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Fortaco team wants to thank you for the extraordinary year

2020 is the year we will remember as the global crisis for the human beings. The corona virus is here to stay, and the world must be ready to accept the ‘new normal’ until a vaccine will prevent the illness. The Covid-19 disease has caused sever damages for the human beings and the financial turmoil for some, for some not. The way to socialize, live and work has changed.

The off-highway equipment industry has faced impacts, in the spectra of slight to intensive. At Fortaco, we have turned around the way we are operating since mid-March: secured deliveries on-time, optimized individual employee protection, optimized sales to delivery planning with business partners, secured healthy cashflow, stopped travelling, met business partners in virtual and limited face-to-face meetings only when absolutely necessary.

Our philosophy is simple – no panic, we are professional and will manage the crisis. With speedy actions by all Fortaco teams we have secured healthy liquidity and good profitability, despite of decline in sales.

Dear customers, business partners and colleagues, we want to thank you all for the extraordinary year 2020 and for the tight collaboration.

Wishing you a Peaceful Christmas Time with your nearest ones and a Successful Year 2021 – aligned with the ‘new normal’.

Stay safe,
Fortaco Team

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Instead of traditional Christmas gifts, Fortaco has made a donation to charity:


Picture of Marko Manninen, a Foreman at Fortaco Kalajoki Factory with Fortaco Logo in the background

Opportunities On Solid Experience

Marko Manninen, a foreman at Fortaco Kalajoki factory, needs no introduction. Known as a hardworking, responsible and straightforward person, he has worked at Fortaco for 22 years in various roles. Those roles contain positions in different industries and business sectors, including assembly, welding and warehouse operator in shipping, construction and energy businesses – he also has worked as a chief shop steward for several years. "I like my work being versatile. Every day is different, which keeps it very interesting and motivating."

Marko thinks the team spirit is good among employees at Business Site Kalajoki, cooperation and interaction with different employee groups is very enjoyable part of his work. Marko's superior says he is very committed and showing a great ability to develop his professional skills.

"Marko is raising necessary issues and works towards solving them. He is very focused on safety and production efficiency, as well as developing the daily production processes", says Jyri Paavola, General Manager, Fortaco Kalajoki. "He has a long experience, which certainly helps him to utilize his knowledge and capabilities in the current position".

This year, Marko was promoted to a foreman position in welding and surface treatment, he finished his foreman management studies at Central Ostrobothnia Vocational College as apprenticeship training program. The program was executed in cooperation with Fortaco, studies were performed both at the college and at work. As studies required a lot of work outside of office hours, time management and good organizational skills were necessary. With Marko's self-directed manner the planned schedule with studies was kept.

"During the apprenticeship training program, organizational changes were made at the Kalajoki factory and Marko's area of responsibility expanded from welding to also include surface treatment. “He succeeded in his role very well, even with the expanded responsibilities together with the studies”, Paavola commends.

Nowadays, Marko's responsibilities gather around the daily operations, monitoring of schedules, quality control, material flow control, development of work processes and interacting with production workers and supervisors at Business Site Kalajoki. Studies were a great continuum for his career and provided right tools for a supervisor's need at a work place.

"I really appreciate I have an opportunity to impact on business unit operations and performance, and also respect that the safe working environment is a high priority within Fortaco".

What does Marko do outside of work? Seems like he also likes his free time to be versatile, as he enjoyes different outdoor sport, dog shows, travelling around Finland; and is planning to start motorcycling hobby again after several years.


Subcontracting fair

Fortaco goes virtual - again

Fortaco is participating Subcontracting Trade Fair. Let's meet up online for networking and pick up the latest insights and industry innovations!

Subcontracting Trade Fair brings together industrial companies, experts and decision-makers. It is packed with new innovations, and you can meet with peers within the industry from Finland’s and Europe’s B2B scene.

