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MUSTAD HOOFCARE GLOBAL NEWSLETTER

The

th 180

Anniversary Issue

SPECIAL EDITION! WE CELEBRATE 180 YEARS SERVING THE HOOFCARE PEOPLE

The original Mustad factory, Gjovik, circa 1870

A bright young farmer in a lovely rural area is The factory was perhaps not impressive: situated near a nourishing his dream. The farmer is Hans Skikkelstad, the parish is Vardal, Norway, and the dream is to start a factory. In 1832 his dream comes true: a small nail and wire factory is established. What the farmer doesn’t know yet is that his modest workshop would turn into a global corporation with sales all over the world and a vast product portfolio ranging - in time - from nails to horseshoe nails, screws, paper clips, thumb tacks, needles, margarine, stoves and fish hooks.

rapid on the river, machines and tools were quite primitive and were operated through four water wheels. The iron was bought from Sweden and rolled to the correct dimensions through a rough roller machine. In 1843, at the age of 56, Hans Skikkelstad died and the factory carried on under the leadership of his widow and son in law, country chief constable Ole Mustad: he had just turned 33 and, unlike his predecessors, he would never take over his ancestral farm. Other challenges awaited him.

The early years of nineteenth century were not an This is how the story of our family business begun. Since ideal scenario for the Norwegian industrial scene: the context was extremely fragmented and the country lacked the necessary infrastructure to allow product specialization. Most supplies were difficult to obtain, so, whenever possible, they had to be produced domestically. This environment favored the development of businesses that supplied local communities with everything, from food and clothing to tools, schooling and even health services. It was in Gjovik that Skikkelstad found the right location to install the “Brusveen Nail and Wire Factory”.

then, six generations after, many changes happened in the world as well as in our company. This issue of our global newsletter is a way to thank the people we deal with and have dealt with: our ties with our employees and customers have been and still are so strong, especially in difficult times, that without them today we wouldn’t be able to tell the story of our amazing journey.

Hans Mustad

Clarin Mustad

SEE THE FULL STORY INSIDE! 180 YEARS OF ENTREPRENEURIAL SPIRIT AND INNOVATIONS, CHANGES AND ADAPTATION, INDUSTRY PIONEERS, REAL MEN.

1


The early years: Ole Mustad

1843 -1874: FREE TRADE, INDUSTRIALISATION, TOUGH TIMES AND GOLDEN MOMENTS

When Ole Mustad took the company over in 1843, the relatively modest nail factory in Vardal was not qualified enough to satisfy a growing demand nor was it qualified to face the competition that was becoming stronger day by day. The export of industrial machinery from England had finally been allowed, as british producers were no longer able to sell to local customers only and needed new markets to explore. As a consequence, many new factories started up a nail production in Norway: Jacob Melhuus was able to produce better nails at a lower price and several customers left Mustad to be served by Melhuus. This situation triggered many improvements to quality and service, but the commercial results were not immediately evident and the financial situation for the company was tough for quite some time: the turnover dropped and cash was scarce, but at the same time a steady flow of raw materials was required in order to keep the production running. So scarce that iron was exchanged for production and suppliers were offered distilled spirits to be delivered upon receipt of the iron! It was quite clear that the craftsman-like production method which had been employed since 1832 was too old fashioned: in the beginning, nails had no point Ole Mustad (1810 – 1884), Hans but a traverse front edge meant to drive the nail into the wood; making a point was Skikkelstad’s son-in-law, took of his inheritance in the best impossible with the old production method. On top of that, heads were stuck by hand charge way, contributing in the best way to and they inevitably varied from nail to nail. In 1847, a young technician was sent to the factory as well as the society Birmingham to learn how to operate the machine Ole Mustad had just bought and as soon as the machine was put to use that same year, nail production was doubled and labour expenses reduced dramatically. A new machine was immediately ordered to the same English supplier but within 2 years the newly installed internal workshop came up with the first own nail machine and for some time Mustad became a supplier of nail machines to many other industrial enterprises in Norway. But after a while the decision was made to no longer supply any local competitors and strictly keep any technical knowledge exclusive to Mustad. Next to Ole Mustad’s industrial vision and courage, 2 men that stood out in this period: Even Amlund, who started what was to become a company’s success factor – the own development of mechanical gear in the internal workshop – and Mathias Topp, hired by Amlund in 1862, a technical genius that made it possible to turn around Mustad’s industrial adventure.

