in Oy Wilh. Schauman Ab was also sold.
Oravais Konfektion was wound up in 1988 and the Kauhava production unit was sold. The global crisis in the fur business in the late 1980s led to a drastic stripping of production and several farms were closed down. After several years with heavy losses, the Group put an end to its fur farming business in 1992, after 55 years in the sector. The majority holding in KWH Monäs was also sold to Rehuraisio Oy in 1989-1990. Thanks to the wide range of operations and flexibility in the Group structure, the Group was able to weather this crisis without suffering any major setback, despite showing a loss for three consecutive years.
A new sector was incorporated into the Group in 1986 when KWH Freeze of Vantaa, a company storing and distributing frozen foods, was acquired.
1989 - 1992
During the period 1989-1992, operations were radically restructured. The insight that the Group did not possess the resources needed to develop all its units made it clear that priorities would have to be set. This process was speeded up by the gloomy economic climate. In 1991-1993, Finland’s GDP fell by a total of over 12 per cent and unemployment skyrocketed. The fall had not been so rapid even in the depression in the 1930s.
During three years when all familiar concepts were overthrown and the government had to go in and rescue the Finnish banking sector from collapse, the KWH Group was restructured from the ground up. About 15 companies were sold, but about 10 new ones were also founded or acquired. Anything to do with fur farming was sold off. KWH Freeze was also streamlined, in that over 30 distribution vehicles were taken out of service and sold. Some smaller companies which had been collected within KWH Invest were also sold. The considerable real estate holdings in the form of cold storage facilities were sold to an investment company in 1991 and leased back on a long agreement.
The most drastic restructuring took place in the pipe division. The industrial pipe division within the Muotekno Group was sold to business partner Neste Oy. KWH Tech, which specializes in machine technology, was bought out in a ‘swap’ with Muotekno, as were the district heating pipe operations. WH-Profil was taken over in its entirety by the Danish company Inter Primo A/S.
According to the new strategy, the Group’s limited resources were to be focused on developing its core operations, which were defined as KWH Pipe, KWH Plast and KWH Mirka. Other aspects of operations would be gathered together within KWH Invest.
To begin with, KWH Pipe received the biggest share of available resources. Operations were characterized by energetic strategies involving new acquisitions and establishment on new markets. After several years of successful project sales to the Iberian peninsula, a new company called KWH Pipe (Portugal) Tubos Lda was registered, and started production in 1990. Operations in Canada were doubled through the acquisition of a pipe factory from Du Pont Canada Inc, in Saskatoon, Saskatchewan. In Southeast Asia, a new factory building was opened in Thailand, while pipe production started in Malaysia. Operations in India began in 1992 in the form of a joint venture company in Bombay.
New acquisitions were also made closer to home when Nortena Plast in Norsjö, Sweden, was bought in 1990. The factory was moved to Borås six years later. Attention also focused on the former socialist countries in Eastern Europe, whose civil engineering and infrastructure were lagging behind and the need for new construction created good potential for operations. In 1992, a pipe factory was set up in Erfurt in Germany. In 1991, KWH Tech delivered machinery to the district heating pipe factory Finpol-Rohr Ltd in Poland, while also becoming a part owner. Production of polyethylene pipes started in Poland when the factory in Belchatow, 170 km south of Warsaw, opened in 1995.
The changes in the early 1990s are perhaps best mirrored through changes in Group personnel. Between 1990 and 1991, the personnel figure fell by 576, from 2,150 to 1,574. The biggest fall, 334 people, was recorded at KWH Pipe. Turnover fell by 12.3%, from FIM 1,125 million to 987 million.