This year, we will meet each other in a virtual Subcontracting event on 8–10 December. There will be plenty of live program, pre-recorded videos, and great opportunities for networking with experts and professionals in the manufacturing industry. Participation in the event is free of charge for visitors.

Join the networking event together with us!

Link to the event: https://www.alihankinta.fi/fi/

 

Subcontracting fair


Narva factory extension timelapse

Ever wondered, what does it look like to build a 10 000 m2 factory? Our partner Rand & Tuulberg not only did a great job as our partner in the factory extension project, they also filmed and edited an enjoyable clip for us to watch.

Layer by layer the magic was made - thank you for a good cooperation!

https://www.youtube.com/watch?v=kwKoaQk4C_0


Construction Equipment Forum 2020 goes virtual

The aim for Construction Equipment Forum Nov 30 - Dec 1 is to network the players along the entire value chain within the construction equipment industry, even across national borders, and enable exchange of knowledge and experience. In order to ensure the aim for CEF will be achieved, it has been decided to arrange the conference as virtual, due to recent development in the spread of Corona virus.

The management conference brings together the players in the entire value creation chain within the construction machinery industry. More than 500 manufacturers, suppliers and customers from all sectors will exchange information in virtual during two days, make new contacts, and enrich each other's lives. The event is rounded off by a virtual innovation exhibition with 60 inspiring solutions and products.

Fortaco Group will also participate by a virtual stand. Dr. Rafal Sornek, Senior Vice President, Fortaco Technology, will give an online presentation on “Residual value of a machine - value enhancement through combination of IoT and blockchain technologies”.

Read more about the Speakers & Experts: https://www.constructionforum.eu/speakers

We are inviting you to register and visit the conference by using this link: https://www.constructionforum.de/anmelden

Welcome – and see you in virtual!


manufacturing

People of Steel

If you can dream it in high-strength steel, Fortaco Jászberény can probably make it.

If it’s made of high-strength or mild steel and weighs between 100 kilograms and 60 tons, Sebastian Kun and his team at Fortaco in Jászberény, Hungary, can probably manufacture it.

While the team mostly produces steel structures for customers in materials handling, energy, and mining, they can also make you a chocolate mixer.

Flexible enough for chocolate

Sebastian Kun, Fortaco Jászberény's sales manager, doesn't foresee a big future for Fortaco in the confectionary industry, but the manufacturing of chocolate mixers are what happens when being agile is in your DNA.

"We're a reliable partner for OEMs, because we’re flexible enough to withstand market fluctuations," says Kun. "In our three business segments we try to serve the top three OEMs. Each of these segments has different market fluctuations, and not being bound to one single segment allows us to balance capacity with demand."

Kun says the chocolate mixers are a real novelty for guests at Jászberény. “Visitors are baffled that the mixers aren’t stainless. But chocolate has so much fat that stainless isn’t required. The customer’s cost savings by not using stainless are significant. We grind the surface, treat it with food oil, and it’s ready to go.”

Secret tank manufacturers

Even before the Jászberény plant joined the Fortaco organization in 2013, it had a history of flexibility. Founded in 1951 under the name Aprítógépgyár, it produced stone crushers and classifiers. Unofficially, it also made military equipment. At one point in its history, it also designed and made its own rolling machine.

Kun joined the Jászberény plant in 2007. He combines a pedigree in steel fabrication — his father owned a steel fabrication company and machine shop — with languages. “Manufacturers in Hungary are very dependent on the German market,” he says, “and surprisingly few engineers of my age were fluent in German.” Born to a German mother, Kun found that his German, combined with his English, made him valuable to both suppliers and customers.

He started in the purchasing department for ready-to-weld parts, implemented the ERP system, and in 2009 switched from sourcing to sales, a move he jokes was “from the dark side to the light side.” He became a part of the cost calculation team, then a sales engineer, and in 2017 became Sales Manager. Kun runs a team of five, three in logistics and two in sales, backed by the plant’s other 400 team members.

Happy birthday, Jászberény!