Strategically the emphasis was put more and more on self-constructed production equipment, new technology and the accumulation of know-how, necessary for further expansion. the decision was to combine new technological know-how at an early stage and displaying a wait-and-see-attitude, until the timing was correct. Technical know-how was acquired by studying drawings of patents, by studying machines at exhibitions or buying a machine to copy it. Or, most expensively, by bringing in persons with special competences. In the beginning of the 1870s timber trade had a tremendous upturn due to extensive construction and building. The demand for nails was increasing with a rise in prices and profits. The rapid growth was too much for Ole to handle the administration on his own, so he included his two eldest sons, Hans and Halvdan, in the management. Halvdan took care of trades and the "Heimdal" store, while Hans contributed to the many offshoots in addition to the saw mills and timber trade. Both were valuable partners for their father, but Hans The first card comb machine was constructed by soon stood out as the right man to bring the company forward. From 1874 he was Mathias Topp for another customer. The machine was in operation for almost 100 years, made a joint owner, and the company changed its name to O. Mustad & Son. until 1957.

1832: the company is established in Gjovik by farmer Hans Skikkelstad (1787-1843).

1832

1843: His son in law, Ole Mustad (18101884), takes over the company under the name of “O. Mustad”. The factory produces wire, nails, card combs and runs a forge. 27 employees.

1842

1853: The engineering workshop starts, headed by Even Amlund.

1860: Ole Mustad receives a trading license, opens a shop and enters into such activities as foundry, sawmill, lumber and trade. New products are launched like shoe plugs, cards, axes and horseshoe nails, and a foundry is started. 1862: Matthias Topp is employed as a carpenter.

1852

1862

2


Hans Mustad, the pioneer

1874 -1885: MUSTAD BANKNOTES, HORSESHOE NAILS AND INTERNATIONALIZATION

In the middle of the 1870s transport costs were so heavy that it was decided to move all of the transport demanding nail production to a place close to the coast. Mustad wanted to be near a good harbour, preferable in Christiania, or as close to the capital as possible. Here was already a good market for Mustad nails, and connections to other markets along the coast were the best. The factory relied on water power and had to be situated by a water fall. Vacant sites were hard to get. While Mustad waited and searched, something happened. A nitro-glycerine factory at Lilleaker near Oslo (at that time known as Christiania) exploded, and the following year all production stopped. Ole and Hans Mustad responded quickly and were able to secure the premises. On 22 December 1875 O. Mustad & Son formally took over the site. Only a few months later nail production was moved from Brusveen to Lilleaker.

But

the situation was far from safe: in 1872,-73 and -74 droughts ruined

much of the crops. The drought also caused problems at Brusveen as the flow of water in the river decreased significantly. Hans Mustad, who had gradually taken over management, experienced one of the most difficult days in his life Hans Mustad started the company’s internationalization process and contributed to when he by the end of September 1879 sat down to write a letter to his the creation of a distinctive ‘Mustad culture’ creditors asking them to accept a composition. On 27 September 1879 Mustad suspended all payments. Then something extraordinary happened. The workers continued working indefatigably without payment for two years! They received "Mustad banknotes" instead. The notes acted as written acknowledgements of debt from Mustad and were accepted by shops in Gjovik. This general trust in Mustad also pertained to the creditors helping the company through the crisis. Even if the crisis was severe, it did not last long. When Hans Mustad had weathered out the gale, he invited all creditors to his home for dinner. By each cover there was an envelope containing a check for a full settlement - including interest! All outstanding debt was paid. When O. Mustad & Son could pay off the last creditor on 15 July 1882, the company appeared healthier than before. The workers had contributed to this by accepting the special "banknotes“. For Hans Mustad the answer to recession was expansion, for which several opportunities were considered. The company made many products that the world needed, among them horseshoe nails.

At the time, cars were not yet an option for the road. The horse was the

The company's development gained speed after the

most important means of transportation. Horses needed shoes, and establishment of a new nail factory at Lilleaker in Oslo (then Christiania) in 1876. horseshoe nails had been in the Mustad assortment since the 1860s. His exceptionally skilful factory manager, Mathias Topp, and his men were busy developing new machines, one of them for automatic manufacturing of horseshoe nails. Mathias Topp had the opportunity to study some American horseshoe nail machines at the World Exhibition in Christiania in 1876. Back home he tried copying them - and succeeded. In 1881 he built two more machines. Mathias Topp was decidedly the right man at the right place. Through his 60 years of service to Mustad he became the company's most trusted and valued man. His inventions and constructions were the foundation of the incredible progress of Mustad. Some of his technical solutions are still in operation, 130 years after they were invented. Mustad did not hesitate and took advantage of this market opportunity to export shoe nails as soon as production had started at Lilleaker. As early as 1882, Mustad had his own commission agent in Paris. The demand for horseshoe nails was almost insatiable. Production as well as sales increased quickly, and profits in 1885 were about three times bigger than 1881. 1872: The iron foundry is established at Brusveen.

