Volvo Deputy CEO thrives on challenges

Jorma Halonen heads world's second-largest truck manufacturer

print this

By Josetta Mykkänen in Gothenburg
     
      With 77 days of travel, 1,200 kilometres of running behind him, and a budget 10-20% ahead of schedule as of early June, Jorma Halonen, Vice President and Deputy CEO of Volvo Group has had quite a good year so far.
      Although Halonen is fairly unknown at home in Finland, the achievements of this top executive during his career are all the more impressive.
      The man, who in 1990 moved from the Dutch electronics giant Phillips to Finland to serve as CEO of Finland’s Scan-Auto, worked miracles in the company at a time when automotive sales were going down. At the end of the decade he helped put the truck manufacturer Scania’s Latin American operations in the black after they had been losing hundreds of millions of Swedish krona.
      In 2001 he left Scania to become CEO of Volvo Truck Corporation, where he performed more of the same magic.
     
From November last year Halonen, 56, has helped guide the Swedish Volvo Group - a company whose turnover is just a quarter smaller than that of Nokia.
      Running helps keep him in shape both physically and mentally, because it is something he can do anywhere in the world.
      Halonen is at his best when things are going downhill. Already as a young ice hockey player, he enjoyed situations in which his team was behind. "I love it when things are going badly, because that is when management is needed."
      When joining a company in difficulties, he has looked for ways to cut costs. He has closed factories, and sat on the edge of a table with workers to explain to people how things really are.
      Sitting in his boat outside his current home town of Gothenburg on the west coast of Sweden, Halonen attributes his success to openness, honesty, and his readiness to make quick decisions.
      "But the main reason is that I have been an absolut workaholic. I have worked too much." Raising his four children has been left to his wife.
      Halonen, who has lived abroad for 19 years, has also been asked if he would like to serve as CEO of Volvo’s passenger car unit, which has been sold to Ford. He turned the offer down; he felt that his present employer was more interesting, because of its large size and the variety of its operations.
     
Volvo’s year has begun on a positive note, as the Americans are currently busy buying new vehicles in anticipation of tighter emission standards.
      The greatest problem has been now to secure the supply of steel and tyres, whose prices have been on the rise. Halonen is nevertheless confident that the price of steel has peaked, because new production should soon lead to a greater supply.
      In Europe, which accounts for more than half of Volvo’s sales, there is hardly any growth to be seen. Halonen is concerned that there has not been enough discussion on the problems of availability of labour. He notes that in 2020 there will be a shortfall of 22 million people working in Europe. "That is why it is not possible to make heavy investments in Europe"
      Halonen does not consider it very likely that Volvo will make new European investments.
     
Halonen is bullish about China, where Volvo has set up five factories in recent years.
      "Growth has been quite fantastic", Halonen says, pointing out the rapid growth of China’s highway network.
      Competition in China is also emerging. Just over a year ago the China National Heavy Truck Corporation (CNHTC), which operates a joint venture with Volvo, sold a truck similar to a Volvo model for a third of the price of a Volvo.
      "After a while they will manage to produce quite reasonable quality, but they won’t reach European standards for many years", Halonen predicts.
      The Asian market is growing rapidly in other ways as well. The greatest surprise for Halonen has been Iran, which is currently the second-largest market for Volvo trucks, right after the Untied States.
      Volvo’s result nearly doubled in the first quarter of the year, but this is not enough for Halonen. He is currently planning for synergy benefits that are to be achieved by combining components of Volvo’s various models.
      He predicts that the company will save EUR 300 million a year when the number of different types of engine chassis is reduced from 18 to just two.
     
Helsingin Sanomat / First published in print 16.6.2005

More on this subject:
 FACTFILE: Volvo Group

JOSETTA NOUSJOKI / Helsingin Sanomat
josetta.nousjoki@hs.fi