Next year, Fortaco’s Jászberény plant will celebrate its 70th birthday. What would Kun like to receive as a gift? More customers is one thing. He sees capacity for taking on more clients looking for 20- to 30-ton products and seeking support from the design stage through to final production of plug-and-play equipment.

“We’re uniquely equipped to handle project- and serial business in manual- and robot welding, plus modular assembly,” he says, nothing that the plant is already doing modular assembly for clients like Komatsu and Liebherr. “We support the customer with ready-to-install modular products. When their product isn’t traveling from one factory to another, there’s a victory with reduced lead time and more flexibility.”


New Fortaco Narva Factory Complex from outside

Building New Opportunities

The new factory in Narva was launched this autumn, signifying a milestone in the industrial development of the region. The factory extension project was kicked-off in 2015, when lack of space, capacity constraints and overload of new project implementations were foreseen.

Andrey Ponomarev at Fortaco Estonia was appointed as Project Manager. Working in this kind of project was familiar to Andrey, he has worked in similar start-up projects in the automotive industry. “But this was the biggest project, which I have participated from the idea and design stage. What is great, that our ideas and wishes have now been implemented in reality.”

For two years, before the construction work was started, Andrey participated the project documentation development, and paperwork took quite a long time to be finished. When a contract was signed, things started to be moving on fast. “The most memorable moments were, of course, in the beginning and at the end of construction. We built a good cooperation within our Fortaco team and with our external partners. The project was like a fresh wave for our daily routine jobs.”

Like in any project, there are always things you can learn from, and which need to be taken into consideration to make the next similar project easier. The biggest challenges were found during the construction work, mostly related to extra work, and to keep up with a somewhat tight schedule. In Fortaco team we had some parallel projects ongoing, the new equipment was needed to be purchased and installed to the right places at the same time when the new factory started to take a shape. “We had to investigate each task carefully, and also fast, to keep everything rolling. For example, when purchasing CNC machines and planning their foundation and installation, we had to make sure, these tasks would not influence on the construction schedule, and machines will be available for use when the permission of usage of the new building is received.”

There are some key elements Andrey would like to stress, when working with the project like this:

Carefully check the partners. The cheapest solution might not be the one with most benefits. Surprises during the construction process usually are not good, and you want to avoid them, as they have a habit to turn out to be expensive.

Check the commercial offer precisely, and make sure the contracts with all parties are transparent. Hereby you will avoid misunderstandings in case there happens to be any deviations from the contract or schedule during the process.

Be active - this is very important, time is money. All people involved must understand their role, and they also have to be willing to make decisions, if required. Some decisions need extra monitoring, but also this should be a rapid process.

Andrey was glad to see how the professional cooperation between the external partners and Fortaco team enabled the launch of new factory just according to the schedule, and he hopes Fortaco employees will be happy to work with the new equipment and technology. “I would like to say big thanks to all people who participated, including our partners and my colleagues in Fortaco. I believe, this new factory will create new opportunities to increase our business, and also employment in Narva region”.


Mining

Spirit of Commitment

During the Corona outbreak it is good to remember that business continues despite the recent restriction across Europe. In Sastamala, Finland we have celebrated the roll-out of the 2500th completely assembled mining machine for one of our important customer. Special congratulations to the local team for the achievement of this great milestone during these special times.

Recently, governments across Europe have started to lift Corona restrictions on people and businesses. However, the Covid-19 situation remains challenging, and we are following all earlier implemented preventive measures at our factories. Our priority is to continue protecting our people and local communities from spreading the virus, as well as protecting our cashflow.

Fortaco factories are operative since the outbreak of Covid-19, we have managed with the supply without any major disruptions. We are closely monitoring the market demand, as our customers are slowly increasing orders and/or slowly reopening their factories. However, we still have a long way to go, both with ups and downs, before the crisis is behind us.

We would like to thank all our partners for the support and trust in tomorrow during the challenging times.