1879: The company barely evades 1881: Starts production of bankruptcy. Employees are paid in horseshoe nails. Production is moved to Lilleaker the same year. "Mustad banknotes” Export to France is started the following year. Horseshoe nails 1877: Production of become the most important product fish hooks is started in for the coming 40-50 years. Gjovik.

1876: Nail production is transferred from Gjovik to Oslo.

1874: Hans Mustad (1837-1918) becomes co-owner. The company is named “O. Mustad & Son” Matthas Topp

1872

1882

3


From local workshop to global firm 1885 -1912: CONQUERING THE WORLD WITH HORSESHOE NAILS

Hans Mustad realized the enormous potential on the export market for his products. The technology that had been developed in his machine workshop was superior to that of other producers. However, there were obstacles. Protectionism was in progress in every country, and tariff walls sheltered industry from outside competition. Mustad decided that these walls were best evaded by starting production within the walls on the international markets with the largest potential. Even though his first attempt was only partially positive (in Finland he sold back his shares to the Finnish shareholders after a dispute only two years after building a nail factory), his perseverance brought him to open soon a factory in France. Competition was not sleeping: in 1891 the United Kingdom introduced a new method for producing horseshoe nails. This provoked a pricecutting war, and subsequently an intense development process at Brusveen. Mathias Topp was not the only creative mind. Hans Mustad's son, Clarin, was also Mustadfors, 1900 blessed with a technical perceptiveness. He constructed a so-called cold nail machine that produced horseshoe nails from wire, which was more efficient as the iron needed no heating. In 1898 it was Sweden’s turn: as Norway was a smaller market than Sweden, and had lower duties on imported products, it was profitable to relocate the manufacturing of horseshoe nails to the other side of the border. A suitable site with a free waterfall was found. Mustad bought land, waterpower rights, spinning mill, gate saw, mill, houses, residence and the property Carlsudde. Hans Mustad was once asked why he ended up building a factory on such a forlorn place. His answer proved his self confidence: “Where I establish a factory, a town will rise” he said. And he was right. The little settlement was called Dals Langed. As it grew, the name was changed to "Mustadfors". Like in Norway, Mustad built tenements and a school for his workers.

The new cold nail machines paved the way for enormous expansion. It was imperative that the production method was kept secret. One of the procedures was to build the factories around many small rooms with only one process in each: workers from one department were not allowed into the neighboring room. In this way, no single worker had the total picture of the production procedures. Most important was to allow only a few persons into the cold forge. All factories purchased by Mustad were reconstructed in As the canal was the only means of communication from the same manner. The secret machines were produced in Norway and Mustadfors, Mustad established his own shipping company to handle the freight. brought to each factory. With them came some of the most trusted mechanics, who assembled the machines. The production process itself was also headed by Norwegians, mainly from Gjovik. This was also vital to prevent leakages. Mustad companies abroad were a reaction to tariff walls. Mustad wanted at least one plant in each of the large markets for horseshoe nails. Before World War I, Europe consisted of five great powers: The United Kingdom, France, Germany, Austria-Hungary, and Russia. Another two nations were large consumers of horseshoe nails: Italy and Spain. In 1913 Mustad was established in all of them except Russia. In 1907 Mustad constructed a new factory in Tolosa near San Sebastian in Northern Spain. Two years later Mustad purchased a horseshoe nail factory with a branch in Bergedorf outside Hamburg in Germany. In 1911 a new plant was constructed in Portishead outside Bristol in England, and the same year Mustad purchased an older horseshoe nail factory in Saaz in AustriaHungary. The year after Mustad bought a factory in Pinerolo near Torino in Italy. In 1913 Mustad started horseshoe nail production in Galati in Romania to serve multiple small markets in the Balkans. 1889: The foundry activity is transferred from Gj0vik to Oslo, and wood burning stoves from Mustad are becoming very popular. A margarine plant is started at Lil1eaker. 1886: The first establishment abroad, a nail factory in Finland.

1898: A horseshoe nail factory is established in Mustadfors and a margarine factory in Molndal, Sweden. 1905: Hans Mustad's five sons are admitted into the company

1891 A horseshoe nail factory is established in Duclair, France.

1892

1902

1907-1913: establishment of horseshoe nail factories in Tolosa (Spain), Portishead (England), Bergedorf (Germany), Pinerolo (Italy), Saaz (Czechoslovakia) and Galati (Romania).

