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INDUSTRY INSIGHTS

Land of milk and money
Sandvik succeeds in the US by changing with the market

by Matthew McKenna
Assistant Editor
mmckenna@mail.aip.com

Swedish-based Sandvik AB is a $5 billion global group of materials-technology companies, with 33,000 employees in 130 countries. Of those 130 countries, the US is one of the most profitable, with sales approaching $1 billion a year. The 14 companies in the Sandvik US group are aggressively expanding the company's collective US presence through capital investments, acquisitions, and increased synergies among them.

"In 1997, the company invested approximately $180 million in capital projects and acquisitions, many involving advanced material technologies," explains Sandvik Inc President James T Baker. "Equally important, synergies among the US companies and with the Swedish parent led to new products that vastly improve machining of stainless steel, sawing of difficult metals, and penetration of new commercial markets for parcel sorting systems."

Internal developments were a key to making the US group a major asset to the parent company. In 1997, approximately $10 million was invested at Sandvik Coromant to expand carbide-insert finishing and toolholder manufacturing capacity. Sandvik Coromant is in its third consecutive year of investing $10 million or more in US capital projects.

Substantial investments were made at Sandvik Steel's Waverly, PA, facilities. To better serve NAFTA markets, a large portion went to build a North American distribution center for seamless stainless steel pipe and tubing. Capital projects at Sandvik Saws and Tools were designed, principally, to create a new world headquarters for Sandvik and forestry products. In addition, US test-and-demonstration centers were created for parcel-sorting and food-processing systems made by Sandvik Sorting Systems.

Recent acquisitions

Nineteen ninety-seven was also a year of acquisitions for Sandvik. In July, the company acquired Drillmaster, Inc, which strengthened the Rock Tool Group's position in downhole drilling tools for oil-and-gas exploration and mining. In September, Sandvik acquired Precision Twist Drill, strengthening Sandvik Tooling's position in high-speed steel tools.

The company's success in the past year meant rolling with the punches. Tooling, saws, and hand tools, traditionally distributor items, are increasingly moving through new channels, such as the Internet and integrated supply.

"The industrial-supply market is beginning to work like the computer and software markets, with a wide variety of distribution channels, and we are adapting," says Baker.

For 1998 and into the next millennium, Sandvik plans to continue its aggressive investment programs in all groups. Though he offers no details on forthcoming acquisitions, Baker says that Sandvik is aggressively investigating alliances that fit with current strategies and strengthen the company's position in existing markets. He adds that the reorganization of Sandvik Inc as a holding company has created some economies of scale and improved competitiveness, responsiveness to customers, and ability to spot niche-marketing opportunities.

This article was originally published in the
March 1998 issue of Metlfax. * Email the editor: jmckenna
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