First half of 2019 - Summer Greetings

The first half of 2019 has been exciting, as usual. The world offers higher focus on the environmental care, higher degree of digitalization and intensive geopolitical discussions like Brexit, global versus regional, trading tariffs etc.

When entering year 2019 Fortaco was cautious in respect of market development. We have experienced a mix of strong growth, stabilization and some decline among our customers. The outlook for the second half of 2019 looks promising, we are expecting to continue delivering a profitable growth. Fortaco offers services from concept to manufacturing, in addition we see the value add for our customers of being a strong technology and R&D provider. Fortaco has launched an EU financed steel fabrication project to develop future production materials, manufacturing processes and product features.

Fortaco participated Bauma exhibition in Munich mid-April, world’s largest off-highway exhibition with more than 620.000 visitors during five days. At the exhibition Fortaco launched the redefined branding concept to further enhance Fortaco’s core values of excellence and reliability. Our stand was visited by the current but also new customers and suppliers. We discussed about Technology, Vehicle Cabins, Steel Fabrications and Vehicle Assemblies.

Fortaco has reached an important momentum, we have announced a collaboration with Tata AutoComp Systems with the aim to offer safety cabins for off-highway vehicles in India, based on technology, design and specifications developed by Fortaco. Our joint strengths will build a strong foundation for the future.

I am proud to be a member of the highly experienced people team across all operations at Fortaco. To meet with customers and suppliers gives continuously energy to explore how we can together re-shape the industry and make it more innovative and a safer workplace. Fortaco has Trust in Tomorrow.

Enjoy the summer with your families, nearest and friends to charge batteries for the exciting second half of 2019.

With best regards,

Lars Hellberg
President & CEO

‘How strong you are inside’

Larissa Shabunova, Managing Director of Fortaco Estonia, talks frankly about industry- and personal challenges.

"Fantastic growth" is how Larissa Shabunova characterizes today's business situation in the off-highway industry. It’s not only overall market growth, she says, but growth due to the success of Fortaco's most important customers winning more market share over the last five years.”

According to Shabunova, Fortaco Estonia's most difficult challenge is balancing customers’ rapidly changing demands vis-à-vis capacity limitations, ensuring delivering on required lead times, right quality, and right price.

Fortaco challenges
To handle a 40-percent growth in net sales over the past two years, Fortaco Estonia has purchased and put into use several large CNC machines and welding robot stations. At the same time, it has added 200 new employees to its Narva factory team. In Ida-Virumaa, a county with a total population of only 140,000, this has not proven easy.

"We've been proactive, always looking a few years ahead," says Shabunova. Her team works closely with vocational technical schools, training the best students at Fortaco while they're still in school and hiring them when they graduate. Fortaco Estonia also works closely with the county's unemployment agency to train and hire new workers. And, of course, Fortaco hires from the open market.

"Our salaries are competitive on the local market," she says, "but this is not the main driver. We're working hard to be an attractive employer thanks to the way we treat people, plus how we establish social- and development programs, support and train workers, fund worker education, and even support their children's sports initiatives."

Fortaco Estonia also has an impressive track record for promoting from inside its organization, and there is no better reference case than Shabunova herself.

First female plant director
Shabunova started her career in an assistant position and constantly worked on self-development. Holding a pedagogical education from Narva, she added an MBA from the Estonian Business School in Tallinn, and found herself in HR- and finance roles.

Working with Nordic companies she found the European work culture motivating. In 2014 Shabunova was named Managing Director of the Fortaco Estonia plant. It was not easy being the first female plant director in the history of the factory. "The factory had 70 years of history with men with strong personalities in the top position," she says. "And these men always had a technical background." She says it was a psychological challenge to be the first woman leading a heavy industry company, but any doubts about her ability dissolved when she showed year-on-year positive results in the factory.

Abilities tested
Shabunova’s leadership abilities were critically tested in crisis situations. Recently, the core problem haunting Fortaco Estonia was related to capacity planning and machinery availability challenges. "We took a holistic view on the customers’ forecasts, putting all forecasted and non-forecasted demands into one software. We were amazed how many non-forecasted requests we got in the end – for example product modifications, new products implementation, new product development, engineering change requests. It meant overall demand was much bigger than original forecasts and, at the same time, problems with machinery from time to time reduced capacity.”

Shabunova buckled down and focused on leadership and execution. "You must find the root cause of a problem and attack it. You plan and then you make sure the planned actions are properly executed.” After a few months, her team started to see positive results. After six months, she says results were excellent. “Results were good enough that nobody asked any more questions!”

