Addtech’s business operations consist of more than 100 wholly owned but independent subsidiaries, which under their individual company names (e.g. Gevea, Triolab, Metric, Caldaro) sell engineering components and subsystems. The role of the parent company in the Group is to create optimal conditions for the profitability and growth of subsidiaries through management by objectives, follow-up, training and acquisitions.
Addtech’s subsidiaries are chiefly technology trading companies that function as a link between suppliers (component manufacturers) and customers (machinery manufacturers, or customers in the process industry or service sector). The technology trading company takes responsibility for parts of the customer’s procurement and delivery processes, making sure that the deliverable meets customer requirements at the agreed price, and that components ordered are delivered at the right time and with the right level of quality. Aftermarket service and warehousing are also usually included.
Addtech – the value-adding link between supplier and customer
Addtech plays an important role for both manufacturers and purchasers of components. Manufacturers gain a distribution channel in the Nordic market and access to a broad and relevant customer base. For their part, customers gain access to a global component market without themselves needing to be specialists in the properties and areas of application of the various components. The modern battery market is good example of a market where needs are easy to define but where an optimal solution demands a great deal in terms of specialist knowledge and a high level of technical expertise.
Market-leading subsidiaries in their respective niches
Addtech’s subsidiaries are technology trading companies in well-defined niches that primarily strive to work with components and subsystems that are required for short series manufacturing and that add a great deal of value for customers.
Customers do not always ask for custom components with high added value; rather, it is often up to the individual sales rep to convert a request for a particular standard component into an order for a complete subsystem. A specific example of this can be seen in the diagram below.
The original enquiry from the customer was for large quantities of 1,2-volt battery cells. By finding out what they would be used for and what function they were to fill, the sales rep was able to sell a complete 48-volt battery cartridge with cells, cable, cable terminal and protective case that was to be used as a backup unit for mobile telephone base stations. By moving forward from the position as order recipient to that of problem solver, the sales rep created added value for the customer, who achieved a simpler, more cost-efficient manufacturing process for a sub-component that was critical to his business but not image-enhancing. For his part, the sales rep generated long-term business that was less exposed to competition.
The example shows how the business model creates value, and that there is a constant dynamic between added value and volume in Addtech companies’ sales. By taking a step closer to the customer and thinking more in terms of added value than volume, margins are improved and competition restricted.
The aim is to get closer to the customer’s development and production processes in each selling situation, with the aim of maximising added value. The advantages to customers are often great, because they are able to focus instead on creating added value for their end customers.
Parent company to manage in moderation
If the Addtech Group is to recruit and retain business-driven employees and entrepreneurs, the independence of the subsidiaries is crucial. The maxim “small-scale on a large scale” permeates the entire business and involves Addtech combining the flexibility, personality and efficiency of a small company with the resources, networks and staying-power of a large one. By conducting small-scale operations on a large scale, the small company’s opportunities for long-term growth and profitability are optimised.
Independence and freedom with responsibility mean that the companies are free to run and develop operations as they wish, as long as they follow Addtech’s business model and the Group’s rules of play. The parent company does not determine the course of day-to-day operations in detail; instead, it provides a range of Group-wide tools to support efficiency and optimisation. These tools cover areas such as legal affairs, finances, training, quality, IT and business systems, as well as general agreements for services and consumables.