Residual Value: Beyond the Holy Trinity

How data will eventually impact residual value, total cost of ownership, and transform heavy-equipment financing.

“Hours of use, type of use, and maintenance record. These are the three things that matter when calculating residual value,” said a former director of a major OEM’s financial business. While it’s hard to find anyone who would dispute that information has value, is more information necessarily good information when it comes to residual value?

"Don't overthink it," cautioned the finance professional, who has left the OEM for another business and agreed to bounce around ideas off the record. “Was the bulldozer used 2,000 hours per year in a single shift? Or double that? Was the ADT used to haul mine tailings, or did it transport feathers? Was the backhoe professionally serviced? Or was the owner a DIY type?”

At the moment, the prevailing wisdom seems to be that hours of use, type of use, and maintenance record — the Holy Trinity of residual value — adequately serve the industry’s purpose.

A used-car model

Dr. Rafał Sornek, Senior Vice President of Technology at Fortaco Group, makes the case for data impacting residual value.

“Take data OEMs already collect, store it in a public place, authenticate it with blockchain, and give industry professionals access to it.” Sornek’s proposal is to do for the off-highway industry what has already been done for used cars in Europe. "I can use a VIN to see a vehicle's entire history. Why not do the same for a used crane?"

Sornek’s vision is massive amounts of data contributing to more accurate residual value, resulting in a lower total cost of ownership. "Even in an honest marketplace," he argues, “sellers themselves sometimes don't know what they're selling."

What OEMs know

Chris Domagala, CBDO of Lectura, a German- and Czech-based company which collects and sells transactional data on heavy machinery, says OEMs don't always know as much about their assets as they let on. "OEMs have huge distribution- and dealer networks that sometimes show significant price autonomy. There are cases where the OEM doesn't even know exactly for how much their machines went to market. They may not get data back from dealers. OEMs are experts on machine specs — they know which components break fastest — but not market prices."

Domagala offers an example of how residual values are still handled on a higher “aggregation level” than they could be at financial institutions (the majority of assets in most countries belong to banks). “It depends on the institution, but crawler excavators, for example, are generalized on a rather high level. You’ll see it's a 20- or 30-ton crawler excavator from a first- or second-tier manufacturer, and that’s usually it. Thus, the residual values they use are aggregated. But the more you know about your particular asset’s value development, the better you can calculate risk, the more profitable it can be. There are more and more ways to approach the car market’s transparency regarding rather accurate model-based value estimates.”

Change begins with a process of mutual educational, he says. “Bankers in the risk department have been in their jobs for 35 years, and to have a third-party company say ‘Our data knows more than yours and your experience’ isn’t always welcome. Also, vast smart data can fail. Banks will naturally take a defensive posture if the process is not symbiotically designed. There is also, literally, a lot that data can learn from ‘old stagers.’”

While collecting data isn’t at all new, putting it to good use is. “We're not in the Dark Ages of collecting data, but we're still at the beginning of connecting data,” says Domagala.

A new type of finance company

Michael Rohmeder is CEO of Equippo, which he characterizes as "a full-service marketplace for construction equipment” with a telematics project. Equippo might be thought of as the Zappo's for excavators, offering online sales of inspected, delivered, and guaranteed equipment.

Depending on how you count it, the annual global transaction volume of used heavy equipment ranges from 100 to 300 billion dollars. Equippo's goal is to get its customers the highest price possible for their equipment, with a high residual value and the lowest possible total cost of ownership. "The components of TCO are the new price, maintenance cost, and the resale value,” says Rohmeder, “and data can impact these heavily."

Rohmeder says banks will write a seven-year contract with a residual value curve so they won't lose money if the value turns. He sees room for a new type of finance company that derives benefit from connected data. One that might offer higher residual value thanks to smart data models, knowledge of future use, and maintenance, allowing the financer to be more aggressive on residual value and still make money.