1912

4


In between the World Wars

1912 -1945: UPS AND DOWNS FOR THE NEW GENERATION OF ENTREPRENEURS

Even if Hans Mustad in many ways was ahead of his This implied several challenges for Mustad. In order time, a shrewd observer and a competent analyst, there was no way he could have foreseen the Armageddon our world was about to enter into, nor the consequences of World War I on nations, business life and individuals. The war changed everything. Transportation needs grew, new roads were constructed, canals dug out and railways built. Everything was prepared for new communication facilities, not least the automobile. Nevertheless the demand for horseshoe nails was large, as horses could make their way where modern communication was insufficient. So Mustad's horseshoe nails could be sold at a good price, without regard to quality. Restrictions laid in raw materials and the lack of competent workers. Many of the workers employed by Mustad in war-struck Europe were on the battle fields on both sides of the frontlines. Those who remained in the factories had to work long hours. The war enhanced demand for horseshoe nails not only in the warring countries, but even outside Europe. Europe's increasing demand for food, raw material and

Ole Mustad (1870 – 1954)

Clarin Mustad (1871 – 1948)

Halfdan Mustad (1874 – 1967) Wilhelm Mustad (1877 – 1961) Christian Mustad (1878 – 1970)

industrial products had to be supplied from other parts of the world. This entailed a greater need for horses in overseas countries, and export from Mustadfors increased during the war. When the war ended, everything had changed, including Mustad's markets. The horse was nearly out as a means of transportation. Canals, railways and tramways took over, and as mass production of automobiles started in the 1920s, the horse was in serious trouble. The horseshoe nail producer Mustad had to adjust to this new reality. The political picture was also changed. New borders had been created through the splitting up of AustriaHungary. The new Europe had more states than before the war, and new tariff walls.

1918: Hans Mustad dies in February

1922

1924 Nail factories in Peggau (Austria), Zawiercie (Poland) and Karlovac (Yugoslavia) are established

to keep up sales in Eastern Europe, it was necessary to establish horseshoe nail factories in Poland, Austria and Yugoslavia. This happened in 1924. And when Hans Mustad died, in 1918, challenges were enormous for his five sons when they took over the company. How should they administer their large inheritance, how should they keep the "empire" together and preferably develop it in a time marked by international trouble, labour disputes and new demands? All of them had very complementary skills and could set themselves so that each of them found the right place in the organization. In the years between the two World Wars, they managed to expand the group, purchased other companies in Eastern and Western Europe (Austria, Yugoslavia, Poland, Romania) and explored new markets such as Cuba or Argentina: all in all, the export volumes for nails increased heavily. The outbreak of World War II had a strong impact on Mustad: for factories producing for the home market, be it axes, cast iron, screws or nails, the war did not matter

much. Export was, however, severely hit. In the five years from 1940 to 1945, only Germany, Denmark and Sweden were maintained as export markets. The horse became important during the war, due to the lack of oil and petrol. This increased the demand for horseshoe nails on both sides of the frontline. The production of screws had an upswing as well. But the war also caused considerable damage to property. The factories at Lilleaker were bombed already in April 1940, and the plant at Kjelsas was partly damaged during an act of sabotage. More critical was the complete destruction of the large Schumag factory in Germany that was bombed by allied forces. The factory in Duclair, France was also partially destroyed.

1928: Starting production of thumbtacks and paper clips.

1932

1934 The German machine factory Schumag is purchased and its substantial hook production closed down. Take over of factory in Belgium. Starting zipper production in Gj0vik. Production of many small items also started.

1942

5


Brother struggle calls for drastic changes POST-WAR - 1970s: RESILIENT TO NATIONALIZATIONS AND READY TO STEP INTO MODERNITY

The

geo-political revolution after World War II marked deeply the company setup. Every Mustad factory in Eastern Europe was nationalised. By a stroke of the pen all assets in factories, buildings, products, agreements and markets were gone in Romania, Yugoslavia, Hungary, Czechoslovakia, EastGermany and Poland. The factories that for decades had supplied Mustad with a flow of revenues had now become the competitors of the rightful owner. Especially painful was the confiscation of Mustad's two factories in Czechoslovakia, where Mustad had had a horseshoe nail plant in Saaz since 1911, and a steel works in Brux since 1916 - plants that had employed more than 1000 persons. Most of the plants that were confiscated produced horseshoe nails: however, Mustad could take a beating and had enough strength to move on, in spite of the 16.000 workers left behind the Iron Curtain, out of a total of 28.000 employees. Mustad was still Western Europe's largest producer of horseshoe nails. But the world changed dramatically in the years following World War II. The days of glory were gone for horseshoe nails, and sales dropped. On the other hand, the rest of the company experienced a huge growth in the first decade after the war, followed by a new period of stagnation, before taking off again in the mid 60s as free trade spread, to last until the mid 70’s.

During

these years

different dynamics affected the company performance. Hans Mustad left behind an organizational model that could have worked very well had the five sons been in harmony, flexible and willing to cooperate. They were no doubt skilful in their own fields. They complemented each other, and they took care of the company in all aspects. This brought the Mustad products further

1945-48: Due to nationalization of subsidiaries in Poland, Czechoslovakia, Romania and Jugoslavia, Mustad loses a major part of its business.

