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asko & upo
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Asko’s factory complex in 1960.
takes – even when they had been warned against them. Some of Aukusti Asko-Avonius’ final investments could be blamed on his stubbornness, and Tammivuori also tended to hold onto ideas no one else in the management supported. According to Joseph Schumpeter’s theory, a company introducing innovative products to the markets would reap the best margins and prosper. Success would attract followers. As a new industry expands and the old industry it replaces withers away, the production structure is altered. Until 1917, furniture production in Finland had been order-driven, with a single company providing the complete interior designs of its customers. Poorer families and families living in the country usually made the necessary furniture by hand themselves. Good workmanship was expensive and cheap production was low in quality. Aukusti Asko-Avonius realised that demand for mass produced furniture would be high, if sufficiently good furniture was available at a reasonable price. Asko-Avonius was one of the central characters developing Finland towards a new way of furniture manufacturing. And as Schumpeter’s theory predicts, there were followers. When Asko-Avonius first established his factory, it was the only one in Lahti. In 1938, there were 26 furniture factories in Lahti and about 40% of total furniture production was manufactured there. Despite the innovative nature of its Managing Director, Upo never launched completely new products or developed new production methods, apart from the electric mangle. Nevertheless,
Upo can be counted among innovative companies. It was the first to produce, market and distribute many of the products necessary in Finnish households and municipalities. It is a commonly held belief that financial profit motivates risk taking. However, Joseph Schumpeter contradicted this as the fundamental motive for entrepreneurship and turned to psychology for more likely answers. According to Schumpeter, the innovators responsible for the industrialisation of the USA were driven by an obsessive need to prove themselves. Their common pursuit was to build their own empires. By the mid-1960s, Aukusti Asko-Avonius’ “empire” employed about 6,000 people and had well over 10 hectares of floor space. At the time, these were impressive figures. He had fulfilled the American dream in Finland.
The inheritance of Asko-Avonius ukusti Asko-Avonius died in the autumn of 1965. At the beginning of 1966, the holding company Asko Yhtymä Oy was established to combine Asko and Upo under a single roof. The holding company presented Aukusti Asko-Avonius’ heirs with a channel for control over their legitimate property and for income. In a sense, the holding company Asko Yhtymä represented Aukusti Asko-Avo-
A
nius. In practice, he had been the chief executive officer of a multi-industrial corporation, although legally such a corporation had never been established. In the holding company, Asko Yhtymä Oy, the highest authority was given to the Supervisory Board. K. K. Kankaanranta, administrator of Asko-Avonius’ estate, was nominated Chair. Kankaanranta was a proficient lawyer acting in the interests of Asko-Avonius’ heirs. As a trusted man, Kankaanranta was soon participating in operations outside estate administration proper. Due to his extensive contacts, Kankaanranta was useful for business as well. His contacts included Asko’s and Upo’s principal investor, the Finnish Union Bank, Finland’s major commercial bank. The Finnish Union Bank gained increased control over decision-making. While alive, Asko-Avonius had been the sole owner and had raised credit against his personal property. The Bank had been satisfied by regular payments and had not required detailed information on the companies. As credit was now raised under the name of the company, it was discovered that Upo was very much in debt. Until the early 1960s, Upo had been able to make the necessary investments practically without additional funding from banks. However, building the Nastola Plant had been expensive. Financing costs were a burden on solvency, which was alarming. The Finnish Union Bank demanded better financial planning and control from both companies. Worse than that, the Bank attempted to coerce Upo to participate in the industry restructuring