Borneo Pulp
Page 21
They were both very tall men, of almost the same age. They had known each other all their lives, having grown up on neighbouring farms. Their families were large wealthy land owning farmers, who worked extensive forestlands in addition to their cereal and pasture holdings. The relations between both families were what could be called most cordial, though there had been generations of neighbourly competition between them.
Both sons were the youngest of their respective families, each having several brothers and sisters. The two had entered into engineering school in the early fifties, when their families decided that farming would no longer be able to support all the members of the family.
After graduation, by chance they had both entered into the same promising medium sized mechanical engineering firm, near the town of Wasa, situated on the coast of the Gulf of Botnia. The firm prospered and grew during the fifties and sixties, driven by the demands of the neighbouring Soviet Union, which still nurtured hopes for the future of the country’s centralised economy.
The Finns understood the Russians, who paid cash, and profits rolled in whilst Tapani and Jaakko learnt the business and rose in the ranks. There was no significant long-standing industrial tradition in Finland and even fewer sons of rich industrialists. Within a generation, the two country boys held the reins of a multi-billion dollar industrial giant, Finnish Heavy Industries, which after being acquired by the banks, had grown through mergers, extending its activities to, saw mills, plywood mills, pulp and paper mills, and owners vast tracts of forest land where they harvested the wood and hunted elk.
In the fifties, the many Finns were poor workers or immigrant labourers in Sweden; they were looked down upon by the Swedes as peasants, as were the Irish in England in the not so distant past. But hard work born of a harsh climate and solid Lutheran principals in a thriving economy had raised them to a level undreamed of by their fathers. Their business acquisitions and markets had spread beyond Scandinavia to Europe, and further to North America. They then turned their attention to exploring the exotic markets of South America and the Far East.
They remained in their traditional business sectors, the forestry based industries of wood, pulp and paper, and the machinery needed by that industry to transform wood into profits avoiding risky diversification.
Success had brought problems; rising standards of living and education had brought increased costs and higher expectancies. The Finns became renowned for their forest based technological expertise and the high quality of their workmanship. Exports became more sophisticated and their reputation grew, they earned respect for their business integrity and reliability. They also exercised great caution, only dealing with those who could pay cash, giving little credit to the poor or the uncreditworthy of the world.
At the same time the cost of the raw materials from their forests grew, gone were the days of the rude woodsmen who hewed the timber by hand in all weather. The forest workers had become accustomed to nothing less than sophisticated all weather timber harvesters with heating, air conditioning and radiotelephones, a thirty six hours a week, holidays in the Canaries and imported European and Japanese cars, in spite of an economic crisis menaced them.
They negotiated cheap wood for their pulp mills from the Soviet Union; high operating costs in Finland had made their pulpwood too costly, it was no longer as attractive as in the sixties. They were also reaching the limit of their exploitable forest resources and further extensive harvesting would not only menace their economy but also their way of life in the long term, the golden days were numbered.
On the sixth floor of their solid and modern, but unpretentious headquarters, they debated the future development of their raw material sources, assisted by extensive market studies that had been produced by their own specialists, and renowned consultants such as Kalevi Nurminen.
‘Unfortunately Tapani, our plywood business here in Finland is no longer viable, of course we have the know-how and our wood is good, but there is simply not enough of it.’
‘Not to mention costs,’ he replied drawing dourly on his Marlboro.
Jaakko, was the Chief Executive Officer of the holding company and Tapani the President of their three billion dollar a year machinery division.
‘So what about Indonesia, what are your conclusions?’
‘It can serve us in two ways, firstly its vast reserve of high quality timber and low labour costs,’ he paused.
‘And two?’
‘Two is our machinery division...linked with the financial resources from the SKP bank and our wood marketing division.’
‘Go on.’
‘We make a joint-venture with a suitable partner, influential, solid, without too much know-how, we sell them the machinery with a financial package and then we market the products in Europe.’
‘Good, a profitable organisation at each phase is essential, without investing fresh money, only our know-how.’
‘Who do you have on the ground?’
‘We’ll work through a company with whom we have acquired a lot of experience on the Papcon project, it’s called Bintang Agung.’
‘Isn’t that the local joint-venture company on the Barito project?’
‘That’s right.’
‘How is the Barito project going?’
‘Well if I’m honest I suppose that its struggling a bit, there’s a capital problem.’
‘Is there any way we can give it a push?’
‘I’m working on it.’
‘Good!’
They took their mid-morning coffee and biscuits as they normally did, continuing their discussions on Barito. It was beyond the scope of Finntech’s activities to invest capital in industrial projects outside of their group. Their main shareholders the SKP Bank and the Polar Insurance Company vetoed all investment outside the groups own needs. Finntech’s vocation was manufacturing pulp and paper products, and the construction of industrial plant and machinery.
‘We’ve bent the rules a little bit before now to help our business,’ Jaakko said with a wry smile, ‘if you have some way the push things a bit it will help us.
‘I’ll think of something…our prospects over the next couple of years are not too bad, but they could be better, a few hundred million or so of new business at our Wasa machinery works, wouldn’t look bad.’
‘Look at the offsets!’ Jaakko winked and lifting his coffee cup he toasted the idea.
Tapani returned to his office, picked up his telephone, and asked his secretary to call Einari Laxell in their Paris office.
WHISKY ON ICE