24 September 2020
Tuomo Peltonen founded ST-Koneistus together with his brother Seppo Peltonen 50 years ago. This is the second part of a series of articles about the company’s history, in which Tuomo recalls the events of ST-Koneistus in the 80s and 90s.
Many do not know, but the Peltonen brothers’ entrepreneurial story also includes another, so-called spin-off chapter, which began fairly soon after the founding of ST-Koneistus.
It was a company that made plastic products called Ässä-Tuote Oy. The brothers drifted into the plastics business inspired by Tuomo’s school mate Jorma Palonen.
Palonen, who still lived in Porvoo in the 1970s, had got the drawings of an injection moulding machine in his hands.
– Jorma asked me and Seppo if we would make him the parts according to the drawings for two machines. The idea was that he would then put the machines into operation in Porvoo and start manufacturing and marketing plastic products from there.
However, Palonen’s enthusiasm was never enough to assemble the machines, and the parts made with hard work threatened to remain unused in Porvoo.
– At some point, I decided to get those parts out and finally assembled the machines in our washroom myself.
This washroom is located in the current canteen building of ST-Koneistus, which was originally built as a residential house for Tuomo’s family. Tuomo, his wife Kaija and the family’s children Tommi and Katja lived there for more than nine years.
It is also worth mentioning that by the end of the 1970s, three different businesses were run at Hopeatie 3, as Kaija also had her own hairdressing business working from home. The balance is rather good for a family whose business was sought to complicate in many ways because of their working class background.
Anyway, for a few years, Ässä-Tuote was a family business in the true sense of the word, when Tuomo operated plastic machines on the floor of the family washroom while the children ran around his feet.
The company’s first products were stone wall screw anchors, i.e. props, which were exported all the way to the Middle East. In addition, over the years, the company manufactured hundreds of other products such as plastic coin holders, refrigerator parts, pints and even plastic toothpicks.
“Ässä-Tuote was always Jorma’s project, even though it started its operations in my washroom.”Tuomo Peltonen, Co-founder of ST-Koneistus
Eventually, the headquarters of Ässä-Tuote had to move out of the way of the day-to-day life of a family with children.
– The machines ran until ten o’clock in the evening and every time the mould opened, our entire apartment shook. At times, parts of the machine broke down, which I then fixed overnight to get production going. They were, in a way, hard times; However, ST-Koneistus was my main job all the time.
So, Tuomo informed Palonen that now he would either move to Ylöjärvi and take charge of the company, or the entire thing would come to an end. The threat worked and production facilities were leased to Ässä-Tuote from ST-Koneistus’s expanded facilities.
However, the company’s operations continued to grow and in 1981 the company built its own premises on Ylöjärvi’s Tulotie.
– Of course, the rapid development of Ässä-Tuote was facilitated by the fact that Seppo and I had connections here with banks and the business community, because we had been running ST-Koneistus for more than ten years at that time.
Although Palonen once did not get the machines up and running, Tuomo admits that he was otherwise extremely skilled in handling Ässä-Tuote’s business.
– He had true knowledge and experience in the plastics industry. For example, immediately in negotiation situations, he was able to give an exact offer to the customer, taking everything into account from material to mould making.
Ässä-Tuote Oy eventually grew into a company with a turnover of more than 10 million Finnish marks, and employed more than 40 people.
– Seppo and I both owned 25 percent of Ässä-Tuote and Jorma the remaining 50. That was always Jorma’s project, even though it started its operations in my washroom. We were in it with Seppo for twenty years, as if it was a hobby.
In the mid-1990s, Tuomo and Seppo sold their shares of the company to Jorma. At the end of the decade, a larger plastic product manufacturer bought Ässä-Tuote from Palonen and merged it into its own business.
“CNC machines and pallet systems revolutionized the metal industry in the 80s”
The first part of the story ended with a lesson learned on what can happen if a company only has one customer. By the 80s, ST-Koneistus already had hundreds of customers. Nevertheless, the lesson learned proved its importance on many more occasions.
At the same time, in the early 80s, the metal industry in Finland experienced a severe technological change, which Tuomo did not intend to follow from the side-lines – CNC machines had entered the market.
A CNC machine is a machine tool with numerical computer control (Computer numerical control). For some time, there were also NC machines in use in the industry, which were controlled by perforated belts, but were quickly replaced by CNC machines.
CNC technology enabled programming of machining plans by using a computer, which improved production speed and accuracy in an unprecedented way.
Before the NC and CNC era, all work was done by manually operated machines, which in practice meant that the parts to be machined were aligned by hand using mechanical methods.
ST-Koneistus acquired its first CNC machine in 1981, and by the middle of the decade the company had several of them.
The next innovation that revolutionized the machining industry and significantly increased the efficiency of production also appeared on Hopeatie in the 80s. It was a two-pallet machining tool.
The productivity of the pallets, in turn, is based on the fact that they can be used to prepare and disassemble jobs while the machine is processing the products. Today, ST-Koneistus has a pallet system that is able to queue up dozens of different jobs that it machines independently day and night if needed
CNC machines and pallet systems revolutionized the metal industry in the 80s, but it was also necessary as demand grew strongly at the same time and new challenges were already ahead.
