Veteran Assembler Valmet Gets Boost From Mercedes

HELSINKI, Finland – Valmet Automotive, Finland’s independent contract auto assembler, is experiencing a renaissance thanks to orders from Germany’s Mercedes-Benz and the European Investment Bank.

Valmet’s breakthrough came when it signed a deal with Daimler in July 2012 to make more than 100,000 Mercedes A-Class vehicles between 2013 and 2017. And while the company will not specify when production job will end, Valmet in November 2015 secured a new contract to make Mercedes GLC SUVs, with output to start during first-quarter 2017. Neither the value of this deal, nor the number of GLCs to be produced, are being disclosed.

“In both projects, the major investment concerns the body shop – both vehicles need their own, which were completely redesigned and rebuilt and are now the largest robot shops in Finland,” says Mikael Maki, VA’s communications manager.

“The A-class (line) has 200 robots and the GLC 316 – ultimately the total will be 600,” Maki says. “VA considers automation carefully. We use robots where they are clearly superior to manual work – repetitive tasks with no or small changes in every car.”

The result is more than 90% automation in the body shops with 80% in the paint shop. This compares distinctively with the near all-manual assembly processes where production agility and flexibility are paramount.

Swedish-Swiss automation tech expert ASEA Brown Boveri supplied the robots and the number “reflects the production volumes and the high level of sophistication in today’s vehicle production” Maki says.

The exact total investment required for tooling-up has not been released, but Maki says the cost of both lines “is in the tens of millions of euros.”

Valmet employs 1,550 workers, more than twice the 700 on the payroll before the Daimler deal was struck.

In 2015, the company’s turnover rose €82.9 million ($86.7 million) to €400 million ($418 million) with net profits rocketing to €14.2 million ($14.8 million) in 2015 from €1.3 million ($1.4 million) in 2014.

Mercedes-Benz Assignment Dwarfs Smaller Jobs

This is welcome news for Valmet’s current joint owners: the state’s Finnish Industry Investment and Helsinki-based Pontos Group, a privately owned private-equity and real-estate investment company.

For them, the Mercedes-Benz deals have offered solid long-term work, with the Finnish manufacturer having relied earlier on some smaller deals offering work between 2010 and 2014, for instance, producing sports cars for Russian marque Marussia; transmissions for U.S. electric-vehicle maker Fisker, the Think EV of Norway-based Think Global and autos for Danish car company Garia.

To deliver on its new Mercedes contract, Valmet has embarked on a major recruitment drive, looking for 1,000 new employees to be hired over the next nine months, bringing its total workforce to about 3,000 when subcontractors working in the car plant area are included.

“We are looking for personnel in all the shops and internal logistics as well as white-collar workers in production, engineering and other tasks,” Maki says. Basic car-assembly employee training takes four weeks at Valmet, he says, with in-depth induction and specialized skills instruction requiring several months.

“The Mercedes-Benz GLC project is the most challenging in our history in its extent and technological implementation,” observes Jyrki Nurmi, Valmet senior vice president for Daimler projects. “Cooperation with Daimler has been excellent and everything is on schedule.”

Looking ahead, the company will upgrade its facility at Uusikaupunki, on Finland’s west coast, with the help of a €20 million ($21 million) loan from the EIB, the European Union’s development agency.

The loan will finance Valmet’s investment in new products, including rooftop systems for convertible cars, and help fund an upgrade of its information-technology and supply-chain management system, minimizing waste and emissions.

Established in 1968 as a joint venture between the then-state-owned engineering group Valmet and Swedish automaker Saab, the assembler has seen success and hard times. It is critically important to Uusikaupunki, whose 2016 population is just 15,500. The plant provides access to a nearby port, with a critical logistical role importing parts and components and transporting finished vehicles to market.

Since it began production, over 1.2 million vehicles – overwhelmingly for export – have left Uusikaupunki. After making Saabs, cars also have also been manufactured at the plant for France-based Talbot, Germany’s Opel and Porsche Boxster and Cayman models and Russian brand Lada.

While car assembly is its core business, Valmet also has diversified into parts and components production. In 2010, it acquired the convertible car-roof business of Karmann, with units in Poland and China that supply BMW, Mini, Daimler, Bentley, Porsche and Lamborghini.

A sign of long-term confidence was the August appointment of former Volkswagen and Audi executive Ulrich Hackenberg to Valmet’s board of directors, a specialist in body development, safety and concept vehicles, as well as hybrid and electric cars.