January 23, 2017
Peikko Group Oy: from cowshed loft to global markets
Peikko Group, a family-owned company based in Lahti, Finland, is one of the Finnish companies that decided to try its luck on the export market amidst the deep 1990s recession. Starting in Germany and the Nordic Countries, this concrete connector manufacturer has expanded its operations to over 30 countries with the help of Team Finland’s experts, programmes and network of contacts.
With a turnover of EUR 170 million and over 1,400 employees, Peikko Group has production facilities in 9 and sales offices in 30 countries across the world. These are figures that Peikko Group’s founder Jalo Paananen could hardly have dreamt of when he started cutting and bending rebars in the loft of an old cowshed in the mid-1960s.
The tie used to fix the outer and inner panels of precast concrete units to each other became the key product for the company, then an SME known as Teräspeikko Oy, giving a nice boost to its growth. However, the final breakthrough came towards the end of the 1980s when the company introduced Deltabeam, a high-strength composite beam used for constructing an easy-to-install building frame, which started conquering the markets, first in Finland and then internationally.
Since the turn of the millennium, the rate of growth has only accelerated. In 2005, Peikko streamlined its corporate structure, passed responsibility for the business on to the next generation and launched a programme for brisk international expansion. At the same time, responsibility for international operations was assumed by Jalo Paananen’s youngest son Topi Paananen.
Customer orientation the first priority
Over the past ten years, the company has quintupled its turnover, expanding to markets in Europe, North America, the Middle East and Asia. Yet ambitions run high – the CEO finds that Peikko is still a minor player in the global construction market. Consequently, there is ample room for growth.
“In terms of turnover, we’ve been growing at an annual rate of 10 to 15 per cent, and the objective is to reach EUR 300 million. The only time we had a dip in turnover was during the financial crisis of 2009,” says Paananen.
Right from the beginning, Peikko’s key to success was customer orientation. The business concept was to facilitate and speed up the construction process, make it safer and reduce its environmental impact.
Even the idea for the company’s first product – the tie fastener– was born on construction sites where workers bent them in the course of their other duties. Later products such as the column bolt connection and Deltabeam were also developed in response to customer needs.
More recent additions to the product range include wind power plant foundations and design tools for structural designers. The company spends EUR 4–5 million on product development annually.
“The construction business is fairly conservative. To succeed, you need to convince several parties, such as the building owner, designer and contractor. The upside is that success creates a steadily advancing snowball effect,” Paananen concedes.
Team Finland involved in many aspects of the business
Over the years, Peikko Group has made extensive use of the support and expertise available from the Team Finland network. For one thing, the company has participated in Tekes-led projects to promote exports to emerging markets and develop wind power components.
“Tekes deserves great credit for our involvement in the wind power business in the first place,” says Paananen.
Finpro and Finnish foreign missions have also offered valuable assistance on avoiding the pitfalls when Peikko has explored potential export markets. Finnfund, in turn, has paved the way and opened doors to China, Africa and the wind power markets, among others. Entry to the Chinese market was also facilitated by Finnpartnership in the form of business partnership support.
Other supportive measures include Finnvera’s financing instruments and Team Finland’s export promotion visits, most recently to Egypt in autumn 2016.
“The first steps to foreign markets were taken after the early 1990s recession in Norway, Sweden and Germany. Most likely, I’d start with the same three countries again,” Paananen muses.
Peikko has had a presence in Russia since 2006 with a 20-strong sales and production team in St. Petersburg.
“We’ve been making a profit all the time. Much depends on the development of the world economy, but we’re optimistic. We’ve got plans to expand production during 2017,” he adds.
Peikko Group Oy
This Lahti-based company, established in 1965, specialises in concrete connectors and composite structures. It started its exports in the 1990s and employs over 1,400 people all over the world. It has 300 employees in Finland.
Aside from Finland, Peikko Group manufactures products in Lithuania, China, Germany, Slovakia, the United Arab Emirates, the USA, Saudi Arabia and Russia. Over 70 per cent of the company’s EUR 170 million turnover is generated outside Finland.
Team Finland’s role
Peikko Group has participated in a number of Tekes-led product development and technology projects that have helped diversify the company’s product range and find new markets. Finpro and Finnish foreign missions have also offered their assistance in exploring potential export markets. Other important partners include Finnfund and Finnpartnership, which have facilitated the entry to the Chinese and African markets, as well as the Finnish–Russian Chamber of Commerce, which has helped with the expansion to Russia. Additionally, Peikko Group has taken part in the export promotion visits organised by Team Finland.
Progress on the path to international markets
Peikko, still a family-owned company, has focused on exports since the 1990s. Its first foreign markets were the Nordic Countries and Germany. Since the turn of the millennium, determined efforts have been made to increase exports to Eastern Central Europe, North America, the UK, the Middle East, Russia and China. The company has sales offices in a total of 30 countries. Peikko operates production facilities in nine countries and its growth prospects are bright. The plan is to increase turnover to EUR 300 million over the next few years. In Finland, Peikko is a clear market leader.
“Team Finland offers a wide range of support to SMEs keen on growth and international expansion. However, you need to be able to harness it in a way that promotes your business.”
Topi Paananen, Chief Executive Officer, Peikko Group Oy
The article was published on Team Finland website.