1952

1959 New management: Johan L'orange employed as managing director. Wilhelm, Halfdan and Christian Mustad leave the company, transferring their shares to their sons, Kristian Mustad, Johan Mustad, Clarin Mustad and Johan Nordahl Mustad.

out into the world, strengthened the brand and won new markets far from Oslo and Gjovik. But they were not well tuned. Actually they were very different, and all five were strong-minded. The corporate structure with five equal owners on top proved to be too demanding with numerous difficult negotiations and bothersome decision-making. As one or two of them frequently were abroad on business and modern communication was still to be developed, cooperation was further hampered. In a period when the brothers were not on speaking terms, the cooperation worked through written notes. It got so far that the brothers banned each other from the premises, and the guards were told to stop or report if this or that brother tried to enter. The controversies were never clear to the public. Now, more than fifty years later, it is impossible to find a thorough explanation other than the different opinions regarding the company management.

The situation demanded a new order of management. In 1958 a new board of management took over, while the brothers Halfdan, Wilhelm and Christian, together with Kristen Mustad (son of Clarin), withdrew from the . the differences that daily management. Everybody of course hoped that had caused trouble in the past generation now were gone. Unfortunately this was not the case: conflict to some extent continued and disagreements resulted in an initiative from Johan Nordahl in 1960, when the first company split was implemented: factories in Sweden except Mustadfors were separated into its own company, J. Mustad A.B. A more challenging market situation was faced successfully (from 1964 to 1974 the turnover multiplied by four), In 1968 Mustad moved into the new 7000 sqf large head office at but the sudden Lilleaker, Oslo. death of Johan Nordahl Mustad (October 1972, only 55 years old) and Kristen Mustad, aged 59. less than nine months later, next to 1973’s financial crisis hit the company hard. Two distinct management approaches emerged in this occasion: Johan Nordahl’s wife Katarina and his descendents on one side, the two cousins Ole and Christian on the other side. Soon everybody realized that the only possible solution was a second split, which happened in 1977: the Mustad International Group BV was created to include all foreign companies. 1961: The first Mustad split. Factories in Sweden, except Mustadfors, are separated in a company called J. Mustad A. B. Wilhelm Mustad dies aged 84.

1962

1968: The Mustad Group concentrates all its activities in the Oslo area, at Lilleaker

1972

1977 The Mustad company is split 1 January. The Norwegian based enterprise is kept by the heirs of Johan Nordahl Mustad.

1982: Mustad’s 150th Anniversasry

1982

6


The leap into 21st century

THE 6TH AND 7TH GENERATION SPEED UP THE CHANGE PROCESS TO TAKE MUSTAD INTO THE FUTURE

Christian and Ole Mustad found a different company than they were expecting: after 3 years as board members, they realized that both financially and organizationally many steps had to be taken to avoid disruptions and irreparable consequences. Unfortunately, the long restructuring phase after their takeover forced them to take unpopular decisions: the overall number of employees (3800 people at the time) had to be more than halved and many products and branches that were not profitable any longer had to be terminated. All in all, their experience – which started in a very negative environment not only for the company (1973’s oil crisis was still affecting the global economy) – turned out to be very positive in spite of the difficult context. In the true entrepreneurial spirit that was typical for the Mustad family, Christian and Ole embarked on a number of ventures besides the restructured steel wire-related business, which remained the company’s core.

Oil

recycling was

one the most exciting initiatives, even though the beginnings were tough and for the business to start paying back it took some time and many efforts. The key to success was a technical improvement in the process which allowed to achieve a much better quality of recycled oil. A salmon farm was also started and quickly ended, luckily right before the price of salmon collapsed globally due to a fish disease. The total number of companies in the newly formed Mustad International Group went up in a few years from 12 to over 30. Typically for Mustad, every company within the group was run independently and a key task for the owners was to keep the group together under common business principles and a solid ethic that were still based

upon the teachings of the founders. As soon as opportunities for diversification aroused, Christian and Ole were ready to take them: expansion happened mostly through acquisitions in the hoofcare sector, adding horseshoes and many types of farrier tools to the product portfolio ­ all in an effort to serve the many local traditions that thrive in countries and regions around the world. Next to oil recycling and equine hoofcare, today Mustad International covers several industrial sectors, including machinery for the paper industry, paper cores and tubes and screws and precision parts

