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From a barn business to a multitalent of forest technology SUMMARY 1960–2010
Antti Kärkkäinen, the founder of Kesla’s predecessor Rantasalmen Raivausväline, was a pioneer with plenty of ideas and the smarts to seize the opportunities of his time. Since the 1950s, agriculture in Finland, which was recovering from the war, was being mechanised at a tremendous rate. Kärkkäinen’s innovations included the Kivi-Antti stone clearing device and the Isokita ripper tooth.
- Kivi-Antti advertising slogan at the Kaavi Agricultural Exhibition in 1957 -
“It’s in my nature that when I see a useless tool, the rotten thing really bothers me inside. I start wondering why it wasn’t done this way and that way.” – Kesla founder Antti Kärkkäinen –
The product range was expanded to include a stone fork and a tractor spring-tooth harrow in the 1960s. The factory premises in the village of Kolkontaipale in Rantasalmi no longer met the needs of production, and the search for a new factory space began in early 1969. Antti Kärkkäinen died in 1969.
After Antti, the company was led first by his eldest son Raimo Kärkkäinen and then by his younger son Seppo Kärkkäinen in 1971.
A large pre-order for harrows received in 1969 accelerated the company’s move to Joroinen. where a 400-m2 hall was found to be available. According to the verbal agreement, the municipality pledged to build more hall space for the company and also a dead-end track.
However, after the promising start, the cooperation between Rantasalmen Raivausväline and the Municipality of Joroinen rapidly fell apart due to local politics. “Joroinen is an entrepreneur-friendly municipality, but not enough attention has been paid to the local entrepreneurs here, at least not to us…. We ranked too low on the list of those who wanted to operate in the new industrial hall.”
- Interview with Seppo Kärkkäinen in Savon Sanomat newspaper, 28 March 1974 -
“Kesla was ahead of its time when it started to develop forestry machines. There was no actual forest machine boom yet back then.” - Ari Koskivaara, Farmer -
Seppo Kärkkäinen started discussions with several municipalities on the possible new seat of the company. Kesälahti came on top thanks to Mayor Matti Alaluoto, who “whipped the money out of his desk drawer and said that a decision can be made quite quickly”. Alaluoto kept his word, and in 1974 Kesälahti built 1,800 m2 of production facilities for the company. Finland was already undergoing a structural change in agriculture. Especially small-time farmers and their families from Eastern and Northern Finland moved to the population centres of Southern Finland and Sweden in the 1960s and 1970s. Economic uncertainty was also overshadowed by the oil crisis.
When the company moved to Kesälahti, its name was also addressed. Consultant Jyrki Karttila came up with name ‘Kesla’. The choice influenced by the name of the municipality has proven to be a good one also in the international market. Seppo Kärkkäinen guided the company through significant changes. In April 1976, Kärkkäinen became Chairman of the Board of Directors. Esko Paajanen, who had been hired as Kesla’s Marketing Manager a couple of years earlier, became CEO.
In an interview for Kesla’s 50th anniversary history, Paajanen said: “A company can be founded around ideas and innovations. But everything only gains value when the innovations are commercially exploited. The company still had a lot to learn…. I started telling Seppo that we needed product development.”
- Esko Paajanen, who was appointed CEO of Kesla in 1976 -
Esko Paajanen as CEO and Seppo Kärkkäinen as Product Development Director formed an effective trio with Designer Raimo Ahonen, who joined the company in 1975. Paajanen has described Raimo Ahonen as a significant innovator for the company, along with Seppo Kärkkäinen. As early as 1972, the company was aiming for the Swedish market with stone forks and ripper teeth. The production at the Kesälahti factory was busy, already employing some 30 people. The first export deliveries of forks were made in the same year to Norway.
An entirely new era in Kesla’s history began in 1977, when the company started cooperation with the Hankkija central cooperative. Chief Agronomist Reino Seppälä, the then director of Hankkija, played a key role in the start of the cooperation.
“Hankkija had already bought forks from us in the past. When we were at the Mikkeli Agricultural Exhibition in 1977, Reino came to our trailer and asked if we could make them 3,000 harrows. Esko and I looked at each other and said yes,” said Seppo Kärkkäinen, reminiscing in March 2009.
Chief Agronomist Seppälä had strong views of what kind of machines farmers wanted. “Farmers were not very happy to use big forest machines for thinning, as they made deep tracks in the forest if the earth was not frozen,” Reino Seppälä said in an interview on 6 February 2009.
Hankkija’s subsidiary Farmer started managing Kesla’s exports in 1975. “Kesla was ahead of its time when it started to develop forest machines. There was no actual forest machine boom yet back then. The JYTY forest trailer and the loader placed on top of the trailer were the first items,” said Ari Koskivaara, who used to work at Farmer, in an interview on 8 September 2009.
JYTY forest trailers were exported to Sweden, England and Norway. Exports picked up rapidly in the early 1980s. Cooperation with Farmer in the export market continued for a total of 15 years.
- Juho Björn, who started as a company analyst at Kera in 1976 -
“In the 1980s, Kesla’s Patu forest machines were known in more than twenty countries. Forest machines made Kesla a real export company.”
At the beginning of the 1980s, Kesla grew even more focused on the forest machine market. The company designed and manufactured efficient machines for forestry work. Their lightness, agility and strength increased efficiency and also conserved nature. In addition to trucks and trailers intended for short-haul transport, felling heads and processors were introduced. A forest excavator was developed for cleaning the drainage in Finnish bog forests. In the 1980s, Kesla’s Patu forest machines were known in more than twenty countries. The forest machines made Kesla a real export company.