“At three in the afternoon it was reported that the company is bankrupt by four o’clock. There was no time to make very in-depth plans.Tuomo Peltonen, Co-founder of ST-Koneistus
The jump in productivity was welcome, as trade with the Soviet Union was going strong. In addition to the hydraulic manifolds used in the mechanical engineering industry, ST-Koneistus manufactured large cylinders for many crane manufacturers throughout the 1980s.
However, the downside of large cylinders was that their raw material costs formed a significant part of the price of the product and thus posed a high risk to the company that manufactured them.
– Their good side was that whenever a machine manufacturer made deals with the Soviet Union, we knew that we had work for a year to come, Tuomo points out.
On the other hand, when the difficulties began in the Soviet Union, they soon appeared as far as Ylöjärvi.
The alarm bells rang in a situation where cylinders worth a million Finnish marks had been delivered to the customer without payment and goods worth another million were already waiting in the stock.
At the same time, the recession raised its head.
Eventually, ST-Koneistus bought the cranes manufactured by its customer against its receivables in order to avoid the worst catastrophe if the customer had gone bankrupt.
– The bankruptcy estate could have taken them anyway, but we rented the cranes forward immediately, in fact to the Koskikeskus construction site that was under construction at that time, in order to give the impression that they were in proper use.
This time, however, everything turned for the better, and the Peltonen brothers’ crane rental business did not go any further.
Creative means were introduced the next time as a skid steer loader manufacturer Ylö-Tehdas Oy was at stake.
– I delivered a cylinder load in the morning and at three in the afternoon it was reported that the company is bankrupt by four o’clock. I did not have time to make very in-depth plans.
So Tuomo did what popped to his to mind and picked up two skid steer loaders from the yard of the Ylö-Tehdas by car as security for his receivables. As expected, the trustee called soon after and hoped for the voluntary return of the machines.
– However, it has occurred to me that the trustee offered to pay 500 Finnish marks per machine for the returned machines, which on the other hand was a nice gesture. As if a reward for having even tried.
“Let’s have a cup of coffee”
As many people in the Tampere region know, the director of product development and marketing of Ylö-Tehdas, Risto Käkelä, bought his former employer’s skid steer loader business from the bankruptcy estate and established Avant Tecno Oy on its ruins.
Avant Tecno is now a successful export company that, like its predecessor, manufactures skid steer loaders and hoists for use by companies and individuals.
Since ST-Koneistus had manufactured cylinders for all the skid steer loaders of Ylö-Tehdas, it was natural for Käkelä to continue cooperating with the Peltonen brothers. Avant Tecno quickly became an important customer for ST-Koneistus.
Tuomo recalls how he occasionally gave himself free reins and set out to take Avant’s deliveries himself in the middle of the working day.
– I remember from those trips that Risto often suggested that we have a cup of coffee. It felt nice that he had time to sit down and change a few words, even though I was just an sidekick next door.
In addition to Käkelä, the Peltonen brothers also crossed the path of another local entrepreneurial legend right in the first metres.
In 1986, a passionate engineer began manufacturing hydraulic accessories in his own garage in Siivikkala, Ylöjärvi. That was Reijo Karppinen, the founder of Dynaset Oy.
Tuomo is amused to recall how Reijo had proposed the idea he had invented to his then employer, but they had not seized the opportunity.
– Reijo left with his ideas and started to make those accessories himself. At the same time, he came to visit here for the first time and asked if we could make him hydraulic manifolds and that’s where our cooperation started. Practically from his first product.
Today, Dynaset is ST-Koneistus’s largest customer in terms of turnover.
The culmination of all this is that both of the aforementioned top companies that needed hydraulic parts happened to be located a kilometre and a half from ST-Koneistus!
How, then, would Tuomo describe these long-term partners and entrepreneurial colleagues?
– Reijo and Risto are both inventors and developers of their own products, who have been passionate about selling their products. At the same time, they have taken good care of their own personnel – I have nothing but good to say about them.
“I never had to worry about Seppo’s work, nor him of mine.”Tuomo Peltonen, Co-founder of ST-Koneistus
Tuomo and Seppo worked together at ST-Koneistus for a total of 25 years until Seppo retired in 1995.
– Throughout our joint career, we had such a tacitly agreed division of labour that Seppo took care of payroll and invoicing matters and sawed the blank in production, and I, for my part, bought the raw materials, loaded the machines, took care of the sales and messed up with the drawings.
In Tuomo’s opinion, the division of labour was still good in retrospect, because the two men never stepped on each other’s toes.
– I never had to worry about Seppo’s work, nor him of mine. He read and followed a lot of world affairs and was well acquainted with, for example, wage development in Finland. However, we always had slightly better wages than the average earnings in the metal industry.
Tuomo and Seppo always agreed on even large investments in the end.
– I always planned them, and Seppo then pondered and considered a little more earnestly, but yes, he always trusted me in the end.
Thus, the cooperation between the brothers went amazingly well from the beginning to the end, until Tuomo bought Seppo’s share of ST-Koneistus as he retired.
Before buying Seppo’s share, however, Tuomo wanted to make sure of one thing to which he needed an answer from his son Tommi.
“Entrepreneurs have a lot in their hands, but we never felt it was too much. The only thing that has been annoying in being an entrepreneur is that Seppo and I suffered from injustice almost throughout our entrepreneurial careers. It was because we were from a working-class family and we did not turn our backs to our background with entrepreneurship. We were only interested in entrepreneurship, and it was not allowed at that time”.