The moves that secured a global market leadership in the hoofcare market were mainly the acquisitions of the historical Capewell Nails, with its 110-year heritage and leadership in the North-American market, and St. Croix Forge brands and operations. In Latin America, the acquisitions of Emcoclavos in Colombia and Mattheis Borg in Brasil, which became key suppliers respectively of nails and shoes for the continent and beyond, added value to the own branches in key horse markets such as Mexico and Argentina. Basic BV in the Netherlands (horseshoes production) and O’Dwyer in Australia were also acquired to complete the picture, putting Mustad in a clear leadership position globally. The handover of the Group to the 7th generation of the Mustad family, Clarin and Hans, happened in 2003: today we celebrate our 180th anniversary in changing, more challenging market conditions, with a new vision for the group that sees Production, Sales, Marketing and Innovation contributing jointly to the Group’s long-term sound growth: find more information on our current business on mustad.com

A screenshot from our recently redesigned Group website

St. Croix Forge in Minnesota became part of the Mustad group in 1999

1985: A significant market share in North America is secured through the acquisition of the historical Capewell Horsenail brand

1992

1999: Leading american horseshoe brand St. Croix Forge becomes part of the Mustad Hoofcare group 1995: Mustad sets out to become a key player in the wider hoofcare industry: the horseshoe business begins

2012: 180th Anniversary

2008: strategic acquisition of the northamerican distributor and hoofcare products supplier Delta

2002

2012

7


« Everything a home needs » NAILS AND SCREWS, ZIPPERS AND PAPER CLIPS, AXES AND ZIPPERS THE MUSTAD WAY TO DIVERSIFICATION

If you have metal wire, some knowledge and adequate tools, you can

Ole Mustad (1810 – 1884), Hans Skikkelstad’s son-in-law, took charge of his inheritance in the best way, contributing in the best way to the factory as well as the society

satisfy many needs. This is exactly what O. Mustad & Son has been doing for the better part of the company's 180 years in business. All kinds of remedies for everyday use, many based on wire, have been turned out by the company. Wire drawing is defined as cold deformation. In order to maintain the content of carbon in the wire, it is heated between drawing operations. In the course of time, demands on the wire grew with regard to purity, straightness, flexibility, cutting ability and so on. In the beginning of the 1950s, a radical upgrading and rationalization of this process was done, which implied that the wire could be reduced with close to 80 percent of the wire dimension. New wire drawing machines with seven subsequent drawing operations were installed. It soon became clear that the wire could be used for a lot of purposes: the Mustad assortment has been so large and numerous down the years that hardly anybody knows the real extent of everything that has been produced and sold. In the years of war, 1940-45, many small items were produced. The staff was employed in the production of all kinds of wire based items needed in everyday life. Here is a small selection: Top: screws; Top right: staples; Third row from top, left: a buckle for trousers. Above the thumbtacks: a loop for braces. Bottom: a case with sewing needles. After the war all items were phased out except paper clips and drawing pins. Mattress springs and zippers were also part of the offer: zippers were produced initially only in metal, then in nylon. Production ended in 1987 after 53 years.

Fertile minds come up with bright ideas! CREATIVITY AND TECHNICAL COMPETENCE THAT WENT BEYOND PURE BUSINESS: CLARIN MUSTAD’S INVENTIONS

Clarin Mustad, the fourth-generation owner with his four brothers, was an

Clarin Mustad (1871 – 1948) next to his “Egoist”

engineer and the brain behind the development of horse nail machines, fishhook machines together with maybe the brightest inventor of them all: Matthias Topp, and screw machines. But his creativity went well beyond the machines that made the fortune of the company: for instance, being a man who valued his personal comfort, Clarin Mustad developed the electrically heated toilet seat in 1915, followed by an even more “strategic” air extractor fan incorporated in the toilet bowl just under the seat. Water skis equipped with ski poles to walk on the fjords were yet another of his ideas. These were large floating pontoons with pivoting flops: his children often walked right around the island in front their home on these skis, a total of over 5 km.

Some of Clarin Mustad’s most cherished inventions were automobiles, of which he

developed several. Perhaps the most impressive car he developed was the 3-4 ton 6-wheeler, of which 2 units were built between 1917 and 1919. The car had a summer coachwork, fully convertible and a winter body where the driver sat outside and the passengers sat inside a spacious salon with curtained windows, lamps and beautiful upholstery. The car had twin rear and a single front axle. The first rear axle turned concurrently with the front wheels while the second was fixed. The idea of the six wheels was that the system would reduce wear and tear on tires and road; both of which were of less than optimal quality at the time. The Clarin Mustad ‘s 6-wheeler car also had a central headlight that turned with the steering-wheel to improve vision around curves (an idea that was later “copied” in the 1960s’ Citroen SM). This 11-seater was just right for his large family and every morning as he drove to the office he would encounter a group of nine people standing at the bottom of a hill waiting for a ride into Oslo in his large and comfortable car. He could never say no so they had the best transport in town, all for free. This situation irritated him to such an extent that he developed a completely new car just to teach them a lesson. This car became known as the “Egoist”, a single-seater with the gear-shift between the legs and enough room behind the seat for a briefcase.