Don’t fear a challenge
Shabunova is a non-technical person in a highly-technical job. Yet she says that can play to her advantage. "There is benefit if the leader has a technical background, but there are also disadvantages. You might be tempted to dictate what should be done. For me, however, I rely on my people and give them the opportunity to use their skills. I empower them. And we are very successful technically speaking."

Shabunova realizes that as factory director she not only occupies a high-profile position at the plant, but in the entire community, as well. She frequently finds herself in front of young women who are faced with making decisions about their own futures. Her advice: Don’t run from a challenge. "Men are used to challenges. But women’s first reaction may be 'Oh, I won't cope.' My advice to them is to be braver."

Take the chances life offers you, she says. "My credo is that it's better to take the opportunity. If you don't try it, you'll regret it your whole life. Take it. Give your maximum. You don't yet understand how strong you are inside."

The Economics of Safety

India has always been a source of vast wealth. In the 18th century, before India's deindustrialization at the hands of the British Raj, it held over 24 percent of the world's wealth. Today, India ranks second worldwide in farm outputs. Agriculture employs 50 % of the Indian work force and contributes roughly 18 % to country's GDP. India is a market to be reckoned with, and a great opportunity for companies with meaningful experience to contribute.

Your grandfather’s tractor
If you want to get a sense of tractors in India, do a Google image search using the term “tractors India.” The cabinless machines may make you nostalgic for your grandfather’s farm, the open air and the smell of the harvest.

“Some companies are still producing tractors introduced in the 1960s,” says Aki Komulainen, Fortaco's Director of Cabin Technology, “and that’s because they’re very good machines for their purpose: simple, robust, easy to service, and proven in the field.” Small tractors make sense in India, where the average farm size is estimated to be 1.15 hectares, and there is not a culture of farming collectives where equipment is shared across multiple farms. Government policy also serves to keep farm size small and encourage family farming.

New regs, new cabins
But as India reasserts itself on the world stage, a culture of safety is on the rise. In the next few years, new safety regulations are coming into force for newly manufactured tractors. “No one yet knows exactly what the new regulations will call for, but we can be sure they’ll include European-style ROPS and FOPS,” says Fortaco’s Komulainen, referencing roll-over protection and falling-object protection. “And because of the recent rise in family car comfort in India, farmers are also demanding air conditioning in tractor cabins.” The new cabins will minimize vibrations and noise, include air filtration systems for pesticide handling, and be delivered at a cost significantly lower than in Europe.

Typically, a cabin for the Indian market must be delivered for around 1,500 euros, versus a European cabin which could easily cost ten times more. “But a one-to-one comparison here is not appropriate,” clarifies Komulainen, who notes that a typical Indian cabin is a drop-on cabin with no floor structure, pedals, or heating unit. “However, cabins for the Indian market cannot be stripped-down European cabins. They must be specifically designed and manufactured for the purpose to meet all needed requirements.”

Local partnership
In September 2018, Fortaco and Tata AutoComp Systems Limited signed a memorandum of understanding. Fortaco will provide technical expertise, cabin know-how, and design competence. Tata will provide the manufacturing facilities near the city of Pune in western India, home to many global OEMs.

“The tractor market in India is estimated to be 700,000 units per year,” says Komulainen, “and a good partnership like this is the key to growth in the market.”

Beyond agriculture, other off-highway businesses in India are also experiencing growth. According to Construction Week, manufacturers in the construction and mining equipment market have enjoyed double-digit growth. Aki Komulainen says Fortaco is also looking at the construction market, participating in the last Bauma expo to develop construction contacts in India. There are plenty of Indian OEMs, plus European manufacturers are showing clear interest in the Indian market.”

Bringing flexibility
India continues to compete neck and neck with China for the title of world's fastest-growing large economy. In 2018, India’s economy improved 23 spots in the World Bank’s Ease of Doing Business ranking.

It’s a dynamic market waiting to be served. “Local manufacturers often make cabins for only one specific customer, or they are limited by geography,” says Komulainen. “Fortaco’s 30 years of experience mean we can bring real flexibility to the market.”

Fortaco signs Agreement with Tata AutoComp India

Tata AutoComp signs an agreement with Fortaco Group - aims to manufacture safety cabins for off-highway vehicles in India.

Tata AutoComp Systems Limited, India’s leading auto-component conglomerate and Fortaco Group, the leading European strategic partner to the heavy off-highway equipment have signed an agreement, where in Tata AutoComp will manufacture Safety Cabins for off-highway vehicles in India.

Read the Press Release