The development of Patu M100 forest excavator required capital, which Kesla sought with a stock exchange listing. Expectations for the excavator were high, but the results were poor. “As a result of the recession in the 1990s, allocations for rehabilitation drainage were almost completely frozen. It was a business risk that we had no concrete control over. About ten machines were sold before the entire project was completely shut down.” (Interview with Esko Paajanen on 8 July 2009).
In 1984, Kesla expanded from Kesälahti to Ilomantsi by purchasing and merging with the Kartekki Ky machine tooling shop. In 1988, Kesla expanded to Joensuu by acquiring the machine engineering workshop of Karjalan Rautarakenne. In September 1988, Kesla acquired a majority shareholding in Foresteri Oy, a manufacturer of timber harvesting machines. As a result of the acquisition, Kesla’s product range expanded to include cranes for timber trucks and industry. Foresteri products quickly became part of Kesla’s selection.
The liberalisation of the financial markets, the banks’ enthusiasm for lending, the lack of oversight, the policy of the stable mark and, ultimately, the collapse of the Soviet Union plunged the Finnish economy into a recession in the early 1990s.
Kesla was also hit by the recession. Kesla’s salvation was ultimately its strong balance sheet and the company’s ability to compensate quite quickly for lost markets. “It reflects the professional skills and good decisions that were made in the company at the time. I think that the post-recession situation was handled very well and very quickly in the company. I had no fear for Kesla, my fear was for other companies entirely. Kesla had good products and the company was not too dependent on Soviet trade,” said Juho Björn, Regional Director of Kera in the early 1990s, in an interview on 26 January 2009.
Esko Paajanen gave up his position as Kesla’s CEO in 1992. “I was just so tired that I felt that letting go at that point was better both for me and the company. The financial problems were not what ate at me the most; the hardest part was the redundancies. People had trusted me, built their future. In the end, there was nothing we could do about difficult times,” said Paajanen in an interview on 19 November 2008.
Timo Suni, who had previously served as Junkkari’s CEO, was hired as the new CEO of Kesla. Suni
ran the company until 1997.” In retrospect, that time of change, the wisdom of Seppo Kärkkäinen and Esko Paajanen to see the need for someone new from outside the company, was crucial. This time, that someone was me,” said Timo Suni in an interview on 11 October 2009.
“During my career, Kesla had the best export people. Young, energetic, educated.” - Timo Suni -
The early years of Suni’s leadership were hard time, as sales of forest equipment shrunk by as much as 60% from before. On the product side, a work platform that progressed to the serial production stage was a cause for celebration. Slowly, domestic trade in timber recovered, and the popularity of the cut-to-length method increased worldwide. That also gave Kesla a boost.
“Kesla has grown fast and moved forward. There is a significant market for the company’s product range as mechanisation of logging continues to grow.” - Antti Asikainen in an interview on 16 March 2009 -
Kesla had long handled its exports through the export company Farmer. The responsibility for export was gradually transferred to Kesla itself. The company opened its own export department in 1989.
After Timo Suni, Asko Kinnunen was appointed CEO. He served from 1997 to 2000. Kesla sought strong growth and the company launched the Kesla 2000 development programme. A lot happened on many fronts: production control systems and marketing, financial management and reporting systems were redesigned. The working method was team-based.
In the end, Kinnunen did not manage to commit the organisation to the changes. A few major product projects stalled and, for example, the production control system reform was a more challenging job than expected.
After Kinnunen, Esko Paajanen returned to the position of interim CEO.
Jari Nevalainen was appointed as the new CEO in 2001. Nevalainen’s management concept consisted of a balance between product development, production, sales and marketing. The production of Kesla’s own disc chipper was discontinued, as was the production of a trailer-mounted work platform.
In autumn 2006, Kesla sold its work platform business in order to focus on forest technology. Kesla produced its last agricultural machines in 1995.
In December 2005, Kesla Oyj became a group after Kesla hived off the operations of its Ilomantsi factory into an independent wholly-owned subsidiary named Kesla Components Oy.
In 2007, Kesla acquired the entire shareholding of MFG Components Oy in Tohmajärvi. MFG Components specialised in the design, marketing and manufacturing of transmission products and solutions. It was believed that MFG Components would bring new customers to the Group. In autumn 2008, Kesla Components Oy was merged into MFG Components Oy.
The global economic downturn in autumn 2008 turned out to be faster and deeper than anticipated. As a result of the financial crisis, the world seemed to be stagnating. Suddenly there were too many new and barely used machines and equipment for the needs of the end customers and the dealer network. In Finland, the structural change in the forest industry, combined with the weakened demand for products and high stocks of raw materials, slowed down the cutting of commercial timber. As a result of the international economic downturn, Kesla’s business operations contracted in 2009. The operations of OOO Kesla, Kesla’s first foreign subsidiary founded in 2006, had already been wound down a year earlier.
“Russia remains an important market. Now we had just come to the point where, as tough adjustment measures were taken in Finland, we were unable to bear the losses of the St Petersburg subsidiary,” stated CEO Jari Nevalainen in Kesla’s Stock Exchange Release on 4 August 2009.
Positive signals of economic recovery were already on the horizon, but there were doubts about the permanence of the change. The company started the new decade with further adjustment efforts.
- said Antti Asikainen, Professor of Forest Technology at the Finnish Forest Research Institute Metla, in Kesla’s 50th anniversary history.