8


MUSTAD Hans Mustad

Visionary entrepreneur

Hans Hans

Matthias Topp

Hans

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My Story at Mustad

I have spent most of my childhood in the factory that my grandfather Hans Skikkelstad founded in 1832, five years before I was born. I have always liked the many exciting activities going on at the factory: as soon as I finished school, I got hired at the factory and started working on many different assignments, which made me grow personally and professionally. That was a fundamental preparation for me to be able to lead the company, one day. I have always loved to observe people in their daily life and look for solutions to their problems and needs and I have made it my personal challenge – as well as my company’s – to manufacture products that fulfill the needs of every single household. My father Ole gave me a great opportunity in 1874 when he made me a co-owner of the company: when he passed away 10 years later, I had acquired a great deal of experience on the field and developed my own view on how to grow our business. My beginnings were very tough and I will never forget the days when the company was almost bankrupt and we had to pay our suppliers with ‘Mustad cash’: these are indeed the times that created deep bonds within the team and made our community more solid and poised to facing even the most difficult challenges. Actually, instead of worrying me, challenges and problems have always stimulated my creativity: when transportation became an issue, we moved transportcritical production to Christiania to make it easier. When business was hampered by other countries' protectionist tariff walls, we established factories within the walls. I have learned to listen to my co-workers and an important thing that made a difference for our team was information availability. This has always been key to take strategic decisions, in our quest to conquer more and more markets, going beyond geographical and institutional borders. Being constantly on the go to the four corners of the world, my team and I have always managed to stay in touch. I was receiving regular weekly updates on the business status and all the necessary information on the markets where we wanted to invest and open a new factory. So, if you ask me what made it possible to do what we did, I would tell you it has to do both with my knowledge, intuitions and hands–on approach as well as with the great team of professionals surrounding me: their skills were only surpassed by the passion for this company and the products they were manufacturing. My vision of a modern, multi-national company could come to life only thanks to our team, which had in Mathias Topp its brightest member. I have always been a man of action and many decisions I took under pressure proved right, but without our team efforts no achievement would have ever been possible. My co-workers and I mutually knew we needed each other to succeed: from my side, I have tried to nurture that spirit, which I wanted to be at the core of our company. I value well-being and achievement and I have always wanted everybody in the company to enjoy work and be paid at least the same wage as in other companies, preferably a little higher. This has developed a sense of belonging and pride for the company that made us overcome even the worst crisis. Our company has become more than just a factory and a commercial office: it is a community where we also take care of housing, schools and food for employees’ children. Beyond business results, this is what I consider one of our biggest achievements which really makes me proud. This is the heritage I have left to the new generations: it is indeed the same culture that brings the company forward nowadays.


Q&A: Christian and Ole Mustad IN THE GROUP’S BOARD SINCE 1971, CHRISTIAN AND OLE BECAME GENERAL MANAGERS IN 1973 AND AFTER THE SPLIT FROM THEIR NOWEGIAN COUSINS IN 1977 HAVE RUN THE COMPANY THROUGH ONE OF THE MOST CHALLENING TIMES EVER, UNTIL THEY HANDED OVER TO THEIR SONS CLARIN AND HANS IN 2003. PUT TOGETHER TWO ENTREPRENEURS WITH A FANTASTIC STORY TO SHARE AND HERE IS WHAT YOU GET:

What was the biggest challenge you had to face when running the company? C&O: Our beginnings were very tough. After 2 years in the board and another 2 years as General Managers, in 1977 we decided to split from our norwegian cousins as our views on business were not aligned. When we took over our side of the business, we realized that many branches were under-performing and in some cases we could restructure, improve products and make them more competitive, but in others we just had to close factories and shut production or move it somewhere else. We started out just after the oil crisis in 1973, one of the most severe financial crisis ever, with all the consequences it brought to the world’s economy: unfortunately we had to reduce our part of the group from 3.800 people to 1.800, by cutting product lines and shutting down factories with no potential. C: Having to face such critical challenges made us work together to make the company survive. We were working day and night to understand more of the various businesses and how to help our financial situation and this created a strong bond between us, that nothing and nobody has ever broken. Not that we agreed on everything at the beginning, but it’s always been a very open discussion and in the end we always took decisions based on the opinion of both of us. O: It was very clear that we were complementing each other. I think I have a sort of synthetic mindset, while Christian is more analytical and sees every little detail of the picture. I recall that in two occasions we were about to announce to all our employees we were bankrupt and the next day the Group would not exist anymore. In both occasions, we managed to find the resources we needed and eventually saved the Group. Those letters to employees were never sent but, trust me, it was not an easy one! These were the most challenging times in my opinion. What was your most precious resource? C&O: No doubt, our people! This is the most important success factor in the history of our company and we were lucky enough to meet outstanding people along our professional lifetime. We were also good enough to spot their talents, attract them, hire them for our company and keep them motivated for a long time, and since longtimers are not an exception in our group, this cannot be luck only: we have examples of families working for us across four generations! We have learned that people

make a difference in a company, for better of for worse – luckily bad managers were only a few exceptions! The exceptional thing with our team was that almost all our general managers also became our close personal friends! Exchanging ideas freely and trusting our managers was one of the strength of our Group and this still seems to be the case.