“A starting point might be in the financing of extremely high-value equipment like cranes,” he says, which can sell new for over a million euros. But when purchased used, he notes, “Crane hours don’t convey how much it's actually lifted. It's an indication, but sometimes the crane is moving up and down with no load. What if we could prove with telematics data that the boom was only used to lift 20 percent of the time?" It's the grandmother-only-drove-it-to-church scenario. Grandma may be telling the truth, but data could tell us whether she had a habit of riding the clutch.

Persuading the bankers

Since interest rates can represent 30 to 50 percent of total ownership costs, it's a matter of time before things begin to change. Chris Domagala says a proper consortium must be built. "We need suppliers like Fortaco with deep knowledge of steel structures. Then we need an OEM with telematics data, a data company like ours, and then a tech provider who can build safe ways of data transfer."

Domagala praises JCB as a first mover. "They launched a telematics platform for JCB users which gives you an overview of all JCB machines, where they are, and all telematics data on one dashboard. It's impressive. But you've got to be an accredited JCB customer, it applies to JCB machines only, and it's not even semi-public."

"Bankers can be persuaded," he says. The risk buy may be intimidated but the CEO will think differently. The bankers will eventually be in favor of it, and they have pull with the OEMs. It could happen in as fast as a year, if an OEM is willing to share historical data.”

Join the cause

Rafał Sornek hasn’t named the group yet, but he’s talking to anyone who’ll listen. He’s convinced Rohmeder and Domagala. And he’ll get around to convincing you, too.

“I want to appeal to people to be part of this project,” says Domagala. “The more people we have at the table, the better the results, and the better we can build trust. Think about a machine's decreasing residual value curve and the upward-sloping cost development. Where the two curves intersect is the perfect place to sell. This leads to better circular economy and, in the end, lower emissions. It’s better for everyone.”


Petra

Opportunities Beyond Obstacles

Every cloud has a silver lining – Petra Špačková’s motto, and more thoughts about her quarantine times during Corona virus crisis.

Special circumstances require special solutions – and those solutions would not be created with ordinary thinking. As everything else in life generally, these special circumstances shall be passed by, but in the meantime our thinking is being stretched to dig deep into our potential in creative thinking and problem solving. Petra Špačková, Fortaco’s Operative Purchaser in Holíč, Slovakia, is a professional, who is working at the frontline of business to keep operations going. Communicating with vendors and production, she is securing that all parts needed in the manufacturing process are being purchased just on-time.

Fortaco operations have been safe and solid during the Corona crisis this spring thanks to all hardworking and flexible members in our team, like Petra. At the moment working means for her spending the days in the solitude of her home office. “In the beginning it was hard to imagine a different daily routine, even though I did understand the seriousness of the situation”. Like for many, at first it was obvious to see only the negative sides, and the change didn’t come without doubts.

“It’s difficult to deal with someone without seeing face to face. On top of that I’m also communicating quite often with people whom I’ve never met before.” Naturally, there were a lot of questions occurring in her head, and not all the answers were totally clear; what can be expected from virtual suppliers; are our network agreements the same as personal agreements?

When the dust was settled, Petra started to pay attention to the advantages of this special situation. Thanks to the advanced information technologies we’re able to stay in contact without the physical presence. “There is no need to meet people personally, in most cases a considerable amount of time is being saved – and also a huge cost”. Even though she was worried the circumstances would affect people’s communication skills, it proved out to be that connections were still made, and people were able to carry on and follow the path towards a common goal.

We are not always able to change situations around us, but luckily, we can always decide, how we respond to them. When a crisis occurs, there are also opportunities to be found. ”I have said to myself, it’s a new period in my job and I should take it as an opportunity for my personal development.” Staying resilient and calm, these are the key factors when making progress through the crisis. And we all have our own way forward when facing hardships. “I´ve discovered the benefits of yoga thanks to my social networks in free time”.

“Viva information technologies - technologies against business crises”, Petra sums up.