From Norway to the world

Laader Berg's factory sits close to a stunning fjord about 450km outside the Arctic Circle on Norway's glorious west coast. Simon Robinson headed north to talk with the company about its growing business.

There are few places to match Alesund on the coast of Norway for stunning beauty, as it nestles within a combination of spectacular fjords and big, shaggy mountains. But the price of this beauty is that there is very little land to farm or build on. Legend has it that the shortage of land and a growing population drove the Vikings to expand out of the region just before the turn of the first millennium. They also make a good case in Alesund that the Queen of England is descended from Rollo, a local boy made good.

While Vikings had a reputation for fearsome violence, they also mastered the art of the team. Getting 20 people across a sea in an open boat is most certainly a team effort, and it is the team that comes through in conversations with CEO Per Henning Vaagen and his colleagues on a visit to the factory next to the Stortfjord and Geirangerfjord in early March.

But, like many other conversations at the moment, the meeting was overshadowed by the situation in the Ukraine. ‘It is a big concern of ours,’ said sales director Ragnar Kaland. ‘We have recently sold three machines in Ukraine. We think about the people and friends we have made inside those companies. [The situation there] is having a big influence here in the company. Not only as businesspeople, but as friends.’

Friends in danger

Kaland added that, for them, there is more to the situation than simply what they see in the media and on the news. ‘It is connected to names and people we know,’ he said. ‘We didn’t just have business meetings. We went fishing with them. We drank vodka together. We are friends. We are used to being in countries and areas where there are difficult times, but this is very close to us. It is closer for us to fly to Kyiv than to Rome.’

As this goes to press, the situation in Ukraine is uncertain but, perhaps, the past holds a key to the future. According to Vaagen, Laader Berg has previously helped companies rebuild in other conflict-damaged regions. ‘We had several customers in Syria who were able to escape during the worst period of the civil war,’ he said. ‘Two years ago, when things started to settle down, one showed us pictures of their ruined factory and told us they want to go back and restart the business. This week, we finished the installation and commissioning of the machine in Damascus, and he can now start production. We see people who have lost almost everything; they reinvest in their country and want to take part in rebuilding the country. To be allowed to be part of it, it is something special.’

Away from the current situation, Laader Berg, like other machinery companies, did well because of the coronavirus lockdowns in 2021. ‘Sales revenues were €11-12m,’ he said. ‘We have 50 employees, and you don’t find many mechanical companies where you have sales of more than €200k/employee.’

The company is focused entirely on the flexible foam machinery market. It seems counterintuitive that a producer in a high-cost country could compete with lower-cost manufacturers and win a contract to supply machinery to a recent war zone like Syria, but Vaagen explained that they do not compete on price. ‘We are offering customers high-value machines, and the cost follows the value and quality of components,’ he said.

A polyurethane machine may last for 30 years and be the heart of the factory, but in terms of cost, it is not the most important element of the foam production process. ‘As a rule of thumb, depending on foam density, whichever machine you buy from us, after about 20 hours of running time, customers will have spent more in raw materials than on the machine,’ Vaagen said. ‘Customers must get the best out of the raw materials and the best yield. A good-quality machine helps foam makers to have repetitive, efficient and high-quality foam production.’

Valuable not costly

Kaland added that for foam makers, competitiveness is not about the unit cost of the machine. ‘It is about the unit cost of the products made,’ he said. Vaagen said they have sold 550 machines in 100 countries. ‘The machines are not costly; they are valuable,’ he said. When designing new machines, he said he often asks the customer whether they are sure they really need it straight away. ‘Consider having it later when you need it. Equipment will cost the same in the future as now.’

It can take months or years for companies to decide to set up a new factory or move into the business. The company also tries to sell the customer what it needs rather than what it wants. Sales and after-service manager Oystein Haugen said: ‘I had a meeting with a customer in South Africa, and they asked for a lot of expensive equipment. We found out what they wanted and sold them something appropriate. It’s not like an internet shop.’

Laader Berg can supply a plant master plan with details of foaming, tank-store, cutting, storage and finished goods areas. It will also provide return-on-investment calculations. ‘We help customers understand the financial benefit of a new machine or upgrading an old one,’ Vaagen said. This is available to new greenfield customers and those that want to understand the benefits back integration.

Once machines ship, the company sends installation supervisors to assemble the parts and train the purchaser’s staff. ‘We do all kinds of service remotely for free,’ Haugen said.

‘We like the machinery owner to give us a call and they can often discuss with the installation supervisor who built the machine on-site and helped train operators,’ he said. ‘The supervisors will spend up to 10 weeks on an installation and are very important for us.’ Salespeople may sell the machine, he said, but the installation supervisors are the bridge to a long-term relationship between the support, service departments and the customers.

Kaland said that Haugen is the key to new development leads. ‘Our service manager is our front line. It is impossible for the sales team to meet everyone,’ he said. ‘The installation supervisors at customer sites are good at identifying opportunity for customers.’ Laader Berg also uses agents from companies in complementary areas such as additive suppliers that have greater contact with foamers to act as its eyes and ears.

Modular machinery design makes it possible to upgrade and retrofit in the future, so customers can keep investment down. ‘We don’t run into problems with obsolescence,’ technical director Ove-Andre Strand-Larsen said.

‘We try to widen the horizon so that parts fit from generation to generation. The wet part is more tailor made. It is made using standard components, but each customer has different demands. The control system is fixed around Lenze; there is no reason to change, as it will communicate with other IT systems. We have long-term relationships with several pump and gear suppliers.’

The company dramatically changed the way that it made machines six years ago when it purchased a CNC facility. ‘By redesigning our product lines and investment in new warehouse and production machinery like metal folding machines and CNC machines, we have stopped pre-assembly the foaming tunnel and working platform,’ Vaagen said. ‘We have turned a lot of indirect and inefficient time into value-added production.’

A tour around the clean, modern, spacious factory reveals that production is arranged in clusters with all the parts near to the operator. ‘We use a visual can ban or two-box system,’ he said.

‘The supplier comes by twice a week, and if a box is empty, it is replaced with a new full box.’ An invoice is then immediately issued and paid.

‘Today it is all prepared part by part,’ said Strand-Larsen. ‘When the machine is sold, the parts can be picked off the shelf and assembled on-site. Most of the dry-side components such as the tunnel are supplied from stock.’

Thousands of combinations

The company claims to keep bigger stocks of PLCs than wholesalers and a relatively large stock of pumps and gears. ‘We can assemble parts in thousands of combinations. We have about 95% of our parts in stock,’ Strand-Larsen said. Some pumps can have lead times of over six months and therefore they chose to keep them in stock for planned production, and this also gives them the capacity to respond to urgent needs for spare parts or replacements.

Laader Berg has no bank loans and has good working capital, Vaagen said. ‘This enables a strong, customer-oriented strategy with large stock of components and quick response to customer demands.’

That ability to address issues rapidly, allied to that Viking teamwork approach, means the partnership between the company and its customers is strong. As Strand-Larsen said: ‘A sale is not made in a month. It may be made over years, so you build a personal relationship. You are under each other’s skin. It’s not a trade; you develop a partnership.’