Christian and Ole Mustad, two distinct characters completing each other, who left a deep mark in the company history

What value or lesson from the company history have you adopted along your career? O: The legacy of our fathers is still strongly with us. Take Hans Mustad: he really created our family’s entrepreneurial spirit with a strong vocation to international businesses and also gave us a clear example of management style, because his work ethics was as strong as his mental and physical skills: he was getting up every day at 5 in the morning, breaking the ice to get the water mill running, along with 2 or 3 fellow employees, so that the machines in the factory could run. Then the workers were invited to his house where they could get their clothes dried, had aquavit with him and the day could start the right way. He was always the first to start and the last to leave: he was truly leading by example and he was “carrying water for his people”. I like that philosophy and have fully made it mine. C: The whole experience as company leaders was certainly a rewarding journey even though restructuring companies like we had to do back then especially in our beginnings was not a great pleasure. But one thing is for sure: we always

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Q&A: Christian and Ole Mustad had in mind the survival of the group and always talked to people from the bottom of our heart, looking straight in their eyes: people appreciated our honesty and integrity and understood our decisions, no matter how tough they were. Many that were affected negatively by those decisions came anyway to shake our hands and thank us. I consider this a big achievement! What was your biggest accomplishment? And also, anything that did not really work? C&O: It’s tough to name one in particular, maybe our biggest accomplishment was to survive through very tough times. We have had many successful experiences, the paper business as an example, and a few bad ones that have taught us a lot. However, in our family DNA we have some genes that bring us towards industrial ventures, in fact we have never thought about any other business, even safer ones, as an option to diversify our portfolio, that did not have to do with an industrialised production of some sort. C: I still believe we had a brilliant idea when we started creating the foundation to pass the business onto the next generation and found adequate resources for the creation of a second Group, next to the existing one, with diversified businesses. At the same time though, a false picture of the business status and the Argentinean financial crisis in the late 90’s struck us heavily and represents one of the worst moments in our career. O: One example that taught us to focus on what we knew best was the salmon farm we started in Sweden and stopped just in time, avoiding major failures and money loss. Also, the oil recycling business is now profitable but we had to put so much money into it before we could turn it around! I believe the lesson is now learned: don’t go into new thing just because things are going well: that’s when you start losing money! C&O: the most interesting and rewarding memories of all have to do – once again - with our people: we met so many interesting people and we went through good and bad

times, shared amazing, sometimes odd experiences in the most strange places on earth: this has been for us a tremendous wealth! O: Especially when you are facing a difficult situation and you see people responding to you and feel your whole team backing you up – well, this is what makes me go! C: the group trips we have organized every five years for our managers have been memorable: after working hard, that was the moment when we could celebrate our successes! I remember our one-week boat trips to the Mediterranean, Egypt, Bora-Bora and New Zealand: our former colleagues still talk about it! Those trips created an amazing atmosphere within the group and helped reinforcing bonds across regions – it was really a fantastic team of people! C&O: among many positive experiences with our managers, unfortunately we also had a very bad one with a disloyal manager who, when things got difficult, started to falsify information: this situation grew like a snowball, fast and hidden and when we finally understood we were in a vertical trend, that took us a very long time and a lot of money to stop. The whole company suffered for that – and we were struck heavily: financially, yes, but most of all personally, as we value so much trust and respect. It’s been almost 10 years since you handed over the company to your sons: are you enjoying your retirement? O: I thought I was going to enjoy my retirement in Argentina but I tend to get bored if I have too much leisure time, so I started a very promising large scale cattle farming: we have a highly modern and flexible organization that has learned a lot quickly and works much more effectively than seasoned competitors from the area. We will deliver profit for the first time this year and I am very proud of it! C: I do not really have a relaxed lifestyle and still enjoy doing business: currently I currently have shares in 5 industrial startups, ranging from medical research to photovoltaic technology, and some interest in a gold mine.

The Mustad family 6th and 7th generations: Ole, Christian, Clarin and Hans Source: Terje Paulsberg: “Mustad: fish hooks for the world”, Alfa Forlag as, Gjovik, 2007; interviews to Christian, Clarin, Hans and Ole Mustad, May 2012

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Mustad Global News - The 180 Years Issue