"Our job is to do such a good job for our clients that they don’t think of our services as a cost, but as a way to earn more money."
Per Magnusson, Divisional President
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The Engineering Division has a leading position in industrial electrical engineering and automation, industrial IT and mechanical engineering. The Nordic region is its domestic market, but the division is also represented in the Czech Republic and Estonia. Engineering is active in all sectors of industry and accounts for 28 percent of ÅF Group sales.
Engineering – customer focus and geographic proximity
The Engineering Division was formed on 1 January 2007 when the former ÅF-Benima Division merged with the Process Division’s mechanical engineering operations. This immediately established the new division as an international engineering consulting partner with an impressive capacity and a multidisciplinary portfolio of skills.
The focus is on client profitability, and the basis for this is simple: no matter what the project, the chances are great that Engineering has already conducted a similar project somewhere else. This is knowledge that is quickly and efficiently brought to benefit the client. Geographic proximity to clients is another way in which we have chosen to maximise the benefits we can offer our clients.
The division is involved in most sectors of industry and is particularly well established in nuclear power, energy, pharmaceuticals, mining, pulp & paper and other process industries.
Engineering has around 1,200 employees working from more than 50 offices in Sweden, Norway, Denmark, Finland, Estonia and the Czech Republic. The proportion of assignments outside Sweden is increasing all the time, not only as a result of the fact that the division accompanies its clients when they expand their business internationally, but also because ÅF is increasingly attracting new clients. By the end of 2007 international projects accounted for around 30 percent of sales.
The offer – more profitable industrial processes
Engineering is Northern Europe’s largest independent consultant in its field. Services comprise the project engineering, design, calculation, programming and commissioning of industrial projects, and the division is active in many areas of technology – industrial IT, automation, electrical engineering, mechanical engineering and piping design – with clients in all sectors that work with industrial processes. The pace of development is fast and there is often great potential for improving industrial processes and, by so doing, boosting profitability. Individual consultants can work close to the client’s own organisation, or the division can assume total overall responsibility for the delivery of either an entire project or a specific function.
Typical client requirements include the need to rationalise or modernise an existing production process or plant, for example through the introduction of new steering and control technology in a nuclear power plant, or the need to expand capacity or add a new production line. Examples here include ÅF’s patented solution for commissioning new boilers, and the expansion of facilities or the construction of new plant in the pulp & paper industry.
Clients – a broad cross-section
Engineering operates predominantly in mature industries, where companies often have active, long-term strategies to rationalise operations by boosting productivity, saving energy, improving safety and reducing environmental impact. Regardless of the size of a project, every client has access to the collective know-how and resources of the entire division, thus reducing sensitivity to, for example, staff turnover.
The Engineering Division has more than 2,000 active clients, representing most industries. The division conducts continual client surveys and the responses are highly positive. The customer base is broad and the ten largest clients together account for no more than around 30 percent of the division’s earnings. The largest single client accounts for seven percent.
Clients include ABB, Siemens, Fortum, Alstom, Billerud, LKAB, Metso, the Swedish Nuclear Fuel and Waste Management company (SKB), Stora Enso, Westinghouse, Volvo and Sweden’s nuclear power plants at Forsmark, Oskarshamn and Ringhals.
2007 in brief – ongoing expansion
In January 2007 the division acquired Automaatika, a well established Estonian consulting company, with 20 members of staff offering services in automation and industrial IT.
January also saw the transfer of some 130 mechanical engineering co-workers from the Process Division to Engineering.
In March one of the units of the Xdin organisation was acquired, reinforcing the division’s consulting services in investment and rationalisation issues with regard to production and logistics systems.
In April Engineering took over the Process Division’s office in the Czech Republic, with just over 20 technical consultants.
During the year the technical consulting company Cordinor with 15 members of staff in Luleå and Kiruna was acquired, strengthening the division’s offer to the mining industry.
The division won assignments from clients that include Tallinn’s water purification plant, Foster Wheeler in Finland, ALK Abello in Denmark, the Swedish nuclear power plant at Forsmark, the Swedish Road Administration’s car ferry operations, Iggesund, Braviken Paper Mill and Metso Paper in Portugal, India and China.
Market and trends – potential for growth
The market was strong in 2007 in all areas and the prospects for 2008 look good, with investments in environment and energy remaining the main driving force behind development.
With clients in so many industries, and in view of the fact that many projects are long-running or governed by public investments that extend over a number of business cycles, the division’s sensitivity to economic cycles is relatively limited.
Although Engineering is the market leader in the Nordic countries, its overall share of the market is not even 10 percent, which leaves plenty of potential for continued growth.